In January of 2014, I wrote a piece on how I felt that there was significant pent up demand in the Greater Vancouver Real Estate market. At that point, I felt that it was beginning to come back into the market and I reasoned that the some 15,000 buyers who had foregone their purchases would drive both prices and sales higher.
Today we can hardly read a newspaper (or some online version of a newspaper that you young people love so much) without hearing commentary on how many sales are being transacted and how the prices are skyrocketing.
Let’s take a look at what happened between January 2014 and March of 2015. During this 15 month period, 12 of the months had sales exceeding the 10 year average sales volume for that month and 3 were below the 10 year average. There were 42,035 sales during this period while the expected volume, based on the average monthly sales data, would have been 36,600. Over this period, there were 5400 more sales than expected. Now this isn’t a zero sum game where we have to get back to the 15,000 sales that I felt were “missing” from 2011 to 2013 in order for the market to be balanced. That said, I still feel that there is significant demand left in the market and that sales will continue to exceed the averages for some time to come.
As far as prices go, the Housing Price Index calculated by the Real Estate Board of Greater Vancouver shows an overall increase of 8.7% from January 2014 to March 2015. While I think we can all agree that this seems like a lot, it is important to look past the trophy properties and see what is happening to properties being purchased by ordinary British Columbians. For example, in 2014, 58% of homes purchased on MLS were either townhouses or apartments and over the past 5 years, prices in these segments have increased by a mere 7.2% and 4.5% respectively. This is less than the rate of inflation. During this same period, wage increases have exceeded inflation and interest rates have dropped, allowing for a greater degree of disposable income and easier access to borrowing.
My takeaway from all of these numbers is that there is still pent-up demand in the market and I expect the number of sales in the condominium market to continue to outperform the averages while condo and townhouse prices continue to rise.