Market Updates   2008 | 2007 | 2006 | 2005 | 2004 | 2003 | 2002 | 2001 | 2000 | 1999

Market Updates are collected excerpts from Duncan's past newsletters. To receive future issues of his newsletter in their entirety, please Contact Duncan specifying your preference for hard or electronic copy.

Spring 2008

Condo Market
2008 is continuing where 2007 left off: a very nicely balanced market. There are still plenty of Buyers (local, national and international) who are excited to buy in Vancouver and there is now sufficient choice for them that they will not be bullied into making poor buying decisions or paying over market value. Low interest rates continue to fuel the entry level of each part of the market. In the Downtown and Westside markets, one bedrooms under $350,000 and two bedrooms under $550,000 are still in high demand. Sales in these sectors should fuel the markets above them in the coming spring.

The luxury condominium market is perhaps a little more vulnerable to the effects of a slowing US economy and an uncertain stock market. However my sense is that regardless of the price range, if the product is priced competitively it will still be snapped up. After a 14% increase in benchmark values last year in Vancouver West and with strong local economic indicators, a further more modest increase this year would appear to be realistic.

House Market
As predicted in the last newsletter, prices accelerated so fast and there was such a high volume of sales last spring that the market needed the second half of the year to catch its breath. Even with this slower period taken into account, benchmark prices in the Westside detached market still rose by a staggering 27% from December 2006 to December 2007.

As I write this in early February, it is a little early to tell if we are finally getting close to the top of this cycle of price increases. The sale of new homes and building lots is being buoyed by interest from mainland China. Local families however may need to see a bit more realism in the annual price increases if they are to able to keep up. By May or June it will become clearer. The desire to live in these premium family neighbourhoods has never been stronger but there has to be a way as well as a will. So, one of two things could happen. Either the local families will give up on their dream of owning on the Westside and look for better value elsewhere, leaving the Westside to overseas buyers from Europe and Asia with deeper pockets. Or more modest price increases will become palatable to local families and a more stable market will take hold. Watch this space!

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September 2007

Condo Market
The summer of 2007 was much stronger than the same period one year earlier. With prices increasing, but at a more sustainable rate, the market appears to be more balanced. Overpriced listings will not be blindly scooped up anymore, however fairly priced condos will sell (with the right market exposure) in a couple of weeks and aggressively priced properties can still generate multiple offers on the first day. The fall season sees the launch of a number of high profile new pre-construction projects. The south east end of False Creek, future home of the Olympic village, is finally set to hit top gear with several exciting pre-sale investment opportunities. Meanwhile the battle of the "big guns" will play out Downtown, with the new Hotel Georgia project launching head to head against the new Ritz Carlton tower. With $1500-2500 per square foot becoming commonplace, the sky really is the limit, it seems!

House Market
As predicted in the last newsletter, the spring frenzy in the Westside single family house market was exactly that. Values increased approximately 15% in the first 6 months of 2007. July and August were much quieter, with fewer homes coming onto the market and less urgency on the buying side too. Traditionally mid-September to mid-November is the second busiest period of the year. However this was not the case in 2005 or 2006. Prices had accelerated so fast and there had been such a high volume of sales in the spring of each of those years that the market needed the second half of the year to catch its breath. My guess is that 2007 will follow suit, but if enough move-in and move-up buyers are concerned about securing existing pre-approved mortgage offers before any further rate hikes, then I might be proved wrong!

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May 2007

Condo Market
As predicted in the last newsletter, following a much needed correction in the last quarter of 2006, the condo market has regained momentum and the volume of sales is back to record levels. Prices and market conditions, however, are quite different from one neighbourhood/micro market to the next, even within the confines of the City of Vancouver. The primary variable is supply (and potential supply). Downtown now provides the greatest choice to a buyer, especially in entry level one and two bedroom homes, so it is rare to see buyers feeling like they need to compete to secure their home of choice. Hop across the bridge to Kitsilano or Mount Pleasant and the story is different. Listings are thin on the ground, bidding wars are commonplace and prices are being forced up.

House Market
As predicted in the last newsletter, the heat is on again. Westside land and house prices are flying up in another spring frenzy; the sixth in succession. February 1st onwards has been a non-stop procession of 200+ groups through first open houses, Sunday night vigils with realtors hovering in their cars 10 at a time, waiting to present competing offers, then record breaking prices buzzing through the grapevine the next day. Sales $200,000 - $300,000 over list price have become commonplace. This too shall pass. I would expect to see the bulk of sales activity and price increases take place by the end of June. The net increase amortized over the full 12 months may not appear quite so scary as a result, but could still top 20%. If we have a second wind in the fall, this could even be light. Watch this space.

