Average Metro Vancouver residential price soars 26 per cent in a year to $832,000, but increase is misleading, economist says!

By Brian Morton, Vancouver Sun June 16, 2011

Home sales in B.C. edged down one per cent to 7,857 units in May compared to the same month last year, according to a B.C. Real Estate Association survey released Wednesday.

The report also said that the average price of a home climbed 20 per cent to $596,872 last month compared to May 2010.

However, BCREA’s chief economist said the soaring price shouldn’t be taken too seriously, because the provincial numbers were skewed by sales of expensive homes in Metro Vancouver’s priciest neighbourhoods.

“With the average price, you need to take it with a grain of salt,” Cameron Muir said. “The reality is that the average price does not indicate where the market is going. It [Vancouver housing] is skewing the average price higher than market conditions suggest.”

Muir said that a more precise indication of the overall market is the benchmark price -only tallied in Metro Vancouver and the Fraser Valley -which measures the price of a typical home in the area.

“The average price is up 26 per cent in [Metro] Vancouver [to $832,000], but the benchmark price has only gone up about six per cent year-overyear.”

Muir said that in Metro Vancouver, there has been a higher proportion of pricier single detached home sales this year than a year ago, especially in the priciest markets -Vancouver’s west side, Richmond and West Vancouver.

Of B.C.’s overall drop in sales, Muir said that tighter mortgage rules, tepid employment growth and advance buying during the first quarter kept B.C. home sales on a lower note in May. “However, recent downward pressure on mortgage interest rates is expected to provide some incentive to consumers over the summer months.”

Year-to-date, the BCREA survey said, B.C. residential sales dollar volume increased 15 per cent to $20.1 billion, compared to the same five-month period last year. Sales dropped one per cent to 34,191 units over the same period.

While the report noted a 25.7-per-cent price increase year-over-year from $662,000 to $832,000 in Metro Vancouver, that wasn’t the same elsewhere in the province.

The south Okanagan saw the average price drop 5.9 per cent in May compared to May 2010, from $352,000 to $331,000, while Kootenay saw the average price drop 4.6 per cent, from $263,000 to $251,000.

However, the Fraser Valley recorded a 15.1-per-cent average price increase in the year, from $458,000 to $527,000.

Nationally, home sales fell in May by 0.6 per cent from the previous month, but were up 2.7 per cent on the year, the Canadian Real Estate Association said.

Sales fell to 36,410 units on a seasonally adjusted basis, from 36,621 units in April, the Ottawa-based group said in a statement Wednesday. Sales during the month were down 0.7 per cent in dollar terms and up 12 per cent from May last year.

The average sale price was up 8.6 per cent from a year earlier, with CREA saying the number was heavily skewed by the more affluent markets in Vancouver and Toronto.

Without Vancouver, the yearover-year increase would only be 5.6 per cent, according to CREA.

The Real Estate Board of Greater Vancouver and the Fraser Valley Real Estate Board reported earlier this month that, in typical springtime fashion, sales are on the upswing in Metro Vancouver and the Fraser Valley.

The REBGV noted that home sales reached 3,377 in May, a seven-per-cent increase over the 3,156 sales in May 2010. As well, the benchmark price for all properties increased 6.2 per cent to $627,568 in May 2011 from $590,662 in May 2010.

The Fraser Valley Real Estate Board processed 1,608 property sales in May, a nine-percent increase over May 2010, while noting the benchmark price for detached homes rose 2.8 per cent year-over-year to $529,810.

Meanwhile, 56 per cent of first-time homebuyers in B.C. are looking for a home with a rental unit, according to the 2011 TD Canada Trust First Time Homebuyers Report.

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