The average price for a home in Metro Vancouver is expected to surpass the $1 million mark in 2016 as the real estate market continues to climb.
As it stands, the average price of a home in the Metro area is $947,350 – that’s for both detached homes and condos. Vancouver will likely experience the largest increase in home prices next year as compared to other major Canadian markets.
“It is increasingly becoming out of reach for the middle class,” RE/MAX managing broker Cory Raven told Vancity Buzz.
While there’s no easy solution to combat a soaring housing market, Raven thinks densification might be one of the answers. The price gap between detached homes and condos is continuing to grow, making more Vancouverites get used to the idea of being long-term condo owners.
“If the market is made up of supply and demand, and we’ve spent the last three years in a much more demand than supply market – and we don’t see signs of that slowing down – my brain tells me moving towards more supply may have some effect in a positive way.”
Raven said predicting the housing market can be tricky. RE/MAX’s Housing Market Report for 2014 called for a seven per cent increase in prices and a 20 per cent increase in sales volume – those numbers ended up being 17 per cent and 50 per cent respectively.
As a result, it’s possible their predictions for price increases could go beyond their expectations.
“I don’t think too many people expected a close to 20 per cent increase in the Great Vancouver area and that would be a tough prediction to make,” said Raven.
Raven thinks incentivizing developers to create more affordable housing doesn’t solve the problem either, since it’s largely the middle class who are getting squeezed out of the market.
“It does nothing to help the middle class, which are the people that are increasingly getting squeezed out of the market because there’s no incentives that I know of to take market housing and make it more affordable.”
As far as foreign investment goes, Raven said there isn’t enough data on the subject to make a viable prediction for 2016, and it’s hard for realtors to get their hands on the numbers that do exist.
“If you talk anecdotally to agents, they’ll say that most of foreign money had been going to the luxury market as that becomes more expensive, even for people who have money, they may just find it too expensive.”
In the end, Raven believes foreign investment is having an effect on the market, but it’s impossible to say to what extent due to the lack of data. Either way, the market is hot and competition is fierce – he said a realtor in his office recently sold a house that had 13 offers on it, 10 of which were over the asking price and with no subject conditions in their offers. All of them were what Raven calls “local money.”
To read the RE/MAX Housing Market Outlook for 2016, click here.