Altus RVA Single Family Housing Historical Market Review

10 Year Review of the Single Family
Housing Market
CityofVancouver
VancouverHousingBubble?
IfyoutypetheabovethreewordsintoGoogleandhitEnter,articleafterarticlerelatingto
Vancouvers Housing Bubble will show up, with opinions on the subject varying widely.
Highly regarded economists as well as banking and real estate experts, both domestic and
international,havedescribedalocalmarketthathasdefiedgravity:isitdueforacorrection?
Orisittheproductofstrongdemand,limitedsupplyandrobustgrowththatshouldsupport
current pricing levels? Not sure whos right (or wrong), just like those who had previously
calledforasignificantinterestratehiketohaveoccurredbynow
The purpose of this article is not to comment on
whetherornotVancouveris,hasbeen,oreverwill
be in a real estate bubble, but simply to present
some historic data on the detached single family
housingmarketwithintheCityofVancouverarea.
We will particularly focus on comparing areas
referred to by the Real Estate Board of Greater
Vancouver as the Vancouver Westside and
Eastside.
The following pages summarize average house prices over the past decade for new homes
(one year old and less) and older homes (10+ years old). The source of this data is the
MultipleListingService(MLS)andtheRealEstateBoardofGreaterVancouver(REBGV).
Althoughtheuseofaveragehousepricesmaynotbeaperfectindicatorofhousevaluetrends
(i.e.extremevaluesateitherendofthedistributionmaydistortthetruepicture),theanalysis
includedbelowdoesprovideforsomeinterestingdiscussionmaterial.
Research, Valuation & Advisory Cost Consulting & Project Management Realty Tax Consulting Geomatics ARGUS Software
630-1040 West Georgia Street, Vancouver, BC V6E 4H1 Canada T 604.683.5591 F 604.683.5594
altusgroup.com
2|P a g e
NEWERHOMES
HOUSESALES(0TO1YEARSOLD)
VANCOUVERWESTSIDE
YEARS20042013
YEAR
OFSALES
#OF
HOUSESSOLD
AVERAGEHOUSE
SIZES.F.
AVERAGESALE
PRICE
AVERAGESALE
PRICEP.S.F.
SALEPRICETO
LISTPRICERATIO
DAYSON
MARKET
2004
111
3,058
$1,140,816
$378
96%
76
2005
101
3,385
$1,419,120
$426
96%
63
2006
127
3,439
$1,797,472
$528
96%
50
2007
122
3,539
$2,192,561
$628
98%
46
2008
81
3,569
$2,427,889
$687
94%
58
2009
253
3,521
$2,262,167
$649
93%
73
2010
108
3,762
$2,841,885
$760
93%
57
2011
114
3,823
$3,216,755
$840
95%
46
2012
119
3,837
$3,334,321
$854
93%
64
2013
2014(March)
209
73
3,706
3,861
$3,117,940
$3,412,649
$840
$884
93%
93%
64
85
HOUSESALES(0TO1YEARSOLD)
VANCOUVEREASTSIDE
YEARS20042013
YEAR
OFSALES
#OF
HOUSESSOLD
AVERAGEHOUSE
SIZES.F.
AVERAGESALE
PRICE
AVERAGESALE
PRICEP.S.F.
SALEPRICETO
LISTPRICERATIO
DAYSON
MARKET
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014(March)
161
200
116
143
50
120
77
66
52
209
24
2,284
2,233
2,230
2,161
2,247
2,257
2,349
2,410
2,642
2,835
2,735
$576,962
$622,668
$731,824
$808,341
$858,545
$883,955
$910,744
$1,078,859
$1,184,351
$1,294,595
$1,280,409
$253
$279
$328
$374
$382
$392
$388
$448
$448
$457
$468
97%
98%
98%
99%
97%
97%
96%
97%
94%
95%
96%
61
67
53
60
57
62
49
62
63
65
82
VANCOUVEREASTSIDEVS.WESTSIDE(0to1YEARSOLD)
YEARS20042014
WESTSIDE
EASTSIDE
WESTSIDEVS.
