Brisk condo sales are driving Greater Vancouver's real estate market while the pace of price gains has slowed in the once-mighty segment of detached houses.
The benchmark price for condos sold in September reached $635,800, up 21.7 per cent from the same month last year, the Real Estate Board of Greater Vancouver said Tuesday. The benchmark price is an industry representation of the typical home sold in an area.
In the market for detached houses, the region's benchmark price of $1,617,300 is up 2.9 per cent from a year earlier. The modest increase is in sharp contrast to the frenzied atmosphere for detached properties during the peak of the real estate boom in the first half of 2016. Back then, prices for detached homes in most neighbourhoods soared between 30 per cent and 40 per cent over a one-year period, while the condo and townhouse markets saw gains of roughly 20 per cent.
The number of condos changing hands in September rose to 1,451, up 19.1 per cent from the same month last year. There were 852 sales of detached properties this past month for a 27.9-per-cent gain from a year earlier.
But sales in September, 2016, were soft largely due to the B.C. government's 15-per-cent tax on foreign buyers in the Vancouver area. That tax took effect in August, 2016.
Industry observers note that prices slumped this past fall after sales activity plunged, with the province's tax placing a chill over real estate in the Vancouver region.
Compared to three years earlier, last month's condo sales climbed 22.1 per cent while detached-property transactions fell 32.9 per cent on the Multiple Listing Service.
"Detached homes made up 30 per cent of all sales in September and represented 62 per cent of all the homes listed for sale on the MLS," board president Jill Oudil said in a statement. "This dynamic has slowed the pace of upward pressure that we've seen on detached home prices in our market over the last few years."
This past month's ratios for sales to active listings show a seller's market for condos and townhouses, while it is edging closer to becoming a buyer's market for detached properties.
The wealth effect is forecast to diminish in the years ahead. "Strong price growth encourages developers to build. And as prices go up, people feel wealthier and they do things like buy a new car or they may renovate because they feel richer," said Simon Woodcock, associate professor of economics at Simon Fraser University. "There is a lessening of the growth in that wealth effect."
The recent influx of Albertans attracted to British Columbia's robust economy is predicted to taper off, too.
"The slowdown in the oil business meant that a lot of people who had moved to Alberta for that kind of work ended up going elsewhere, including coming to B.C.," Prof. Woodcock said. "Hiring has been pretty strong in B.C., but there is a limit."
Sales of detached homes, condos and townhouses totalled 2,821 this past month in Greater Vancouver, up 25.2 per cent from a year earlier, and 13.1 per cent above the 10-year average for the month of September. The benchmark price for various types of housing rose 10.9 per cent year over year to $1,037,300. Active listings have climbed 1.2 per cent over the past year.
The average price of detached houses sold in Greater Vancouver hit $1,666,284 last month, up 8.7 per cent from a year earlier, though September, 2016, was the first full month after the foreign-buyer tax dampened the enthusiasm of non-Canadian residents for detached properties, industry observers say. The average price of condos jumped 22.7 per cent year over year to $673,615 and the average price of townhouses rose 19.5 per cent to $886,396.
The Fraser Valley Real Estate Board saw a total of 1,619 transactions last month, up 24.1 per cent from a year earlier. In the board's territory, which includes the sprawling suburb of Surrey, the average price for various property types reached $709,253 last month, up 18.9 per cent from September, 2016.