By Mathieu Powell
In Vancouver, consumer demand for condominium units and townhouses has significantly outpaced the desire for free-standing homes. The MLS Home Price Index benchmark price of condos increased by 18.5 per cent compared to July 2016, up to $616,000, and the benchmark price for townhouses grew 11.9 per cent over the past year, up to $763,700.
In Victoria, gains weren’t as steep, but they are not far behind. The MLS Home Price Index benchmark price of condos is up by 17.7 per cent over July 2016, up to $402,499, and the benchmark price for townhouses grew 7.4 per cent over the year, up to $506,614.
What is driving gains in the condominium and townhouse market?
Two factors: affordability and inventory.
Although the average price of homes in BC is lower than last year, a closer look at the data reveals the composite of homes being sold has shifted to smaller free-standing homes, condos, and townhouses. BCREA economist Brendon Ogmundson attributed this shift to a pronounced need for more affordable residential real estate along with short supply.
“(The) supply of homes available for sale has not recovered and is still declining in many markets around the province,” says Ogmandson.
Indeed, home prices in most BC markets are being pushed higher due to severe supply constraints. This is particularly true for the Victoria region, which currently has less than two months of total inventory for sale.
Victoria Real Estate Board President Ara Balabanian stated "This July, we saw a strong focus on the lower priced end of the market, with condos and townhomes and single-family homes listed for under $700,000 in high demand. Many of those properties saw multiple offer situations."
The lack of supply is also very apparent in Vancouver’s apartment and townhouse market. Jill Oudil, president of the Real Estate Board of Greater Vancouver said in her recent CBC News interview “detached home listings have increased every month this year, while the number of condominiums for sale has decreased each month since February.”
Out East, Toronto’s housing market may have cooled overall, but that isn’t true for the condominium market. Prices continue to soar as speculators interested in flipping and families desperate for affordable housing flock to the market.
"Despite the recent dip in overall GTA home sales, the condominium apartment market was quite resilient,” said Toronto Real Estate Board President Tim Syrianos in TREB's Q2 2017 Condo Market Report. “Condo apartment sales accounted for a greater share of overall transactions during the spring compared to the same period last year.”
The average selling price for the GTA market area at the end of Q2 was $532,032, and the average price in the City of Toronto was $566,513. That’s a 28.1 per cent increase over Q2 2016, making condominiums the fastest growing of all home types in the GTA.
What do these trends mean for condominium and townhouse prices here in Victoria?
Our economic fundamentals remain strong, the climate is delightful, inventory is low, and many more people want to live here. We predict a seller’s market and rising prices for quite some time to come.