Prices for condos are on a tear across the Lower Mainland but there are signs of an emerging peak at the top end of the market.
The $1 million figure has earned a place in Vancouver real estate vernacular for being when observers give up on any semblance of prices being affordable. It’s been mostly reserved for describing detached homes, but that’s changing.
A few weeks ago, an analysis by David Taylor, senior vice-president at Colliers International, of inventory on the Multiple Listing Service put the median asking price of apartments and condos in the City of Vancouver at $962,500, popping eyeballs for how close that comes to the $1 million mark.
This week, condo sale prices from the Real Estate Board of Greater Vancouver show a strong upswing. The price for what the board considers a typical condo rose 26 per cent in Great Vancouver in March 2018, compared to a year ago. The Lower Mainland as a whole clocked in with a 30 per cent gain. There were even higher increases in some communities. In Maple Ridge, a typical condo sold for $316,100 in March, a gain of 46 per cent gain in one year and 83 per cent in the three years.
And to be clear, these numbers are for resales of existing condos, not presales of units that haven’t yet been built.
In Burnaby, a condo near Government Road recently sold for $526,500, according to Sutton Group West Coast Realty agent Solomon Yasin. It’s a two-bedroom, one-and-a-half bathroom unit built in the 1990s that would have gone for about $350,000 to $400,000 two years ago, he estimates.
“There were seven offers on it. When you have a lot of multiple offers, after the sale you have six other buyers waiting and wanting to buy, and the backlog keeps adding up,” he says. “Buildings that allow rentals, like this one, bring out a pool of investors too, which means more buyers.”
So, why have prices continued to climb?
“Essentially, it proves that supply is an issue even in resales (of condos),” says Michael Ferreira of Vancouver-based Urban Analytics, which provides data about new condos for developers, planners and bankers. “Listings are still down and we’re in a situation here where people are not forced to sell, so they’re going to hold on.”
When it comes to presales, which are not captured in the real estate board’s statistics and are not subject to the foreign-buyers tax, the price gains have been significant too, according to Ferreira. Between 2015 and 2017, the per square foot presale condo price went up by 57 per cent in Burnaby, by 60 per cent in Port Coquitlam, by 61 per cent in Richmond and by 66 per cent in Surrey. Recently, Ferreira updated these figures to include presales made in 2018, showing the price increases for Burnaby and the west side of Vancouver are between 70 and 80 per cent.
Ferreira says it will be interesting to see if there will be an easing of prices in areas such as the Burquitlam / North Road corridor and Brentwood in Burnaby, where several new projects will hit the market.
Ferreira says it’s still early days in terms of seeing how the more recently unveiled set of taxes (including a widened foreign-buyers tax and a surtax on higher value properties) will impact the condo market, but he says the speculation tax on empty or lightly-used properties will not address the speculation linked to prices gains in presale condos. “True speculation is when buyers assign a unit (to another buyer for a higher price) before it’s even completed and the deal isn’t closed.”
Despite a feeling of ever rising price gains, there are signs that some buyers are reaching “a cause for pause when looking at some of the prices,” especially at the top end of the market, says Ferreira.
According to independent March figures produced by SnapStats Publishing Company, the average condo price in West Vancouver dropped 33 per cent in the past two months from $1.492 million to $938,000.
It’s a sign that while clamouring will continue and prices will keep rising for buyers of condos in the $700,000 to $800,000 range and lower, more established, savvy buyers could be starting to step back.
“The average prices of condos in downtown Vancouver dropped from $950,000 to $840,000 in the last two months because of the change in high end condo prices,” says Ian Watt of Sotheby’s International Realty.
Source: The Vancouver Sun. http://vancouversun.com/business/local-business/lower-mainland-condo-prices-soar-but-there-are-signs-of-softness-at-the-top-end