Vancouver

Vancouver Real Estate Prices Soar Over $30k After Canada Creates More Moral Hazard

Greater Vancouver real estate prices are rising at an even faster past these days. Real Estate Board of Greater Vancouver (REBGV) data shows home prices hit a new record high in April. Home prices were already fast growing, but the annual rate went parabolic in February. This is shortly after a series of statements from Canada welcoming the growth.

Typical Greater Vancouver Home Rises $116,000

The Greater Vancouver composite benchmark, a.k.a. the price of a typical home, reached a new record high. The benchmark hit $1,152,600 in April, up 2.6% ($29,300) from the month before. This represents an increase of 12.0% ($116,600) compared to the same month a year ago. Most gains are driven by detached homes, but condo apartments have picked up recently.

Greater Vancouver Composite Benchmark Price

The price of a typical home across Greater Vancouver, in Canadian dollars.

Source: REBGV; Better Dwelling.

The 12-month rate of growth has seen a very fast acceleration, starting a few months ago. The 12.0% annual rate of growth for April is the highest since the same month in 2018. Price gains were large throughout the pandemic, but they went parabolic in February. This is when the Bank of Canada (BoC) said they “needed” the price growth, and downplayed any signs of froth. That sentiment was reinforced by the Federal government saying price declines are unacceptable.

To appreciate how fast the recent acceleration has been, you have to look at where prices were. Composite prices are only up 5.4% from 3 years ago. That’s less than half of the annual growth seen in the past year. Recent gains are making up for any ground lost.

Vancouver Detached Prices Are $293,000 Higher Than Last Year

Greater Vanocuver detached housing has been behind most of the composite gains in the past year. Detached homes now have a benchmark price of $1,755,500 in April, up 3.2% ($55,300) from a month before. This represents an increase of 20.9% ($293,400) from the same month last year. Despite these gains, the price growth is more of a recent phenomenon as well. 

Greater Vancouver Composite Benchmark Price Change

The annual percent change of a typical home across Greater Vancouver.

Source: REBGV; Better Dwelling.

Greater Vancouver detached home prices increased at the fastest rate in nearly half a decade. The 20.9% annual gain seen in April is the highest seen since November 2016 — a few months shy of 5 years. Like in the general composite, the 12-month acceleration is also fairly new. Detached prices are only up 10.3% from 3 years ago, and 23.5% from 5 years ago. The single year of accelerated growth made up a lot of lost ground.   

Vancouver Condo Prices Rise Over $13,000 In Just One Month

Greater Vancouver condo apartments finally joined the market, making a massive single month gain. The condo benchmark price reached $729,600 in April, up 1.9% ($13,800) from the previous month. This works out to an increase of 5.9% ($40,800) from the same month a year before. Increases may sound small, but that’s only because they’re being placed beside detached homes. The gains are massive. 

Condo apartment growth has been tame over the past few years, but the market had a sudden turn. The 5.9% annual growth is the highest 12-month rate of growth for condos since September 2018. Prior to February, growth had been decelerating. After the BoC’s remarks, the market suddenly reversed, as people grabbed on to whatever they could. The benchmark is still only 1.6% higher than it was 3 years ago, but they’re making up for lost ground quickly.

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9 Comments

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  • Reply
    Ali 5 months ago

    People are putting a lot of weight in Vaughan’s statement that price declines are unacceptable, but he also said that in 2017.

    • Reply
      Canaduh 5 months ago

      I have been thinking about his comments a lot. At first I was disgusted. Then angry. Then sad. At this point I have come to believe that there is an incentive to have a public record of the comments once things inevitably go south. If they didn’t say they tried to “protect” existing home owners, they will be under fire. The commentary gives them the out they need in the (perhaps near) future.

      Whether he believes it though almost doesn’t matter at this point. The last decade, if not longer, has really brought out the true colors in many Canadians. We say we are for community. For one another. We say we want to set an example for the world. Instead, we are fixated on riches at the expense of others. We make up contrived economic justifications that do not withstand the data. We are increasingly ruthless to those around us while we say “we are in it together” during a global pandemic. Real estate has become an economic weapon instead of a roof over our neighbour’s heads.

      I am truly sad for what this country has become. What our politicians have become.

      Most of all I am sad for what we have become.

      • Reply
        SH 5 months ago

        What the Liberals possibly want is a massive exogenous event to occur that will cause real estate to plummet in Canada and elsewhere. They can then throw their hands up and say “wasn’t our fault”, followed by new program announcements to make even more Canadians feel dependant on them and therefore likely to vote in the Liberals’ favour.

  • Reply
    WE 5 months ago

    Imagine if you’re wrong about the inflation play with housing. I didn’t think I’d live through watching this one again.

    • Reply
      Oops 5 months ago

      You can own metals and baskets of other liquid assets. Why would you hold a levered asset in a country with low productivity. Better off holding crypto currencies or commodities, at least if you have the cash.

  • Reply
    Holton 5 months ago

    Guys, I have read your comments. If you look at the world from the perspective of the entire world you will understand. Please dont just reference your own narrow experience. Currently, the entire world, many of which have far greater GDP than Canada. So there are lots of money slushing around. This did not happen in the 1970s and 1980s. With the world’s money supply greatly increased and interest rates at all time lows. How do you expect Canada, a small economy in the world stage to jack up interest just to make housing affordable?

    We are stuck in a hard place guys, the only somewhat workable solution at this point is to do what Asia have done in the past. That is to put in measures to cool the market but not crash it. But at the same time allow inflation to up over extended period of time. There will be winners and losers, but that better than all of us becoming losers. Not ideal but thats where we are at now. Like I said, we should have let prices drop last year. Now its too late, we cannot crash the market now that everyone else is recovering. If we do that we will not recover for decades.

    • Reply
      Jason 5 months ago

      This is literally not true. I’m both an economist and lived through the early 80s. This is exactly what happened. There’s nothing unprecedented about this type of risk.

      It’s either upside inflationary or downside deflationary. In the end it either balances out, or the government is overthrown and the land has no value anyway. I don’t think the government is going to be overthrown because of 3% inflation.

      Your mortgage rate increasing 50% to balance bond expectations will get you thrown out of your house though.

    • Reply
      SH 5 months ago

      By the same logic, Canada being a small economy will be forced to raise interest rates whenever the US does. The BoC won’t have a choice, regardless of the bleating from realtors like yourself.

  • Reply
    D 5 months ago

    Interest rates are going up, Yellen confirmed it and Canada will follow America like a dog does his master. Just watch. Everybody with a mortgage will get slaughtered, Canada offers nothing to the world so it doesn’t matter if Canada becomes Japan 2.0 with a 30 year “lost decade”. Deflation first, buy up everything that’s on a fire sale (real estate, precious metals, land), have cash NOW until that happens, then the great hyperinflation that will make 20’s Germany look like a drop of water in the frying pan will happen soon after. Hedge accordingly.

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