The Vancouver region’s affordability crisis persists as buyers drive up townhouse prices to record levels.
The average price for townhouses sold in the area reached a new high at $966,221 in March, up 16.3 per cent from a year earlier, the Real Estate Board of Greater Vancouver said on Wednesday. The previous record was $938,805, set in February.
Prices for townhouses and condos have been rallying since early 2017, after a slump in the second half of 2016.
“Prices in Greater Vancouver are so expensive, relative to the rest of the country,” said Phil Soper, chief executive officer of real estate firm Royal LePage. “And when buyers see prices dip, they leap in.”
The average price for condos hit $723,827 in March, up 22.8 per cent from a year earlier and just shy of the record $751,358 in January. By contrast, the price for detached houses fell 6.2 per cent over the past year to an average of $1,607,886.
“Meeting demand will require higher-density living,” Mr. Soper said in an interview. “That means having to build up rather than spread out. Vancouver has some of the most attractive high-rise living in Canada, and it does provide an entry point. Condominium properties are the last bastion of relative affordability in Vancouver.”
On Feb. 20, British Columbia’s NDP minority government announced a variety of measures designed to reduce home prices.
Notable tax measures include hiking the foreign-buyers tax to 20 per cent from 15 per cent while also expanding that tax beyond the initial target of the Vancouver region.
Despite a recent downturn for detached properties, the benchmark price for various housing types reached $1,084,000 in March, up 16.1 per cent from the same month in 2017. The benchmark price is an industry representation of the typical home sold in an area.
“Any price growth is likely to remain subdued as the region’s affordability woes are further accentuated by rising interest rates,” according to a research note by Toronto-Dominion Bank.
Mr. Soper forecast benchmark prices in the Vancouver area will rise slightly in 2018, compared with 2017, but believes that the NDP’s recent budget will have a dampening effect on sales volume.
Total residential sales last month fell to 2,517 transactions, compared with 3,579 in March, 2017. Last month’s sales, the lowest for March since 2013, were 23 per cent under the 10-year average for the month.
“High prices, new tax announcements, rising interest rates and stricter mortgage requirements are among the factors affecting home buyer and seller activity today,” Greater Vancouver board president Phil Moore said in a statement.
The Vancouver region’s price gap between detached houses and condos is shrinking, falling to $884,059 last month from $1,124,491 a year earlier.
“Last month was the quietest March for new home listings since 2009, and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms,” Mr. Moore said.
Kira Gerwing, manager of community investment at Vancouver City Savings Credit Union, said the region’s expensive housing market is seeing not-for-profit developers play an increasingly important role in adding supply such as below-market rentals.
“This isn’t a problem that’s going to get solved with just increased density,” she said in an interview. “The conventional market model has not served the housing needs of citizens of this region adequately.”
The Catalyst Community Developments Society and Vancouver Community Land Trust Foundation are two notable not-for-profit development examples, but much more needs to be done beyond traditional developers increasing the supply of market housing, Ms. Gerwing said.
“At this stage of the game, there needs to be more options for households earning between $30,000 and $80,000 a year,” she said. “Below-market rentals are a reasonable option, and it gives people a chance to build up their savings.”
Vancouver real estate agent Steve Saretsky said there has been a noticeable sag in the market for detached houses within city limits, dragging down prices over all as fewer luxury properties trade hands. The price for various types of housing sold within the City of Vancouver averaged $1,234,414 last month, up slightly from a year earlier but down from the record of $1,505,765 last October.