Compounding Factors Continue to Drive Up Real Estate Prices
The question on everyone’s mind: When will the bubble pop?
The Bank of Canada warned on Wednesday about the risk of correction in Vancouver, Toronto and Calgary property markets. Yet, the Greater Vancouver Real Estate Board reported at the beginning of May that bidding wars are more frequent than ever. Property sales this March are the strongest seen in BC since 2007 according to the BC Real Estate Association. Property sales in the entire province jumped 37.6% over last year, and 53.2% in Greater Vancouver alone.
Low interest rates, a diminished Canadian dollar, attractively temperate BC weather, scarcity of vacancy, and fear of price hikes have driven buyers to flock into bidding wars. All types—first-time homeowners, growing families, and foreign purchasers—are buying.
There has been a 13.8% decline in listings compounded by an increased demand. On top of that, the sales dollar volume increased from last year by 57.1%, surpassing the overall rate of inflation. The average sale price for all types of homes this past March was $891,000 from $801,000 last year.
These prices resultantly create a housing barrier affecting both low-income and middle class households. Those excluded from the local property market suspect that offshore buyers are hiking up real estate prices, making the property ladder inaccessible to the average homebuyer.