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The heated activity of late 2009 spilled over into Greater Vancouver’s real estate market in January, with 1,923 homes changing hand up 152 % over last year. While inventory showed some improvement, it still posted a 26 % deficit over January 2009 at 10,218 listings. That fact, combined with very healthy demand out of the gate, has created ideal conditions for bidding wars and upward pressure on pricing.

While the market was dominated by first-time buyers during much of 2009, the move-up segment has re-emerged, driving sales from $600,000 to $1 million. With all segments working in tandem, multiple offers are now occurring with frequency across the board. Buyers are aggressive, more than willing to compete. Yet, despite the increased level of competition, most are demonstrating caution, given the economic realities of the still-too-fresh recession and tenuous recovery currently underway.

While there are some exceptions, most homes are selling at list price and under. Existing fundamentals do point to further price growth in the months ahead, especially if the disparity between supply and demand continues to exist. The simple truth remains that for every deal closed in Greater Vancouver, approximately two to five unsuccessful purchasers jump back into the fold. The benchmark value of detached homes increased 19.5 % to $788,499, while condominiums increased 15 % to $385,487, when compared to January 2009. The benchmark price for all residential property types combined is up 17 % to $573,241—nearly one per cent higher than the all-time market peak in May 2008.

The looming Harmonized Sales Tax (HST) and threat of interest rate hikes later in the year has added fuel to Vancouver’s already robust real estate market in 2010. Rising confidence is also a considerable factor. Purchasers are more secure in their belief that the worst of the recession is over and the prospects going forward are brighter. Given the framework that’s taken shape, the momentum is expected to continue unabated through the second quarter. Little relief is expected in terms of supply in the short-term. Rising prices may entice potential sellers in coming months, helping to ease the inventory crunch closer to mid-year.

Markets are easing to levels in keeping with the economy.

Real estate sales in January eased off the frenetic pace markets saw in December across British Columbia, the B.C. Real Estate Association reported Thursday.

While overall provincial market in January represented a sea change from the doldrums of early 2009, buyers seem to be coming sated.

"We saw a dramatic rebound in sales since last January, and that pace of sales that we saw in December, and during the last quarter, was unlikely to be sustained through 2010," Cameron Muir, the association's chief economist said in an interview.

January's sales, recorded through the Multiple Listing Service, hit 4,619 units, some 118 per cent more than the same month a year ago, but down about 16 per cent from December.

That slowing from December's hectic pace, Muir said, happened because many home hunters have bought, which lessens the "pent up demand." Other potential buyers, however, have been squeezed out by the rebound in home prices, which have begun to again approach pre-downturn highs.

With sales still elevated, the provincial average price hit $491,571 in January, up 19 per cent from the same month a year ago.

"Mortgage rates are still low," Muir said, so on the basis of monthly payments, "housing is still more affordable than it was at the previous peak in the first quarter of 2008."

However, with less pent-up demand and with home sellers expected to list homes in larger numbers during the coming months, Muir said "we are likely to see much less upward pressure" on prices during the rest of the year.

Carol Frketich, regional economist for Canada Mortgage and Housing Corp., said January's easing in sales compared with December "is right in line with CMHC's forecast."

The high level of sales through the end of 2009, which was driven largely by the rapid decline of mortgage rates to record low levels that made monthly home payments more affordable, were expected to cool as conditions changed.

"What we're seeing now is sales moving lower from high levels back to levels that are more consistent with economic fundamentals," said Frketich, with those economic conditions being a slow recovery from the recession of late 2008 and early 2009.

While unemployment is still higher than it was at the peak, Frketich said the employment market is a "lagging indicator" of economic improvement. Companies do not start hiring again until they are sure business is improving.

And Frketich said other economic conditions, such as retail sales, have shown that the economy is beginning to improve.

Meanwhile, the higher levels of home sales have prompted developers to start work on more new homes, and builders are being rewarded with slight rises in prices.

Statistics Canada released its survey on new home prices Thursday, which showed that Metro Vancouver's new home prices in December increased 0.7 per cent from November. However, prices had still not caught up with where they were in December 2008, remaining 2.2 per cent below that mark.

Nationally, new-home prices were up 0.4 per cent in December compared with November.

Source: the Vancouver Sun

Housing supply and demand reach closer alignment in January.

Diverse selection and favourable interest rates continue to drive demand in the Greater Vancouver housing market.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 1,923 in January 2010, an increase of 152.4 per cent compared to January 2009 when 762 sales were recorded and a 23.5 per cent decline compared to the 2,515 sales recorded in December 2009.

In terms of historical perspective, January ranked as an average month for number of residential housing sales over the past decade, with higher sales in January 2002, 2003, 2004, and 2006.

Over the last 12 months, the MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 17.2 per cent to $573,241 from $489,007 in January 2009. This price is 0.8 per cent above the previous high point in the market in May 2008 when the residential benchmark price sat at $568,411.

 “Although home prices in the region have largely returned to their previous peaks, we still see a significant number of first-time and move-up buyers in the market, thanks to low interest rates and the diverse range of properties available today,” Jake Moldowan, REBGV president-elect said.

“There is also closer alignment between supply and demand in today’s housing market. At 18 per cent, the sales-to-active listings ratio in January is approximately 10 per cent lower than we’ve seen in our market over the last six months,” Moldowan said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,147 in January 2010. This represents a 39.1 per cent increase compared to January 2009 when 3,700 new units were listed, and a 139.1 per cent increase compared to December 2009 when 2,153 properties were listed on the Multiple Listing Service® (MLS®) in Greater Vancouver.

At 10,218, the total number of property listings on the MLS® increased 14 per cent in January compared to last month and declined 26 per cent from this time last year.

“Looking ahead, it’s difficult to know exactly what the Olympic effect will be on our market in February, although I think it’s fair to say it should be a quieter period for home buyers and sellers and so, in fact, may be a good time for motivated buyers to search for properties,” Moldowan said.

In January, sales of detached properties increased 141.4 per cent to 705 from the 292 detached sales recorded during the same period in 2009. The benchmark price, as calculated by the MLSLink® Housing Price Index, for detached properties increased 19.5 per cent from January 2009 to $788,499.

Sales of apartment properties in January 2010 increased 146.8 per cent to 891 compared to 361 sales in January 2009. The benchmark price of an apartment property increased 15.2 per cent from January 2009 to $385,487.

Attached property sales in January 2010 are up 200 per cent to 327, compared with the 109 sales in January 2009. The benchmark price of an attached unit increased 13.4 per cent between January 2009 and 2010 to $482,478.

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