Even Luxury Homes Do Not Last in Vancouver's Hot Housing Market

Luxury homes that would normally take at least four months to be sold are selling at a fast rate and being bought for millions of dollars above their assessed value in Vancouver.

In Greater Vancouver, high-end transactions contributed to the highest number of sales ever recorded for any month. There were a total of 5,173 properties including single family detached homes, condo units and townhouses sold in the month of March. This represented a 27.4 per cent increase from March 2015.

In March 2016, the Fraser Valley district which includes the less expensive suburb of Surrey had a record of 3,006 sales which exceeded the 2,270 sales in March, 1991.

The average price of detached houses in Greater Vancouver hit a new high last month to $1.34 million which represents a 27.4 per cent increase from last year.

The Real Estate Board of Greater Vancouver stated the benchmark price represents a typical home in the area. According to the board's president, Dan Morrison, there are several factors that lead to housing frenzy which began in the middle of the year in 2013. Dan Morrison stated that the sales activity is influenced by low mortgage rates, population growth, an optimistic economy and lack of housing supply.

He said that it is a bit unusual that high-end homes are selling in weeks rather than months. In a normal market, 30 to 90 days would be normal for typical homes but many are selling within two weeks now. He also said listings are selling so rapidly that there isn't any time for the inventory to build up.

According to Josh Gordon, an assistant professor at Simon Fraser University's School of Public Policy, foreign demand and low interest rates are putting upward pressure on prices for detached homes in Vancouver's west side.

The average price in March 2016 for detached homes sold in Vancouver's west side reached $3.07 million, a 25.5 per cent jump from last March.

Reference: The Globe and Mail

http://www.theglobeandmail.com/…/even-luxu…/article29516276/