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January 2007

Condo Market
As predicted in the last newsletter, we saw a much needed adjustment in the pace of the market. With some real choice for buyers, urgency to make a decision finally subsided, forcing sellers to either adjust their sights or sit back on the sidelines for a while.

Vancouver is a highly educated and responsive market place. In this new calmer climate, there is now every chance that prices can find a sustainable level and that the number of transactions will begin to increase again this Spring.

House Market
Like the condo market, the last quarter of 2006 provided a welcome break from the madness of earlier in the year. However, inventory still remained tight and prices solid. There is still no underlying reason to suspect that homes in established neighbourhoods will not continue to be in high demand, with price increases for 2007 on the Westside anticipated once again. Its hard to imagine that owning any piece of land 15 minutes from Downtown Vancouver will not be a bad investment over the next 10 years. If you don't do it for yourself do it for your grandkids!

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Fall 2006

2006 to date has been more of the same as per the last 5 years: limited inventory, multiple offers and escalating prices. Despite concerns over the US housing market, we have yet to feel the effects in Vancouver.

The three biggest reasons for this are:

1. Our Federal and Provincial economies both continue to outperform their rivals
2. The upward housing cycle which appears now to have ended in both the US and parts of Eastern Canada, began 3-5 years later here, so may still have some longevity
3. 2010. Traditionally in Vancouver, we have seen 7 year cycles in the residential market which would suggest a potential slowdown could be on its way in 2007 or 2008. However, the idea of investors (who play a huge role in the Downtown market especially) leaving the market en mass just 18 months prior to the Olympics, seems unlikely. Their curiosity if nothing else should keep them in the game until at least 2011.

However the idea of investors (who play a huge role in the Downtown market especially) leaving the market en mass just 18 months prior to the Olympics, seems unlikely. Their curiosity if nothing else should keep them in the game until at least 2011.

In the meantime, in order to prevent a major slowdown, it would also be nice to see slower periods of activity each year to counter balance the crazy spring markets and keep the prices in check. If we see a calmer last quarter to 2006 I would not be at all surprised or unhappy. In the long term this could be good for both buyers and sellers.

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May 2006

The market to date in 2006 has been sending us mixed messages. Overall the stats still bear out a familiar story - limited supply of property for sale, oversubscribed by anxious and frustrated buyers. This is still frequently leading to competing offers, bidding wars and record prices. Of particular note is the staggering jump in land values on the Westside. Typical 33' and 50' single family house lots have seen increases of as much as 15-20% in the last six months.

Interest rates have crept up but are still historically low. Construction costs have taken a huge jump upwards in the past year and this is having a direct effect on the developers. A number of large condo projects have been delayed and even cancelled due to escalating costs. It has also meant that those projects which are going ahead will cost a lot more to build than the projects which were bid on a couple of years ago. For the consumer what this could signal is the end (for now) of the pre-sale party. While buying pre-construc ion is attractive because it is so convenient and low maintenance as an investment, if you can find better value in existing product, that somewhat defeats the purpose. As always, there are exceptions and unique product can buck the trend whether its pre-sale or re-sale. The Woodwards project in Gastown is a prime example.

What does this all mean to you as a buyer or seller? My best guess is that this intense pressure on prices will force buyers to back off a little which could take the heat out of the market for a few months, while it adjusts. This kind of minor correction could be exactly what the market needs in order to sustain itself over the long term and prevent those infamous "bubbles" from bursting!

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January 2006

2005 saw another very solid year of growth in the Vancouver market both in sales volume and median prices. Demand was high throughout the year and the lack of supply was the only limiting factor on the number of sales in any particular month. Assuming no major upward move in mortgage rates, more of the same in expected in 2006.

Despite the lack of a crystal ball, here are some hot spots to watch for this year.

GASTOWN may finally have its day. After almost 30 years of attempted gentrification, the stage is now set for the major re-emergence of Vancouver's oldest quarter. The catalyst will be the marketing launch of the Woodward's project.

FALSE CREEK EAST & MOUNT PLEASANT will continue to boom after a record breaking 05, fuelled by Olympic fever and a fabulous central location.

WATERFRONT condominiums on COAL HARBOUR (and False Creek North) are starting to achieve world class recognition, reflected in prices heading up in excess of $1,500 per square foot. Expect this (and the opening of Urban Fare in Coal Harbour) to draw up the values on the more affordable buildings off the waterfront.

In the detached market, SHAUGHNESSY (once the place to live on the Westside) is starting to look like a bargain relative to some of its currently trendier neighbours. Over the mid term (3-5 years), expect the market to pick up on this and adjust accordingly.