YEAR
AVERAGE
%PRICEGROWTH
AVERAGE
%PRICEGROWTH
EASTSIDE
OFSALES
SALEPRICE
WESTSIDE
SALEPRICE
EASTSIDE
SALEPRICERATIO
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014(March)
$1,140,816
$1,419,120
$1,797,472
$2,192,561
$2,427,889
$2,262,167
$2,841,885
$3,216,755
$3,334,321
$3,117,940
$3,412,649
24%
27%
22%
11%
7%
26%
13%
4%
6%
9%
$576,962
$622,668
$731,824
$808,341
$858,545
$883,955
$910,744
$1,078,859
$1,184,351
$1,294,595
$1,280,409
8%
18%
10%
6%
3%
3%
18%
10%
9%
1%
2.0
2.3
2.5
2.7
2.8
2.6
3.1
3.0
2.8
2.4
2.7
altusgroup.com
3|P a g e
OLDERHOMES
HOUSESALES(10+YEARSOLD)
VANCOUVERWESTSIDE
YEARS20042013
YEAR
OFSALES
#OF
HOUSESSOLD
2004
1322
2005
380
2006
356
2007
AVERAGEHOUSE
SIZES.F.
AVERAGESALE
PRICE
AVERAGESALE
PRICEP.S.F.
SALEPRICETO
LISTPRICERATIO
DAYSON
MARKET
2,936
$835,101
$271
96%
49
3,690
$1,165,738
$320
95%
64
3,834
$1,400,122
$373
96%
58
401
3,725
$1,695,375
$470
96%
51
2008
216
3,797
$1,894,333
$509
94%
58
2009
363
3,782
$1,792,480
$472
93%
71
2010
307
4,014
$2,427,891
$599
95%
58
2011
241
3,772
$2,791,234
$727
97%
40
2012
111
3,526
$2,618,556
$733
94%
60
2013
2014(March)
165
324
3,778
3,151
$2,914,522
$2,481,699
$742
$788
94%
97%
57
35
HOUSESALES(10+YEARSOLD)
VANCOUVEREASTSIDE
YEARS20042013
YEAR
#OF
AVERAGEHOUSE
AVERAGESALE
AVERAGESALE
SALEPRICETO
DAYSON
OFSALES
HOUSESSOLD
SIZES.F.
PRICE
PRICEP.S.F.
LISTPRICERATIO
MARKET
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014(March)
2016
2297
1716
1880
1146
1719
1440
1600
1129
1237
333
2,108
2,101
2,111
2,106
2,149
2,154
2,164
2,168
2,167
2,205
2,197
$416,674
$479,712
$582,203
$638,696
$680,933
$669,524
$749,186
$835,386
$883,399
$893,773
$942,555
$198
$228
$276
$303
$317
$311
$346
$385
$408
$405
$429
97%
98%
99%
99%
98%
99%
99%
100%
99%
97%
99%
37
35
29
37
36
39
44
28
31
37
28
VANCOUVEREASTSIDEVS.WESTSIDE(10+YEARSOLD)
YEARS20042014
WESTSIDE
EASTSIDE
WESTSIDEVS.
YEAR
AVERAGE
%PRICEGROWTH
AVERAGE
%PRICEGROWTH
EASTSIDE
OFSALES
SALEPRICE
WESTSIDE
SALEPRICE
EASTSIDE
SALEPRICERATIO
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014(March)
$835,101
$1,165,738
$1,400,122
$1,695,375
$1,894,333
$1,792,480
$2,427,891
$2,791,234
$2,618,556
$2,914,522
$2,481,699
40%
20%
21%
12%
5%
35%
15%
6%
11%
15%
$416,674
$479,712
$582,203
$638,696
$680,933
$669,524
$749,186
$835,386
$883,399
$893,773
$942,555
15%
21%
10%
7%
2%
12%
12%
6%
1%
5%
2.0
2.4
2.4
2.7
2.8
2.7
3.2
3.3
3.0
3.3
2.6
altusgroup.com
4|P a g e
Someinterestingobservationsarenotedbelow:
One clear trend displayed by both the Westside and Eastside is that during the last 10
yearsthevolumeofsaleactivityappearstobedecliningforolderproduct(10+years),while
new home sales (0 to 1 years) has displayed an increase. The Eastside segment for new
home sales has, in particular, joined this trend more recently (209 sales in 2013), after
meagersaleactivityin20102012(77,66,&52,respectively).Regardlessofthisdeclinefor
olderproduct,supportingsaleslevelshasbeenastrongSalePricetoListPriceratioduring
this time for all categories; it may also indicates there has been more limited supply
available.
