Prices of detached homes in Vancouver may have hit bottom in the first quarter of this year, but are poised for a rebound this spring as sales activity surges across the region, according to a Royal LePage survey.
The Royal LePage quarterly house price survey, released Tuesday, shows home prices in the Greater Vancouver region dropped 1.9 per cent in the quarter ended March 31 compared with the last quarter of 2016, driven by a decline in prices of detached homes. Two-storey houses were down 3.1 per cent in the quarter while bungalow prices fell 1 per cent.
The Vancouver market began softening last spring and the market cooled even more after the B.C. government imposed a 15-per-cent tax on foreign buyers in August. But sales activity has grown so far in each month of 2017, suggesting the market for detached homes in Vancouver could rebound even sooner than people expected, said Royal LePage chief executive officer Phil Soper.
Mr. Soper said the number of units sold in Greater Vancouver climbed more than 48 per cent in March compared with February this year, which is much stronger than seasonal norms. He predicts the slowdown caused by the introduction of the foreign-buyer's tax could lead to "market whiplash" this summer as pent-up demand is unleashed in coming weeks, sending prices sharply higher again.
"Frankly, I thought the correction would be deeper and longer, but that unit-sales number says to me that there's still a lot of demand in the region and people may not sit on the sidelines for as long as we thought they would," he said in an interview.
On a national basis, home prices are a tale of two cities, with Vancouver slumping while the Toronto region sees soaring prices, marking the first period in years in which Vancouver and Toronto's housing markets have headed in opposite directions.
The combination has driven the average price of a home in Canada up 12.6 per cent in the first quarter of 2017, compared with the same time last year. The average home sold for $574,575, according to sales data from 53 of Canada's largest real estate markets.
Removing the hot Ontario market from the calculation shows a more modest national price increase of just 6.4 per cent in the first quarter this year.
Mr. Soper said growth in the rest of Canada outside of Vancouver and Southern Ontario is strong but sustainable, and higher prices in cities in Alberta and Quebec are particularly welcome news.
"Generally it is shaping up to be the best and healthiest year we've seen in Canadian real estate probably since before the global financial crisis," he said.
Prices soared not only in the Greater Toronto Area, but also in other cities across Southern Ontario. Prices climbed 12.4 per cent in London, 9.9 per cent in Kingston and 8.5 per cent Windsor, all of which are two hours or farther from Toronto.
Mr. Soper said the growth well beyond the Toronto region is being fuelled by Ontario's strong economic performance, with the province now leading Canada in economic growth.
Closer to Toronto, the city with the greatest year-over-year price gain was Richmond Hill, north of Toronto, where prices climbed by 31.5 per cent in the first quarter this year compared with the first quarter of 2016. Oshawa, which is east of Toronto, saw prices rise 28.2 per cent in the first quarter compared with the same period last year.
The price growth in suburban cities is being fuelled by single-family home buyers, who have concluded they can get more "bang for your buck" outside of central Toronto, Mr. Soper said.
He added he sees no sign that Toronto's market is cooling yet, but believes a slowdown is coming soon as prices move too far out of balance.
"There is so much momentum in the market that it will carry through the spring market at full steam," he said. "The earliest I believe we'll see a slowdown in the GTA market will be this summer or fall. Save a really heavy-handed move by regulators, I don't see anything slowing this market this spring."