Finally over the long term (10-15 years), with a limited raod system struggling to handle the population boom, any location with close proximity to Downtown is likely to increase radically in comparative value, regardless of its current status. Therefore find the roughest house on the roughest block in the city, buy it and forget about it.

Just one Realtor's opinion!

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Fall 2005

Following on from the last issue, the question posed was how long would the spring market last this year? Well, we're in mid August and its still going strong! Competing offers are common place and the stats will likely reflect average price increases in 8-10% range right across the Vancouver market for the first half of 2005. To buy and sell most effectively under these market conditions means a major change in mind set for most consumers.

As a buyer, it is important to be as well educated as possible on market value so that you have the confidence to know when to step up and when to walk away, often under extreme time pressure. Listing prices invariably have very little connection with either market value or the eventual selling price.

As a seller, ensuring maximum exposure for your home and creating a highly competitive circumstance around the sale, without deterring any buyers in the process, is a delicate art.

In both situations, having the right Realtor beside you can be critical. So far this year over 70% of Duncan's listings have sold in excess of the list price in competing offers. To find out more please feel free to contact Duncan directly anytime.

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Spring 2005

Well, we're back! As predicted in the last issue, the correction has worked. To be more specific, since 2001, the market in Greater Vancouver has been rising swiftly (Jan 2001- Jan 2004 benchmark prices for condominiums rose by approx 50%). From Feb 2004-April 2004 competing offers forced prices up even further but at an unsustainable pace. As a result a correction was required. This was provided by a much slower final quarter of 2004 which returned some realism to the prices and allowed buyers to see some value again.

Since the beginning of February this year, buyers have returned in huge numbers. Inventory remains limited in every area and price range in the City of Vancouver so the demand is once again outstripping supply. Pressure on prices is therefore high and we anticipate increases through the year as long as the cost of mortgage money remains low. Whether the increase is in the 5% range or considerably more will depend upon how long the spring market can sustain itself. Watch this space.

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Fall 2004

After almost 3 years of intense heat, the big chill has arrived! Well not quite, but we are taking a bit of a breather. Our view on the frontline is that there is still a lot more to come over the next 10 years (I would not be at all surprised to see the prices at least 50% higher) but in order for that to happen the growth rate needs to be reasonable (5% per year not per month!). From February to April of this year the market reached a frenzy which now requires correction, so expect to see prices in January 2005 returning closer to those one year earlier. If this happens there is no reason why growth on a more modest level cannot continue. The only potential exception to this could be the heart of Downtown South where the rate of new construction has outstripped demand from long term residents. If too many speculative players decide to leave the market at the same time a more significant short term price adjustment may take place. However, even here, the smart money will stay in for the long haul.

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Spring 2004

No surprises here for any of you locals!

In 2003 the Real Estate Board of Greater Vancouver reported the highest number of transactions of any year on record. The most notable effect on values is in the condominium market. In the City of Vancouver (both East and West), the benchmark price for an apartment in January 2004 was up by exactly 50% from the same period 3 years earlier. Assuming interest rates remain at record lows, more of the same is anticipated for 2004.

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Fall 2003

RAINSCREEN—RECOVERY OF VALUES

As most, if not all, of you are aware, building envelope failure has been an epidemic in the Lower Mainland over the past decade. A combination of factors led to numerous complexes having to undergo a total exterior retrofit under the new building code, using "rainscreen" technology to cope with our wet climate. The code was introduced in 1999 and it immediately created more consumer confidence in brand new construction, however, the "post-leaky condo" complexes continued to give prospective buyers the jitters, even after the repairs were complete. This is no longer the case. The difference in value between a similar home in a "fixed" building versus a building with the original envelope in place (even it has never experienced any obvious problems) has grown substantially. It still tends to take about 6 months after the works are complete for the cloud to lift, but when it does, the effect on the values is significant.

What does all this mean to the consumer?

As an owner in a complex built under the old code (primarily in the time period between 1981 and 1999), I would recommend that you support any move towards envelope replacement, even if it is hard to say for certain that the original envelope will fail. The market will punish you if you do not and will thank you if you do.

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Spring 2003

Charging out of the gate at an alarming pace, the market in the New Year took about 24 hours to recover from the holiday season. Spring is upon us already in Vancouver (cherry blossoms in February) and the relentless demand for condos continues, with both first time buyers and investors continuing to cash in on low interest rates and a chance to purchase long term security.

The rental market has been sending a different signal of late, with higher vacancy and lower revenues, not surprising when you look at the number of potential renters who bought last year and the number of new investor owners looking for tenants.

