Anshu Arora LLM, MSc, PMP

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Vancouver house prices hitting new highs because of short supply

Last month's Multiple Listing Service (MLS) sales data, analyzed by research firm Snapstats, reveals by the end of the month sales of downtown Vancouver condos and townhomes just under $600,000 were dramatically outpacing new listings. The same was true for attached properties at the $700,000 mark on Vancouver's east side. In other words, the pool of available homes is draining faster than it's being replenished.

 

The B.C. Real Estate Association says it has been seeing this trend — over 100 per cent sales ratios — throughout Vancouver for many months now, and has even coined a special term for the phenomenon — an "accelerated" market. In comparison, a traditionally hot "sellers" market is defined at a sales ratio of 21 per cent or higher.

 

While much of Vancouver's real estate conversation has focused on extreme sales in a handful of west side neighbourhoods, all of these "accelerated" condo and townhome sales were units priced under $1 million.

Offshore money, absentee landlords and even the latest villain, so called 'shadow-flippers', all get blamed for putting home-owning dreams out of reach.

 

But what if the answer is much simpler — what if there simply isn't enough housing to meet a steadily growing population?

 

The Urban Development Institute — a non-profit association representing the development industry and related professions — argues that while a great many factors contribute to rising prices, lack of supply — both in type of house and location — is a major problem.

 

But it's not a bogeyman that can be easily unmasked and banished. People don't hold rallies about increasing supply of homes, and there is no #BuildMoreMultifamilyHomes trending on Twitter.

 

"The answer," said institution president Anne McMullin, "is to increase density and people don't want that. They're looking for an easy answer — let's blame others."  The pace of new home construction in Vancouver has remained virtually unchanged over 15 years, averaging under 4,500 new completed units a year according toCMHC data. Compare that to the population growth that B.C. saw in 2014 — 55,000, mainly through immigration and in-migration.