As the prices of detached homes in Greater Vancouver soar to new heights, the housing industry is stepping up its promotion of condos to a new generation of buyers.
Prices for single-family detached houses in the region averaged $1,417,409 last month, up 16.3 per cent from May, 2014.
The real estate market is red-hot within Vancouver proper, according to new data released Tuesday. The median price for existing detached homes sold last month hit new highs of $2.88-million on the city's west side and $1.2-million on the east side – up 25.8 per cent and 26.3 per cent, respectively, over the past year.
Some Vancouver real estate leaders are advising young buyers to say goodbye to the picket fence and hello to the condo unit.
"There is a depleting supply of detached houses and there is more demand," said Bob Rennie, the owner of Rennie Marketing Systems, which specializes in selling condos. "We need alternative housing stock."
Mr. Rennie said detached homes within the city of Vancouver in particular have skyrocketed in value, making it important for developers to pack more living space onto valuable land.
Some industry observers point to the influence of foreign buyers, noting that wealthy families originally from China have been acquiring high-end homes in Vancouver. But Mr. Rennie said the clout of offshore money has been overstated and that there are a variety of factors fuelling the region's housing sector, including low interest rates and baby-boomer parents helping children with down payments.
To help control prices, he is calling on the B.C. government to introduce a speculation tax on property flippers. The province, though, isn't keen on the idea.
Tracie Moser, who has rented in Vancouver since 2001, said soaring housing prices have squeezed out a generation of young buyers from ever owning a place with a front lawn and backyard. "The housing industry wants us to scale back our expectations. We're not talking about a detached home at this point. Getting into the condo and townhouse market is proving to be more difficult, too," Ms. Moser said.
Darcy McLeod, president of the Real Estate Board of Greater Vancouver, said consumer demand is strong while the inventory of resale properties is tight. There were 12,336 properties listed on the area's Multiple Listing Service last month, down 23.2 per cent from May, 2014.
There were 4,056 sales of all housing types in Greater Vancouver last month, up 23.4 per cent over the past year.
The Home Price Index (HPI) for detached properties set a new high of $1,104,900 last month in Greater Vancouver, which includes suburbs such as Burnaby, Richmond and North Vancouver. The benchmark HPI is a representation of the typical house in an area, providing a better barometer of real estate trends than average prices, which skew the picture because the most expensive properties are included, according to housing industry officials.
While the detached HPI has doubled over the past decade in Greater Vancouver, benchmark prices for condos and townhouses have increased less than 58 per cent over the same period.
The HPI for condos on Vancouver's east side was $322,300, up just 0.6 per cent over the past year.
In the Fraser Valley, which includes the sprawling and less expensive Vancouver suburb of Surrey, the HPI for condos last month was $192,500, down 2.8 per cent since May, 2014.
Sales volume in the Fraser Valley on the Multiple Listing Service rose 20.6 per cent year-over-year to 1,969 properties changing hands last month.
Metro Vancouver, a broader area than Greater Vancouver, saw the average price for new and existing detached homes sold hit $1.1-million last year.
Fraser Valley officials say properties are still relatively affordable in their region, with a median price for detached homes at $625,000 last month, a gain of 7.8 per cent since May, 2014.
MLS Home Price Index for single-family detached homes in Greater Vancouver in May, with percentage change over 12 months
VANCOUVER WEST SIDE
VANCOUVER EAST SIDE
Source: Real Estate Board of Greater Vancouver