Blog

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.