Nonetheless projections for both the short and long term are positive, with maybe just the potential for a blip in the medium term. Timing is everything in real estate and when you sell is often just as crucial as when you buy. For a translation of the above into English, please feel free to call Duncan anytime!

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Fall 2002

What's "NEW" Downtown?

With another mini-boom of residential construction now underway Downtown, the question arises again.

Is pre-sale a good idea?

Pre-sale is a speculation—pure and simple. If the market conditions are good, you will look like a genius. Buyers who purchased suites 2 years ago and are taking possession now, are very happy campers. Not only have the prices generally improved but the supply/demand ratio has totally flipped around. In 2000 the Downtown market was flooded with re-sale opportunites and there were very few buyers taking advantage. Now it is the opposite. Previously occupied condos in quality buildings Downtown are extremely scarce, so buyers are turning to the new projects. However, by 2004 the picture could be very different again. There are numerous new rental units under construction right now, plus a large percentage of the pre-sale condo developments are being bought by investor owners. Unless the number of tenants grows substantially in the next 2 years, the rental market could be severely over supplied and this could start to negatively impact the values. Long term is less of a concern. As the city expands and the Downtown peninsula reaches saturation, upward pressure on values could surpass anything we have seen to date, but that is some years away.

So how best to protect your investment?

The same rules apply for new and re-sale.

1. Don't be overly influenced by finishing. Vancouverites are notoriously susceptible to fancy finishing. Be assured - by the time you come to move, someone will have produced an even trendier kitchen than yours.
2. Think location. Downtown (block by block) in 2 to 3 years could be quite different as the residential core changes and develops. Eg: consider the geographic definition of Yaletown 5 years ago vs now vs 5 years from now.
3. Think construction quality. 1999 has become a watershed year. With the change in building code and third party warranty requirements for developments post 99, expect to see these hold their values considerably better than their predecessors.
4. Think different. Supply and demand still dictates that if you can find something just a little different (without being impractical) you will stand out on re-sale. Outdoor space, protected view, unique floorplan (loft), or heritage conversion are all worth paying a premium for.
5. Don't overpay. If you buy at the right price it will all make sense, so watch out for that GST on new construction and make sure you are completely educated on values before jumping in, no matter how nice the countertops!
6. Buy at the right time and sell at the right time. No crystal balls but your best shot at achieving this and all of the above? A well informed Realtor!

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July/August 2002

Just when you thought it was safe to go on vacation… we're back! June saw a dip in the number of sales against both May 2002 and June 2001 and it appeared as though, after a hectic spring, things were beginning to steady off for the summer. The figures aren't in yet for July, however the news from the frontline is that the condo market is alive and kicking. Buyers are still being encouraged by low interest rates and also have more choice than they did earlier in the year. Many are seeing it as a great time to buy and those sellers who are willing to be realistic, are reaping the rewards. 15% increase in values over the last 9 months means "being realistic" is a very attractive option. There are pockets of the market which are better supplied than others right now, so some exciting opportunities are beginning to emerge for those considering moving up the market. For instance, entry level two bedroom condominiums in good buildings are in scarce supply, with competing offers commonplace, whereas mid range townhomes and larger apartments (the next logical step up the ladder) are more readily available.

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April/May 2002

Things are good and everybody is talking about it! Competing offers, a scarcity of listings and soaring prices… but when it hits the front page of the newspaper it's probably a fair guess that it's already over. In fact, the evidence is already out there to suggest that another change is coming. The number of listings is on the rise - the number of buyers is not. This should bring some much needed balance back into the market place. Over the past 6 months the pace has been frantic and if it hadn't slowed down on its own, we could have all been in for a nasty shock. 15-20% increases over 6 a month period are clearly not sustainable and something had to change.

So what's next? Are buyers overpaying and will they regret it later? My feeling is that only a tiny minority of buyers (none represented by me!) may have cause for concern with hindsight. These are the victims of extreme multi-offer scenarios, where the desire to be the "winner" (Realtor and buyer alike) and the frustration of having lost, perhaps two or three times previously, forces people to act irrationally and pay too much. These situations aside, I believe most buyers will be pleased to have bought in now. Securing low interest rates and buying in a rising market means acting fast, but if you can find the right place it is still a good time to buy.

By the end of this year rates may have crept up, there may be more choice in property but will the prices have actually gone down? I would be surprised. The long term graph has always gone up and will continue to do so. Many of us had been aware for the past 2 to 3 years that there was a pent up supply of buyers waiting for a signal to jump. Well it happened and 3 years worth of catch up sales just took place in 6 months. Now let's get back to normal and hope for a couple years of healthy, steady turnover and modest, sustainable growth. Just one Realtor's opinion.

