Entry-level buyers in the Vancouver region's real estate market are snapping up condos and townhouses in the suburbs as prices for all types of housing reach new highs.
In Greater Vancouver, the benchmark price for single-family detached houses exceeded $1.56-million last month to set a record, a 38.7-per-cent jump from a year earlier. The benchmark price is a representation of the typical home in an area, providing a better barometer of trends than average resale prices, according to industry officials.
In the Fraser Valley east of Vancouver, the benchmark price for detached houses sold last month hit a new high of $861,600, or a 41.3-per-cent gain from a year earlier.
For buyers who find detached listings too pricey, the spotlight has shifted to less-expensive condos and townhouses in the suburbs of British Columbia's Lower Mainland.
The total number of residential properties that sold last month reached the highest level yet for June in Greater Vancouver (4,400) and the Fraser Valley (2,864). Sales volume declined year-over-year for detached properties but rose for condos and townhouses.
Prices for condos and townhouses set record highs in the areas covered by the Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board.
Over the past year, the benchmark price for townhouses surged 36.9 per cent to $408,400 in Langley and jumped 29.7 per cent to $515,300 in Port Coquitlam. The benchmark price for condos climbed 25.7 per cent to $445,700 in Port Moody and increased 24 per cent to $357,200 in New Westminster.
With total listings this year falling sharply from 2015, the combination of robust demand and limited supply has fuelled big price increases, said Brandan Price, an agent with Rennie & Associates Realty Ltd.
The average price of detached houses sold within the City of Vancouver has climbed to almost $3-million. In Greater Vancouver, the average price of detached homes reached $1.77-million last month, or a 22.6-per-cent increase from June, 2015.
Some industry observers argue that buyers from China are the primary drivers behind the housing boom that has spilled into the suburbs, but Mr. Price sees a range of factors contributing to the frenzied activity over the past two years.
"It's supply and demand in a desirable place to live. There are so many different reasons for buying – population growth, low interest rates and people helping their children," he said in an interview Tuesday.
The latest housing rally, which began in mid-2013, has defied predictions that it would have cooled off by now. Mr. Price said bidding wars remain common, though the number of buyers caught up in multiple offers appears to be declining. "Instead of five offers, you're seeing one, two or three," he said.
While it is unclear how much speculation is going on, statistics from BC Assessment show that in the Renfrew neighbourhood on Vancouver's east side, 22 of the 213 sales of detached houses between Jan. 1, 2014, and mid-2016 were sold at least twice. That works out to a flipping rate of 10.3 per cent.
Over all, for sales of detached homes in the City of Vancouver, there was a flipping rate of almost 6 per cent, based on 390 transactions having at least two sales during the 30-month period, including demolitions.
As part of efforts to dampen the market, Vancouver Mayor Gregor Robertson said last month that the B.C. government should introduce a speculation tax to discourage investors from flipping houses for short-term gains. The provincial Liberal government has so far rejected that suggestion, but said in February that it plans to collect more data on foreign buyers to help study the role that they may play in the real estate market.