December jump in housing sales drives up Greater Vancouver home prices

Jan. 6, 2010 | Market Update | By Aaron Rossetti

By Derrick Penner, Vancouver Sun - After plummeting to lows not seen since the 1980s, Lower Mainland real estate markets saw a rush in the second half of 2009 that pushed sales well above an economically challenged 2008 and prices back on an upward slope toward previous peaks.

Aided by the slashing of mortgage rates, cut to the bone in step with the Bank of Canada's measures to stimulate the economy, new buyers poured into the market.

The recovery wasn't equally shared among Lower Mainland municipalities, but Robyn Adamache, a market analyst for Canada Mortgage and Housing Corp., said most communities are in seller's market conditions, which she expects will continue until mid-2010 when an expected rise in mortgage rates takes hold.

"Prices are expected to continue rising as well," Adamache said, "and that will be cutting out the benefit [the market has experienced] from lower prices combined with low interest rates."

The area of Metro covered by the Real Estate Board of Greater Vancouver recorded 35,669 sales through the realtor-controlled Multiple Listing Service in 2009, a 45-per-cent increase from 2008.

And the benchmark price, an average price for the typical property sold, hit $562,463 in December, up some 16 per cent from December 2008, when prices had fallen considerably from their peak.

Scott Russell, president of the Vancouver board, said realtors experienced record or near-record sales for each month in the second half of 2009, with December 2009 the organization's third busiest December on record.

However, price performance varied from community to community.

"Some areas have shown larger increases than others, the west side of Vancouver being one of them," Russell said.

Detached homes on Vancouver's west side, for instance, hit a benchmark average of $1.5 million in December, up 30 per cent from the same month a year ago.

"Vancouver's west side, when the market becomes stronger, historically is always the leader," he added.

In the Fraser Valley, realtors racked up 16,721 sales in 2009, up 26 per cent over 2008.

And by December, the average price for a Fraser Valley home hit $430,827, not quite at the peak of value, but still 7.3 per cent ahead of December 2008.

Board president Paul Penner said that in the span of 12 months, the valley went from "the worst January in 20 years to the third-best December."

Penner said Fraser Valley sales figures from July onward were consistently higher, month by month, compared with the region's 10-year average for sales.

"It's not just a blip that developed," he said, "It's not a spike."

The poorest month for sales in 2009 was January, when there were 762 sales in Vancouver and 389 in the Fraser Valley. The best month in Vancouver was June, with 4,529 sales, while the Fraser Valley's best month was July, with 2,089 sales.

December saw 2,515 MLS sales in the Vancouver board area, which includes most of Metro Vancouver except for Surrey. In the Fraser Valley, realtors saw 1,260 sales.

The Fraser Valley also saw some regional differences in the strength of the market, with single-family home sales in White Rock, Surrey and Langley showing better results than Abbotsford or Mission.

"It seems to be that if you're closer to Vancouver, the market has been hotter," Penner said, "which is the same kind of story I'm hearing from [B.C. Real Estate Association economist] Cameron Muir about provincial sales as well.

"Vancouver and the Lower Mainland are the hottest part of the market."

On balance, however, inventories of unsold homes in Lower Mainland markets continue to shrink as strong sales eat up the active listings faster than new listings are added.

The Vancouver board's inventory of 8,939 active listings is some 41 per cent lower than the number of unsold homes on the market in December of 2008, and is even 19 per cent lower than the previous month.

"The number of homes listed for sale on our MLS has been in decline in Greater Vancouver for eight of the last nine months, which results in upward pressure on home prices," Russell added.

Adamache noted that the number of listings in Vancouver amounts to just over a three months' supply at the current pace of sales, a far cry from the 10 months' supply in the market in December of 2008.