Statistics Canada reported last month that new home prices in Vancouver had the biggest decrease in the country, dropping 1.3 per cent from August 2012 to August 2013.
However, real estate agent Ray Harris said, “looking at year-over-year stats can be misleading.”
Harris, who is also president-elected of the Real Estate Board of Greater Vancouver (REBGV), said, “because the market was going down on September last year, you are going to see some clinging results.”
Back then, home sales in Canada declined at the lowest point for that month in more than a decade, following the tighter mortgage rules introduced by the Department of Finance. The new regulations clamped down on mortgages by reducing the maximum amortization for a government-insured mortgage to 25 years from 30.
The REBGV reported that this period represented a 32.5 per cent decline in Vancouver’s market on residential property sales compared to the previous year.
Nevertheless, the board reported one year later that residential property sales in the area reached a 63.8 per cent increase compared to September 2012.
A study published by the Canadian Real Estate Association (CREA) said that national sales have improved quickly than anticipated.
One of the reasons is the transient influence of buyers with pre-approved financing making purchases before their lower pre-approved rates expire.
This was a practical reason why Statistics Canada found this considerable decrease year-over-year. The numbers are up again, but they may be losing steam since the market is returning to normal levels.
Harris said that Vancouver has been in a balanced market for consecutive months.
“This suggests that many of the key housing indicators such as prices are stable, in conditions; therefore, don’t tilt in favour of buyers or home sellers,” he said in an interview last Wednesday.
But there is still the house affordability obstacle. The Multiple Listing Service (MLS) Home Price Index composite benchmark for all residential properties in Greater Vancouver is currently $600,700, which is, by far, the highest in Canada.
Home prices in Greater Vancouver are extreme compared to other major cities across the country. As stated by CREA, the composite benchmark price in Greater Toronto as September was $476,200.
Calgary’s MLS composite benchmark price edged up to $409,700, while Greater Montreal stood with $298,300 – 50 per cent lower than Greater Vancouver.
The MLS Home Price Index is a tool developed by five of Canada’s largest real estate boards, including Greater Vancouver, and is used to measure home price trends.
Whereas composite represents all homes used in models – including townhouses and apartments – benchmark means the combined quantitative and qualitative features of the home, like square feet and proximity to schools, for example.
On the other hand, Vancouver real estate guru Michael Ferreira has found that new home prices are lower today in many areas of Metro Vancouver than they were towards the end of 2008, when the market turned into a financial crisis.
One of the reasons that make Vancouver’s house prices look higher is the fact that some areas of the city distort the values for the whole region.
“When you look at the west side of Vancouver, and the average price that is there, it just tends to skew the values for the entire region. I don’t know if you can say the same for other cities,” Ferreira said in an interview last Monday.
As the principal of Urban Analytics research and advisory firm, Michael Ferreira said the suburbs still have affordable home prices to most families.
For him, the most important factor to be considered in Metro Vancouver’s market is geography. He said there isn’t much space to build on when compared to Toronto, Montreal and, especially, Calgary.
“So you combine that with our geographical constraint, which regards the ocean, the mountains and the Agricultural Land Reserve that we have here (in the province) that restricts the land.”
Whereas is more expensive to live in Vancouver, “there is also a lot of people who want to live here. It tends the prices up and it comes down to supply and demand,” Ferreira said.