Vancouver’s housing recovery accelerated at the end of last year, as buyers adjusted to tougher mortgage rules and drove up home sales in the country’s priciest real estate market.
Home activity in the greater Vancouver area jumped 88 per cent to 2,016 sales in December, according to the Real Estate Board of Greater Vancouver, the steepest increase in a year and the sixth consecutive month of double-digit year-over-year increases.
Last month’s activity was nearly 10 per cent higher than the 10-year average and capped off a robust fall season.
“What we are seeing is a bit unusual. We are making up for lower activity,” said Ashley Smith, president of Vancouver’s real estate board. “When we look at the big picture, it is balancing out the year. It is just about demand catching up,” she said.
Strong sales in October, November and December helped push annual sales up 3 per cent over 2018, when the federal government implemented the mortgage stress test that requires borrowers to prove they can handle loan payments at a higher interest rate.
Although last year’s sales of houses and condos hit 25,351, that was still one-third lower than in 2017 and a fifth lower than the region’s 10-year average.
The mortgage stress test made it harder for potential buyers to get a loan in a market where the average home price is more than $1-million. That along with the 20-per-cent foreign buyer real estate tax slowed sales for most of 2018 and the first half of last year.
“It was pretty grim for a while but it has come back quite nicely,” said Randy Ryalls, a broker with Royal LePage Sterling Realty, who has worked in the Vancouver area for more than three decades. “A lot of people have adjusted to the stress test. They are coming in with a higher down payment and interest rates are still spectacularly low, which helps a lot," he said.
In the spring of last year, buyers were waiting to see whether home prices would fall further. But as more homes sold, buyers gained confidence that prices had stabilized and decided to purchase property.
A housing shortage coupled with increased demand has started to drive up home prices. For the third consecutive month in the greater Vancouver area, the benchmark sale price or the industry representation of a typical home sold, increased slightly from the previous month. The December benchmark, which includes houses and condos, was $1,001,000. That is higher than November’s $993,700, but 3 per cent lower than December, 2018.
Mr. Ryalls said the market has been much busier and there is now some competition for homes priced within a few percentage points of the area’s going rate.
However, while some properties are getting multiple offers, is is not like the housing boom in 2017, when home buyers were offering $100,000 over the asking price.
“People don’t want to overpay. We are not seeing people going crazy,” he said.
Over the year, the benchmark price of a detached house in the Vancouver region dropped 4 per cent to $1,423,500. The price of a townhouse fell 2 per cent to $778,400 and a condo decreased by 3 per cent to $656,700.
Prices fell across most parts of the greater Vancouver area, with the steepest declines in the Sunshine Coast and Bowen Island. Squamish and Whistler bucked the trend with single-digit increases in prices across most types of housing.
Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.
Rachelle Younglai