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January/February 2002

TD/Canada Trust released their economic forecast for 2002 and predicted Central Bank rates to remain low and perhaps even drop over the next 9 months, while bond rates would increase in anticipation of an economic recovery in both Canada and the U.S. (albeit small recover to begin in the last half of 2002). If they are correct, this would equate to lower rates on variable rate mortgages (5 years and up which are affected by changes in the bond markets). Deposit rates would be similarly affected, with shorter terms dropping and longer terms rising slightly. More great reasons to buy real estate this year!

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November/December 2001

Can anything stop the recovery? Well, it would appear not. Despite the tragedy and uncertainty surrounding world events, there appears to be a real underlying strength in the Vancouver housing market, which is driving sales forward and prices upward. Interest rates are of course a huge factor. Supply and demand is the other. With less new housing starts across the region, the short term pressure on existing homes should remain high. In the longer term, if confidence returns sufficiently to encourage the developers back on mass, population growth predictions and land shortages in the central neighbourhoods should still be enough to ensure that demand outweighs supply. The local situation is also a fair reflection of the above. More than ever there is a chronic shortage of both new and re-sale listings in the West End and Kits. Downtown and False Creek North join them for the first time in several years with a similar dearth of home available. Coal Harbour has more choice in pre-sale, but there it's only at the higher price points. Waterfront prices look set to rival Whistler for the nation's highest per square foot - and of this community becomes clearer. Moving out - you'll struggle to find a better place to put your money right now. Moving in or moving up - now's the time!

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July/Aug 2001

Right across the city and most definitely on the Westside, West End and Downtown, sales activity levels have soared. May 2001 was the busiest month for residential sales in Greater Vancouver for over 4 years. June's figures are expected to exceed that. Buyer's recognize that there is a change afoot and with little for sale in key neighbourhoods and less than a 1% rental vacancy rate, expect to see more pressure on prices in the coming months.

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February/March 2001

More of the same? Throughout 2000 the condo market in central Vancouver continued to stabilize, with lower inventory and increased buyer activity and, now in 2001, still lower interest rates. The temptation for buyers to finally jump off the fence should become increasingly irresistible. If they do so in numbers, this will force prices up, but most likely still only in specific sectors. More economic optimism will be required to send this effect throughout the market. Most encouraging sign of the year so far: a total of over 100 parties through my last two open houses in the West End - unprecedented!

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August/September 2000

The condo market continues its determination to recover, despite the obvious obstacles to consumer confidence in certain sectors. For those battling with such a dilemma, remember that while the quality of the building is an integral part of your decision, the land on which it stands, in most cases, accounts for over 60% of the value of your investment. Location is still the key.

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February/March 2000

Well we're all set here in the real estate community waiting for someone to pull the trigger. No, not like that. On the Westside/Downtown Vancouver everything is set for the millennium to kick off with a bang. Supply is continuing to shrink in both the condo and detached markets. Interest rates are creeping up but are still affordable for local buyers, as are the prices. The pent up demand, especially from empty nesters waiting for the right time to move into the condo market, is enormous. Everything is set. So what is the trigger that will re-energize the market and allow prices to rise (in real terms for the first time in over 10 years)? Best guess - renewed optimism and confidence in both our local and global economies. Many believe that is less than a year away. In short 2000 is not the year to sit back and wait for others to make the smart move.

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November/December 1999

Market stats for October report continuing good news across the Vancouver market. The number of condo sales in Vancouver West (includes Downtown) is up 71% over the same period last year. The number of listings shrank by 35% from September to October, so prices are holding firm - all very optimistic signs for the spring market next year.

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June/July 1999

'Tis the season to buy real estate - or so it would appear by market activity levels. Single family still leads the recover on Vancouver's Westside with numerous tales of sales within hours and multiple offers. Condominiums are steadier with buyer caution understandably tempering any quick decisions. Nonetheless, with interest rates edging up and prices attractively low, the quality buildings are still selling well.

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March/April 1999

CRYING OUT FOR CONDOS! As you can see from the market update report … what we need now in Central Vancouver are listings. Steady sales volume, limited listing inventory (off 33% from the same time last year) and fluctuation interest rates, are placing pressure on prices and created a real sense of urgency amongst buyers. Hotspots right now are still the perennial favourites - The West End and Kits are most active (especially West of Denman and North of 4th), proving once again that a good location is your best protection in any market.

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West End | Coal Harbour | False Creek (North) | False Creek (South) | Gastown

Downtown (South) | Fairview | Kitsilano (North of 4th) | Upper Kits | Yaletown