What happened over the last few months?
We left 2014 with a low inventory market and we began 2015 in a low inventory market. As a result, houses that have come on the market over the past few weeks have been met with a demand unlike anything we have seen since the mad markets of Spring 2012. I remember back then one house we sold in Kitsilano had 26 offers on it and sold for $270k above list. Well last week we were involved with a sale that generated 37 offers and set a new record for 33′ land sales on the west side for a collector street at over $1.5M (previously value would be $1.3M). Accordingly, prices on quiet streets through the prime Westside neighbourhoods have followed suit resulting in 33′ lots soaring past the $1.7’s and into the $1.8M range. A significant change from last year where our top 33′ lot land sales just past $1.6M. Prices have literally jumped by $200,000 over the past 2 months for 33′ lot bungalows.
When we look at our 50′ lot sales the story gets even more surprising. Last year 50′ lots were selling for $1.7-2.0M. We set a record on a corner RT7 Kits lot breaking the $2.1M barrier. But that didn’t last long, the lack of lots for buyers to choose from over the past few months has driven the pricing up past the $2.5M mark with some hitting $2.7-2.8M in highly desirable pockets near popular schools. It won’t be long before we see the standard 50′ lot on the Westside hit $3M, over $1,000,000 past what we were seeing last year.
Is this possible? Could prices for some lots really have gone up 15-20% in several months? If this momentum continues through spring it is highly likely. The sales numbers and prices are real, and the current market is overheated.
You won’t read about this in the newspaper until the January stats come out at the end of the month. At that point, I expect to see a flurry of listings come out feeding the insatiable demand and the market will begin to balance out. It’s an annual cycle we see, however, not usually to this extreme.
On the Eastside, the story on houses is just as dramatic. Just yesterday, we were reviewing some recent sales of 3 story character homes in Grandview Woodlands near Commercial Drive area at $1.2M and $1.7M. There are currently few 33′ bungalow lots on the Eastside below $900k and we don’t expect to see many more this year. As I predicted last year, the average price for an entry-level bungalow 33′ lot on the Eastside has hit $1,000,000.
Will the Eastside/Westside divide eventually disappear with pricing remaining the same from UBC to Boundary Road?
I believe there will always be some price differences as we travel east from the Westside neighbourhoods. This is mainly due to proximity to the downtown Central Business District (CBD), school catchments, airport, beaches, shopping and amenities, etc. that seem to draw the Westside buyer. That being said there is a growing list of eastside neighbourhoods evolving into very attractive destinations for families. Commercial Drive, Main Street, Fraser Street and Collingwood just to name a few. The majority of our first time house buyers over the last year have already redirected into the Eastside as Westside prices have become unaffordable for them. This major redirection of buyers has caused Eastside prices to steeply climb last year before the recent Westside price climb. So, in summary, yes the Eastside/Westside price gap seems to be closing. Or is it merely now we are seeing what once was Westside pricing now on the Eastside. And the Westside pricing has hit new heights that has not been acknowledged yet by most Vancouverites. Last year ended with the Eastside Sales Ratio (The percent of which the current inventory homes are selling monthly) at an astounding 46%, which the Westside closed off at a respectable 21%. Visually, from the 13-month trend graphs you can see how the recent decline in inventory in both markets has resulted in increases in average sale prices.
So What’s in store for 2015?
Well let’s look at some current facts:
1. Interest rates are continuing to drop (following Bank of Canada’s aggressive drop of their key overnight lending rate).
2. BC economy is projected to expand by 2.7% this year outpacing last years growth.
3. Continued migration to BC nationally and globally.
4. Vancouver still seen as one of the safest and most desirable cities in the world to invest and live in.
5, Federal Government launching new millionaire immigrant investor program on January 28th.
If I was to make a prediction, we will see house prices increase significantly this year. The sharpest increase, as noted above, will be in the early part of the year tapering off as inventory begins to catch up with demand. Don’t be surprised to see price increases over 10% year to year on average mainly driven by the dramatic lot sale increases noted earlier.
As always, we are here to meet with you and we encourage you to call us to discuss your unique real estate needs at your convenience.