Greater Vancouver real estate prices surged 7.8 per cent a year for more than a decade

(February 09, 2011)

VANCOUVER - It’s been a seller’s market in Greater Vancouver for 55 per cent of the last eleven years.Buyer’s market prevailed only 13 per cent of the time, while the remainder was balanced.
Values rose from $295,978 in 2000 to $675,853 in 2010 — for a compounded rate of return of 7.8 per cent each year, while Canada earned a 6.8 per cent return over the same duration. Average price increases from 2000 to 2010 ranged from an annually compounded rate of return of 4.82 per cent in London-St. Thomas to a high of 9.56 per cent in Regina.
Its price growth helped position the city in the top tier, out-performing two-thirds of Canadian markets, ranking six nationally and fifth in Western Canada for return on investment.
The past decade was one of the healthiest on record for real estate across the country, during the period from January 2000 to December 2010.
The top growth market overall was Regina, with a 9.56 per cent increase each year, followed by Edmonton at 9.25 per cent, Saskatoon at 9.2 per cent, Winnipeg at 9.01 per cent and Kelowna at 8.42 per cent.
“There’s no question that price growth has been solid over the past decade, but history tells us that exceptional growth supported by sound fundamentals is healthy,” said Sylvain Dansereau, executive vice-president, RE/MAX Quebec. “Concern is only raised when the underpinnings are insufficient to justify the trajectory. By all accounts, Canada’s real estate market measures up to conventional wisdom, and the faith in home ownership has not been misplaced.”
The report shows a seller’s market is underway in B.C. now, with the sales-to-new listings ratio reaching 82 per cent in November and 110 per cent in December.
“Builders and new immigrants are snapping up properties two at a time, in cash purchases, for future development,” according to the report. “Most of these homes are older, on larger lots, and will be torn down to make way for custom-built homes. With competition underway once again, multiple offers have re-emerged, especially for homes that represent land value in well-established neighbourhoods.”
Single-family homes and reasonably-priced units in good neighbourhoods are being snapped up quickly.
“Inventory has always been the wild card,” says Michael Polzler, executive vice-president, RE/MAX Ontario- Atlantic Canada. “Its influence is remarkable, but a number of other factors will serve to bolster Canadian real estate moving forward including land scarcity, intensification, immigration, continued infrastructure and capital spending, improving money markets and the rebounding economy. The threat of rising interest rates and the changes to mortgage lending may also prompt a flurry of activity affecting price growth in the weeks ahead. Yet, overall, gains in 2011 will be more moderate than those noted in the past decade.”
Even during the time from the latter half of 2008 to early 2009, fewer listings offset diminished demand, so that the market remained stable.
“While population growth, pent-up demand, and a strong economy also contributed to the run up in activity, inventory played a major role in price growth,” said Elton Ash, regional executive vice-president, RE/MAX of Western Canada. “The recent recession was case in point. Supply remained largely in check, keeping prices on the upswing despite softer demand. That is expected to continue, given an improved global economic picture, lower unemployment rates and rising consumer confidence—all of which have buoyed home buying activity since November. While sales figures are expected to be slightly off 2010s heated pace, housing values are forecast to continue to climb in Canadian real estate markets in 2011—with most a direct result of lower listing levels.”