Greater Vancouver real estate prices got an abrupt bump last month. Composite home prices jumped in September, according to the Real Estate Board of Greater Vancouver (REBGV). Prior to last month, the market had been slowing after large growth over the past year. Even with a recent boom, homeowners that bought at the previous peak have only seen modest gains. This is especially true in the City, where price growth has been trailing the board.
Greater Vancouver Real Estate Price See A Sudden Surge, As The Slowdown Reverses
Greater Vancouver composite home prices made an abrupt climb last month. The benchmark price reached $1,186,100 in September, up 0.80% ($9,400) from the previous month. Compared to last year, prices are now 13.80% ($143,800) higher. September somehow managed to buck the trend, with monthly gains 8x the previous month.
Greater Vancouver Composite Benchmark Price
The price of a typical home across Greater Vancouver, in Canadian dollars.
Source: REBGV; Better Dwelling.
Greater Vancouver’s big annual gains mostly just rolled back prior price declines. REBGV data show the composite for the region has increased 11.90% ($126,100) over the past 3 years. A compound annual growth rate (CAGR) of 3.82% over that period is still solid. Not quite the same lofty-sounding gains as the shorter-term growth might lead one to think.
Greater Vancouver Composite Benchmark Price Change
The annual percent change of a typical home across Greater Vancouver.
Source: REBGV; Better Dwelling.
In The City of Vancouver, Home Prices Have Shown Smaller Growth
In the City of Vancouver, the price movement has been a little more split. In Vancouver East, the benchmark increased to $1,209,800 in September, up 0.80% ($9,600) from the month before. Compared to a year before this represents a 9.40% ($104,000) increase. A six-digit annual gain is huge by any measure, but it was smaller than the REBGV composite. This implies greater home price growth in the suburbs than in the City. Well, the east end of the City, anyway.
Looking at the board’s 3-year trend shows this region is playing catch-up. The Vancouver East composite benchmark is up 8.80% ($97,851) over the past 3 years. A solid gain, but buyer’s over the past year made out better than those at the previous peak.
Vancouver West Real Estate Has Been Sliding Lower
Composite home prices in the west side of Vancouver have actually slid lower. The Vancouver West benchmark price fell to $1,360,500 in September, down 0.50% ($6,837) from a month before. Prices in the region are now 7.00% ($89,005) higher. This was one of the few regions to see home prices slip across the board.
The medium-term struggle is real in Vancouver West, as prices have made minimal movement. Over the past 3 years, the board said the benchmark is only 3.40% ($44,736) higher. This works out to a CAGR of just over a point, which is not at all what people are thinking of during this boom. Surprising, considering the low rate environment is a big positive for prices. Somehow home prices failed to push much higher.
Greater Vancouver real estate is seeing a post-election trend reversal. Prior to the election, price growth had been relatively low. Now that it’s over, we’re seeing an abrupt surge higher.
In general, prices have shown substantial growth over the past year. That can mean this growth is healthier than some might guess. Gains look huge but are actually fairly sustainable over the medium term. Or it can mean price growth faces such a hurdle in the City, not even slashing interest rates to near zero can move them significantly above the prior peak.
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Inventory dried up pre-election. Who’s going to sell when the government is giving everyone handouts? It would be silly to not take advantage of buyers getting more money.
Same problem across most of the country. No one knows what impact rising interest rates will have, but that’s going to throttle most buyers to see what happens.
I’m getting suspicious of these board stats. Prices in my condo are definitely falling. I don’t know how much longer it’s going to since listings are drying up, but it’s definitely changing.
The board uses benchmark prices to determine where prices are working, and for two months in a row prices managed to be flat. That’s a nearly statistically impossible fete, but it happened. Not saying they’re lying, but there’s something weird about how these numbers are being adjusted.
Mortgage rates falling right after the election for two weeks definitely provided a boost. Pre-approvals for another 30 days now before we see the impact of the rate reversal climb.
Prices are rising because the government promised to make more supply. Does anyone else see a pattern here?
Most of this is being driven by a shortage in the suburbs. As more building happens out there, I would be a lot more hesitant about long-term gains in far out regions than city centres.