An already hot housing market in the Vancouver region is getting even more frenzied as sales and prices skyrocket to set records.
The suburb of New Westminster experienced a 9.7-per-cent price gain in May alone for single-family detached houses, and annual price increases of 30 to 40 per cent are common across the region.
The market is scorching amid renewed concerns in the banking industry about debt levels, with some bankers calling for the federal government to intervene with measures such as raising minimum requirements for down payments and slapping on a luxury tax for foreign investors.
Brian Porter, Bank of Nova Scotia's chief executive officer, described the Vancouver and Toronto markets this week as "frothy," pressing Ottawa to take action. In British Columbia, Premier Christy Clark has resisted calls from housing critics to find ways to cool down the frantic activity in real estate.
There were 4,769 sales of detached houses, condos and townhouses last month in Greater Vancouver, marking the highest number of transactions ever posted in May.
The benchmark price last month for the three categories of housing reached a record $889,100, up 29.7 per cent from May, 2015. The benchmark is a representation of the typical property in an area, excluding the most expensive transactions.
Amid the craze for real estate, one Vancouver luxury listing is asking $35-million, or 74 per cent above its assessed value last July of $21.18-million. That property, owned by former Spence Diamonds CEO Sean Jones, originally sought $38.8-million when it went on the market in mid-January. The asking price then fell to $33.8-million before settling recently at $35-million.
The mansion, with $63,300 in property taxes last year, is on Vancouver's upscale Belmont Avenue. Mountain views are touted, although the property isn't on the waterfront like the Belmont Avenue home listed and recently sold for $31.1-million by Peter and Joanne Brown. Mr. Brown is the founder of investment dealer Canaccord Genuity Group Inc.
Many properties have recently listed at prices roughly 30 per cent higher than their assessed values last July. Some sellers, however, favour a strategy of asking relatively low prices in an effort to generate bidding wars that often result in sales well above the list price.
On Vancouver's West Side, benchmark prices for detached houses sold hit $3.44-million in May, up 7.6 per cent in one month alone and an increase of 34.7 per cent from a year earlier. On the city's Eastside in May, benchmark prices for detached properties surged to $1.46-million, a gain of 8.3 per cent during the month and up 36.1 per cent year-over-year.
Greater Vancouver saw an average price of $1.74-million for detached houses sold last month, just shy of the record $1.83-million in January but still up 23.1 per cent from May, 2015. The region's benchmark price for detached properties climbed 36.9 per cent to a new high of $1.51-million over the past year, according to the Real Estate Board of Greater Vancouver. The region's benchmark condo price has climbed 22.3 per cent to $485,000, after years of missing out on big gains.
Board president Dan Morrison cited the thriving economy and job growth amid limited listings as key factors behind the unprecedented sales activity for the month of May.
But some industry observers argue that foreign demand is the main driver of the residential housing boom in the Vancouver region, especially an influx of buyers from China acquiring detached houses.
Home sales and prices are forecast to reach record highs this year in British Columbia, fuelled by Greater Vancouver and the Fraser Valley. The Fraser Valley Real Estate Board, whose boundary includes the sprawling suburb of Surrey, reported 2,911 residential sales in May, up 47.8 per cent from a year earlier. The average price for Fraser Valley detached houses rose 36.6 per cent to $948,190 in the past year.
The B.C. Real Estate Association said Thursday that it expects 115,170 sales of detached homes, condos and townhouses this year in the province while prices average $766,600. The provincial sales are on pace to be 22 per cent higher than last year and smash the former record of 106,310 units sold on the multiple listing service in 2005.
Average prices this year in B.C. could be 20.4 per cent higher than last year, although price gains will likely be modest in 2017 as sales slip from record levels, said Cameron Muir, the association's chief economist. "Record housing demand has depleted inventories in many urban areas," Mr. Muir said in a statement.
Prices for detached homes, condos and townhouses in Greater Vancouver are forecast to average a record $1.13-million this year, up 24.6 per cent from 2015, while sales surge 8.9 per cent to a new high of 47,000 transactions. The Fraser Valley is also experiencing a housing bonanza, with a record 24,300 sales predicted this year and a new high of $710,000 anticipated for the average price for the three categories of housing.
Stable on the whole
While Canadian bankers this week called on the federal government to take further steps to cool surging housing markets in Toronto and Vancouver, Finance Minister Bill Morneau said two weeks ago that it's too soon to know the impact of changes to mortgage rules.
The federal government in mid-February raised down-payment requirements to 10 per cent for the portion of a house above $500,000 while making it more costly for banks to fund lending.
The Canadian housing market is "stable on the whole," although the government is continuing to monitor Vancouver and Toronto, a spokeswoman for Mr. Morneau said Thursday. "We have allocated funding to Statistics Canada to gather data on the activity of foreign investors, and are prepared to take further action if required," Annie Donolo said by e-mail.