Prices for single-family houses in Vancouver are on the rise again as the affordability gap widens between detached homes and multifamily units.
On Vancouver’s West Side neighbourhood, the benchmark price index last month for detached homes reached $2,086,800, up 1.2 per cent from October, 2012. On the city’s East Side, prices rose 1 per cent to $850,500.
Over the past five years, prices for West Side detached properties have surged 45.3 per cent while they have jumped 35.2 per cent on the East Side, according to statistics released Monday by the Real Estate Board of Greater Vancouver.
For Greater Vancouver as a whole, including suburbs such as Burnaby and Richmond, single-family detached prices climbed 24.4 per cent to $922,600 over the past five years. By contrast, prices for townhouses rose 7.8 per cent to $458,000 while condo prices increased 4.5 per cent to $365,600.
The Vancouver region’s single-family detached homes are on track to get ever-more expensive in the long term, while price hikes for townhouses and condos are forecast to be restrained by increased supply for those multifamily developments, said Cameron Muir, chief economist at the B.C. Real Estate Association.
“In the long term, single-family detached homes are going to become an increasingly smaller proportion of the housing stock because we’re building 80 per cent of new homes that are townhouses or condominiums,” Mr. Muir said.
“Over time, the housing stock will be shifting toward multifamily. Single-family detached homes are going to be a smaller proportion of the total number of homes in the marketplace. As such, theory tells us that prices of those particular home types are going to get bid up relative to the other ones because they are an increasingly finite and scarce resource,” he said.
October sales for detached homes, townhouses and condos in Greater Vancouver climbed 37.8 per cent from the same month last year as the real estate market finds its balance. There were 2,661 resale properties that changed hands last month on the Multiple Listing Service, up from 1,931 sales in October, 2012.
The increased activity marks the sixth consecutive month that Greater Vancouver has experienced a year-over-year gain in monthly sales, following a 19-month slump in volume.
Hani Lamman, vice-president of development and acquisitions with Cressey Development Group, said the City of Vancouver is facing opposition from long-time residents in historic neighbourhoods as civic politicians seek to encourage builders to pack more housing units onto lots traditionally zoned single-family detached.
Land is precious within the City of Vancouver due to mountains to the north and the ocean to the west, Mr. Lamman said. While it will be a slow process, Cressey intends to build townhouses and condos in the East Side neighbourhood that includes Commercial Drive, assuming city hall officials are able to rezone the area to make it easier to construct townhouses, row houses and condos.
Housing sales over the past six months look rosy when comparing the figures with last year’s slump. In July, 2012, Ottawa reduced the maximum period on government-backed mortgages to 25 years from 30 years, a move that contributed to the slowdown in housing sales and drop in prices in the second half of 2012 and early 2013. On Vancouver’s West Side in March this year, for instance, single-family detached prices were down 9.1 per cent, compared with the same month in 2012.
The sales volume in Greater Vancouver last month was 2.8 per cent above the 10-year sales average for October, said board president Sandra Wyant. Greater Vancouver’s MLS home price index for single-family detached houses, townhouses and condos was $600,700 last month, or a 0.5-per-cent decline from the same period in 2012. There were a total of 15,257 active listings last month, down 12.2 per cent from a year earlier.