In Vancouver's sizzling housing market, even entry-level homes are starting to overheat.
Interest has intensified for single-family detached properties – extending to fixer-uppers on busy streets previously overlooked – as the price of entry within the city of Vancouver approaches $1-million.
On Vancouver's east side, buyers looking for a detached house on a standard-size lot are finding list prices of roughly $800,000, but the winning bid often far exceeds the asking price. "The market is very hot," said Brian Vidas, a Sutton Centre Realty agent whose listing sold last week for $958,000 – $158,100 above the asking price of $799,900. "It exceeded all of our expectations."
Bidding wars are breaking out in many cases. Mr. Vidas held open-house showings on the weekend of April 25-26, then accepted offers on April 29. The 1,715-square-foot bungalow on Nanaimo Street, a main artery with four lanes of traffic, attracted seven bids.
The sale of the house, built in 1943, is an example of how even entry-level homes on standard 33-foot-wide lots are beginning to attract offers close to $1-million on Vancouver's formerly affordable east side.
Listings that seem like a hard sell at first glance would have deterred many buyers in the past or at least resulted in low-ball bids, but not this spring. Housing supply isn't keeping pace with demand, driving up prices for existing detached homes, said Darcy McLeod, president of the Real Estate Board of Greater Vancouver.
The Home Index Price (HPI) on Vancouver's east side for detached properties hit a new high in April of $1,046,000, up 16.2 per cent from the same month last year, the board reported Monday. 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 sold are included, according to the B.C. Real Estate Association.
On Vancouver's west side, the detached HPI reached $2,490,600 last month, up 13 per cent from a year earlier. For Greater Vancouver – including suburbs such as Burnaby and Richmond – the detached HPI jumped 12.5 per cent year over year to a record-high mark of $1,078,900 last month.
The average price for existing detached houses in Greater Vancouver in April was $1,398,967, just 0.50 per cent below the record set in March. The board doesn't release statistics for the average price within the city of Vancouver, but a study commissioned by Vancouver City Savings Credit Union showed that prices averaged $1.9-million for new and existing detached homes in Vancouver proper last year.
Property hunters have been out in droves, despite the ever-rising prices. Sales of existing detached homes, condos and townhouses soared to 4,179 last month in Greater Vancouver, up 37 per cent from April, 2014, and 29.3 per cent above the 10-year average for total sales in April. In the Fraser Valley, total sales surged 36.7 per cent.
Bargain hunters are being forced out to the suburbs. In Metro Vancouver – a broader area than Greater Vancouver – prices in 2014 averaged $1.1-million for new and existing detached properties, including the less-expensive Vancouver suburb of Surrey and Fraser Valley communities such as Langley and White Rock.
A study by Andrew Yan, an urban planner with Bing Thom Architects, found that 66 per cent of the nearly 68,600 detached properties within Vancouver's city limits were conservatively assessed at $1-million or higher last July.
Mr. Vidas said more than 100 people attended his open house events for the Nanaimo Street bungalow, and a local buyer emerged as the winning bidder. The bungalow was assessed last July at $739,200 – $218,800 lower than what it sold for last week. Market prices are far outstripping outdated assessed values, real estate experts say.
Buyers searching for cheaper asking prices usually have to look at much smaller lots. For instance, one listing on Vancouver's east side recently asked $749,500 for a 105-year-old house on a 20-foot-wide lot close to busy Fraser Street.
Low interest rates, limited listings and an influx of international buyers have helped fuel demand for properties in a seller's market. Buyers with ties to China have been especially keen on high-end houses.
Chris Simmons, manager of Royal LePage Westside in Vancouver, said a contributing factor to the red-hot housing market has been the tight supply of detached properties. On some major streets, detached homes have been sold as part of a process called land assembly, reducing the supply of sought-after properties because the houses end up being replaced by multifamily buildings and other developments, Mr. Simmons said.