Regional resale prices begin to edge upward

By Fiona Anderson, Vancouver SunJuly 8, 2009

Resale home prices in the Vancouver area inched higher in the second quarter and are likely to continue going up, but they still remain well below what they were a year ago, according to Royal LePage’s quarterly house-price survey released Tuesday.

Prices either remained flat or increased from April to June for all types of homes in the four areas surveyed — Vancouver East, Vancouver West, North Vancouver and West Vancouver.

The biggest jump — eight per cent — was in condominiums in Vancouver East, which increased from $311,000 in the first three months of the year to $336,000, down only 0.6 per cent from the second quarter of 2008.

Royal LePage’s mid-year forecast for the average resale house price in Greater Vancouver is now $560,000 up substantially from the $540,100 predicted at the beginning of the year. However, that price is still 5.7 per cent below 2008’s average resale price of $593,767.

The change in forecast is “not just wishful thinking,” said Bill Binnie, president of Royal LePage Northshore.

June was the second-busiest month on record for the Greater Vancouver area and the fourth most active in the Fraser Valley.

“It’s been a very hot market, surprisingly so,” Binnie said.”

On one hand, he said, low interest rates and lower prices have made homes more affordable.

“But I think behind all that there was renewed confidence for people to march back into the market in such numbers,” Binnie said.

Much of the marching was done by first-time homebuyers.

“That’s typically where a market starts,” Binnie said. “The first-time homebuyer will push the old guy out of his house and he’ll either go buy a bigger house or a smaller house, who knows what. But he’ll go buy something.”

Another reason prices are moving up is they had fallen a long way.

“We had sort of a double whammy in that at the same time house prices corrected, we had that economic mess hit Canada,” Binnie said. “And our market had gone up more in price escalation.”

Binnie expends the trend of both increased sales and prices to continue.

“I’m pretty sure by the end of the year our prices will be up slightly from where they are today,” he said.

So too does the Mortgage Brokers Association of BC (MBABC), which reported this week that more potential home buyers have been shopping for mortgages.

“The increase in activity is quite dramatic,” the association said in a news release. “Lenders are experiencing application numbers similar to those a year ago.”

Those who were pre-approved at 3.69 per cent before mortgage rates went up are highly motivated to get out and bid on homes so they can close the deal before their pre-approval expires, MBABC president Joe Santos, said in the release.

The average rate for a five-year fixed mortgage now is 4.49 per cent.

“MBABC is not declaring an end to the real estate recession, but it is clear it may be much shorter than thought six months ago,” the release said.