Vancouver home prices hit ‘astounding’ heights: report

Real estate correction possible if rates rise or foreign buying slows

A new report warns housing in Vancouver could be at risk of a correction.

A new report warns housing in Vancouver could be at risk of a correction.

A new report warns “frothy Vancouver” is vulnerable to a real estate market correction that could bring a significant price drop.

“Riding a wave of wealthy immigrants, Vancouver’s house prices have nearly tripled in the past decade, spiralling beyond the reach of most first-time buyers or non-lottery winners,” according to a report by Sal Guateri, a senior economist at BMO Capital Markets.

He cited strong demand from Chinese buyers, stoked by looser travel restrictions as well as stricter purchase rules and higher prices in China.

Guateri examined the ratio of average home prices to median family income – a key yardstick of real estate affordability.

Vancouver prices are now an “astounding” 11.2 times the median local income, he found, compared to 4.6 times the median income in the rest of Canada and 6.7 in Toronto, the highest level of a major Canadian city after Vancouver.

Ten years ago, Vancouver’s ratio was only 5.4 and prices were running only modestly ahead of Toronto’s. Now Vancouver’s prices are 71 per cent higher.

“While land-use restrictions and high quality-of-life rankings can justify elevated prices, current steep valuations could prove unsustainable if foreign investment ebbs or interest rates climb,” Guateri cautioned.

“How much could prices fall?” he asked. “Four corrections in the past three decades saw declines averaging 21 per cent and valuations are higher today.

“Still, if interest rates stay low and wealthy immigrants continue to pour into the city, prices could stabilize sooner than in past downturns.”

The recent 2008-09 correction – a 13 per cent drop – was actually the mildest of the four.

The worst was 1981-82, when Vancouver home prices fell 36 per cent.

Even a modest increase in the current ultra-low interest rates would slow the market, the report said.

The Real Estate Board of Greater Vancouver’s benchmark price for detached houses hit $890,800 in May, a 10 per cent increase from a year ago.

Apartments were up 2.2 per cent to $407,400 and attached units gained 3.5 per cent to $517,800.

The benchmark price for detached houses rose 2.8 per cent in the past year to $529,800 in the Fraser Valley, which includes Surrey, North Delta, White Rock and Langley.

Unlike the benchmark (which tracks typical properties), average prices have risen faster – the result of more sales of higher-end homes or houses on big acreages.

The average price for a detached house rose 11.6 per cent to $630,870 in May, according to the Fraser Valley Real Estate Board.

Townhouses in the valley actually dipped 1.1 per cent to $328,300 and apartments were down 0.5 per cent to $252,200.

Just Posted

Xauni de Figeuiroa of Abbotsford has been selected to attend a virtual space camp hosted by the Canadian Space Agency at the end of July.
Abbotsford student selected to attend virtual space camp

Xauni de Figeuiroa among 52 youth selected from across Canada

Kindergarten kids from Evans elementary school in Chilliwack painted rocks with orange hearts and delivered them to Sto:lo Elders Lodge recently after learning about residential schools. (Laura Bridge photo)
Kindergarten class paints rocks with orange hearts in Chilliwack for local elders

‘Compassion and empathy’ being shown by kids learning about residential schools

Chilliwack potter Cathy Terepocki (left) and Indigenous enhancement teachers Val Tosoff (striped top) and Christine Seymour (fuchsia coat), along with students at Vedder middle school, look at some of the 500-plus pinch pots on Thursday, June 10 made by the kids to honour the 215 children found at Kamloops Indian Residential School. (Jenna Hauck/ Chilliwack Progress)
Chilliwack students make hundreds of tiny clay pots in honour of 215 Indigenous children

‘I think the healing process has begun,’ says teacher about Vedder middle school project

A program of the Fraser Valley Health Care Foundation enables patients to thank their health-care workers.
Fraser Valley program enables patients to say thanks to their health-care workers

Philip Harris Grateful Patient Program offered through health care foundation

Image by Free-Photos from Pixabay
Webinar looks at sexual abuse prevention among adolescents

Vancouver/Fraser Valley CoSA hosts free online session on June 15

Canadian Prime Minister Justin Trudeau participates in a plenary session at the G7 Summit in Carbis Bay, England on Friday June 11, 2021. THE CANADIAN PRESS/Adrian Wyld
Canada donating 13M surplus COVID-19 vaccine doses to poor countries

Trudeau says the government will pay for 87 million shots to be distributed to poor countries

Premier John Horgan speaks as provincial health officer Dr. Bonnie Henry, right, and health minister Adrian Dix look on during a press conference to update on the province’s fall pandemic preparedness plan during a press conference from the press theatre at Legislature in Victoria, Wednesday, Sept. 9, 2020. THE CANADIAN PRESS/Chad Hipolito
B.C. officials to provide details on Step 2 of COVID reopening plan Monday

Step 2 could allow for larger gatherings and a resumption of recreational travel

Indigenous Services Minister Marc Miller is seen during a news conference, Wednesday May 19, 2021 in Ottawa. THE CANADIAN PRESS/Adrian Wyld
Indigenous child-welfare battle heads to court despite calls for Ottawa to drop cases

Feds are poised to argue against two Canadian Human Rights Tribunal rulings

The Great Ogopogo Bathtub Race has been held in Summerland as a fundraising event. Do you know which Canadian city introduced this sport? (Black Press file photo)
QUIZ: A summer’s day at the water

How much do you know about boats, lakes and water?

Two-year-old Ivy McLeod laughs while playing with Lucky the puppy outside their Chilliwack home on Thursday, June 10, 2021. (Jenna Hauck/ Chilliwack Progress)
VIDEO: B.C. family finds ‘perfect’ puppy with limb difference for 2-year-old Ivy

Ivy has special bond with Lucky the puppy who was also born with limb difference

A million-dollar ticket was sold to an individual in Vernon from the Lotto Max draw Friday, June 11, 2021. (Photo courtesy of BCLC)
Lottery ticket worth $1 million sold in Vernon

One lucky individual holds one of 20 tickets worth $1 million from Friday’s Lotto Max draw

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

“65 years, I’ve carried the stories in my mind and live it every day,” says Jack Kruger. (Athena Bonneau)
‘Maybe this time they will listen’: Survivor shares stories from B.C. residential school

Jack Kruger, living in Syilx territory, wasn’t surprised by news of 215 children’s remains found on the grounds of the former Kamloops Indian Residential School

Most Read