Lower Mainland Property Values Closing in on Peak
Most recent reports about the future of real estate in the Lower Mainland have been optimistic. Real estate prices continued to rise in August and are now within 3 per cent of their peak from just over a year ago. Real estate boards throughout Greater Vancouver and Fraser Valley have been benefiting from year-to-year gains for the past few months and while many experts are surprised by the resiliency the market is showing, buyers seem more concerned with cashing in on low mortgage rates.
Indeed, the real estate market has been hotter than our early summer weather but questions about the stability of the market remain. Experts are reluctant to boast about recovery as they are more than aware of the impact of recent low mortgage rates. The market may or may not maintain its current pace once interest rates begin to creep up again. Nevertheless, early data clearly indicates resurgence in real estate throughout the Lower Mainland.
At the moment, the past 5 months have shown steady and consistent improvements in the number of homes sold as well as average prices. Without question, these gains have been buoyed by low-mortgage rates and unprecedented numbers of pre-approvals. First time-buyers have had a unique opportunity to take their first steps on the property ladder but whether this trend will continue when mortgage rates rise is yet to be seen. With housing prices seeming rapid ascent back to their peak many real estate experts are questioning whether recent market improvements are sustainable.
Mortgage rates over the past several months have reached record lows, as low as 3.65 per cent on five-year fixed mortgages and this fact is not being ignored. Many realtors are giving full credit to these low rates for the recent real estate recovery as many buyers were approved quickly at low rates and given 90 days to close deals before the rates expired. As such, buyers were essentially flooding the market in order to take advantage of these once-in-a-lifetime rates.
Still, backed by the return of consumer confidence and a variety of other signs that Canada is gradually climbing out of recession there is good reason for optimism. There has certainly been something of a buyers craze of late, with more than 3,400 sales in Metro Vancouver alone, and as a result prices are sneaking up again. Compared to August of 2008, there has been a 120 per cent rise in sales which is obviously going to have an impact on prices. More buyers mean more competition and bidding wars are becoming commonplace again. Indeed, some regions have seen new pricing peaks. One primary example is the west side of Vancouver where the average price of $1.4 million this August is a 3 per cent improvement over last year. Likewise, the east side of Vancouver has benefited from a 3.2 per cent increase from a year ago and several communities outside Metro Vancouver, such as New Westminster, Pitt Meadows, and the Sunshine Coast are showing year-to-year gains in average housing prices as well.
The level of sales and increasing prices has come as a shock. The forecast in January was bleak at best but the combination of lower prices, low mortgage rates, and reduced mortgage payments opened the flood gates for first-time buyers. Take the Fraser Valley as the prime example and you'll see that the region has seen only one busier August on record. Sales rose from 910 in August of last year to a staggering 1,786 this year. Similarly, from June to August local real estate boards recorded 5,857 sales which is nearly within 1,000 sales from the pinnacle in 2005.
In the Fraser Valley, the benchmark price of homes, which is calculated by averaging the price of the most common type of property sold, has risen 3.8 per cent since May of this year. While the benchmark is still more than 3 per cent below the figure last year there has certainly been marked improvement which is igniting optimism for realtors across British Columbia.
Keep in mind, many regions are still showing declines on the benchmark but there are some communities that are leading the way back to real estate stability. At the moment, South Delta, New Westminster, Pitt Meadows, Port Coquitlam, Vancouver East, and Vancouver West are the communities that are showing the biggest gains over a year ago while Abbotsford, Burnaby, Coquitlam, North Delta, Maple Ridge, North Vancouver, Port Moody, Richmond, Surrey, and West Vancouver are still putting up decreased figures.
Indeed, the real estate market has been hotter than our early summer weather but questions about the stability of the market remain. Experts are reluctant to boast about recovery as they are more than aware of the impact of recent low mortgage rates. The market may or may not maintain its current pace once interest rates begin to creep up again. Nevertheless, early data clearly indicates resurgence in real estate throughout the Lower Mainland.
At the moment, the past 5 months have shown steady and consistent improvements in the number of homes sold as well as average prices. Without question, these gains have been buoyed by low-mortgage rates and unprecedented numbers of pre-approvals. First time-buyers have had a unique opportunity to take their first steps on the property ladder but whether this trend will continue when mortgage rates rise is yet to be seen. With housing prices seeming rapid ascent back to their peak many real estate experts are questioning whether recent market improvements are sustainable.
Mortgage rates over the past several months have reached record lows, as low as 3.65 per cent on five-year fixed mortgages and this fact is not being ignored. Many realtors are giving full credit to these low rates for the recent real estate recovery as many buyers were approved quickly at low rates and given 90 days to close deals before the rates expired. As such, buyers were essentially flooding the market in order to take advantage of these once-in-a-lifetime rates.
Still, backed by the return of consumer confidence and a variety of other signs that Canada is gradually climbing out of recession there is good reason for optimism. There has certainly been something of a buyers craze of late, with more than 3,400 sales in Metro Vancouver alone, and as a result prices are sneaking up again. Compared to August of 2008, there has been a 120 per cent rise in sales which is obviously going to have an impact on prices. More buyers mean more competition and bidding wars are becoming commonplace again. Indeed, some regions have seen new pricing peaks. One primary example is the west side of Vancouver where the average price of $1.4 million this August is a 3 per cent improvement over last year. Likewise, the east side of Vancouver has benefited from a 3.2 per cent increase from a year ago and several communities outside Metro Vancouver, such as New Westminster, Pitt Meadows, and the Sunshine Coast are showing year-to-year gains in average housing prices as well.
The level of sales and increasing prices has come as a shock. The forecast in January was bleak at best but the combination of lower prices, low mortgage rates, and reduced mortgage payments opened the flood gates for first-time buyers. Take the Fraser Valley as the prime example and you'll see that the region has seen only one busier August on record. Sales rose from 910 in August of last year to a staggering 1,786 this year. Similarly, from June to August local real estate boards recorded 5,857 sales which is nearly within 1,000 sales from the pinnacle in 2005.
In the Fraser Valley, the benchmark price of homes, which is calculated by averaging the price of the most common type of property sold, has risen 3.8 per cent since May of this year. While the benchmark is still more than 3 per cent below the figure last year there has certainly been marked improvement which is igniting optimism for realtors across British Columbia.
Keep in mind, many regions are still showing declines on the benchmark but there are some communities that are leading the way back to real estate stability. At the moment, South Delta, New Westminster, Pitt Meadows, Port Coquitlam, Vancouver East, and Vancouver West are the communities that are showing the biggest gains over a year ago while Abbotsford, Burnaby, Coquitlam, North Delta, Maple Ridge, North Vancouver, Port Moody, Richmond, Surrey, and West Vancouver are still putting up decreased figures.
posted by VancouverResidence