Averagehousesizeoverthepastdecadefornewhomestendstobeincreasingintermsof
total square feet; with the Westside displaying the greatest increase (26% over 10 years).
Interestingly, the big jump in new home prices in the Westside from 2009 to 2010 was
supported by builders constructing bigger product (avg. size from 3,521 to 3,762 s.f. or
6.8%+), with new home sizes appearing to have leveled off since then, as well as the
Eastsidewhich is now displaying a stronger growth trend in new home sizes in recent
years(2012tocurrent).Coincidently,thelanewayhousingprogramwasintroducedin2009
withthefirstoccupancypermitgrantedinmid2010.
Vancouver realtors appear to be quite good at selling close to ask price, with a marketing
periodintherangeof1to2monthsshouldbeexpectedtoachievethedesiredsellingprice,
with older homes on the Eastside showing particularly shorter Days On Market (DOM)
periodsinrecentyears.
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5|P a g e
Ingeneral,itappearsthattheEastsidepricegrowthdisplaysasimilarorslightlagprofile
incomparisontotheWestsideoverthelast10yearsforbothnewandolderhomeproduct:
AverageSalePriceGrowthEastside(10+
YRS)
AveragePriceGrowthEastside(0to1YR)
20%
25%
15%
20%
10%
15%
5%
10%
5%
0%
0%
5%
2005
2006
2007
2008
2009
2010
2011
2012
2013
5%
2014
(March)
2004
2005
2006
%PRICEGROWTHEASTSIDE
2007
2008
2009
2010
2011
2012
2013
2014
(March)
%PRICEGROWTHEASTSIDE
AveragePriceGrowthWestside
(10+YRS)
AveragePriceGrowthWestside(0to1YR)
30%
25%
50%
20%
40%
15%
30%
10%
20%
5%
10%
0%
0%
5%
10%
10%
2005
2006
2007
2008
2009
2010
2011
2012
2013
20%
2014
(March)
2004
%PRICEGROWTHWESTSIDE
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
(March)
%PRICEGROWTHWESTSIDE
Morerecently,intheperiodfrom2012to2013,theaveragepriceofWestsidenewhomes
decreased by approximately 6%, while the average price of Westside older homes
increased by approximately 11%; the decline for new Westside product appears to be
primarily a function of the average house size being reduced. Conversely, Eastside new
homepricesdidnotabateduringthistimeperiod(up910%),butwerealsosupportedbya
marked increase in average home sizes (up 710%). Again, this is likely the influence of
somelanewayhousingstockbeingaddedtothenewprincipalresidence.
Average house prices increased by a factor of an approximate range 2.2 (Eastside) to 3.0
(Westside)forbothnewhomes(0to1yearsold)andforolderhomes(10+yearsold)over
thepastdecade.Ifthistrendcontinues(andthatisabigif),intheyear2024,theaverage
house price for older stock could be greater than $2,000,000 (Eastside) to $7,000,000
(Westside).Wearenotsayingthiswillhappen,wearesimplyapplyingthemathfromthe
pastdecadeandextrapolatingforwardtothenextdecade.
Focusingonthemostrecentstatistics,thefirst3monthsof2014indicatedWestsidehomes
10+ years old are showing both higher frequency of sales (324 sales in first three months
versus111/165salesin2012/2013intotal)atasignificantdroppingaverageprice(15%),
howeverproductsellingisalsosignificantlysmallerinaveragesize(17%),resultinginan
overall increase in price per sq.ft. New home prices though in the Westside have
continuedtheirupwardascentin2014.
altusgroup.com
6|P a g e
One final historical trend examined was the percentage of pricing for older homes versus
new, as demonstrated below. For the most part, it would appear that the relationship
hovers around high 75% to 80% range, although there appears be have a trough for the
Eastsidein2013andacrestfortheWestsideduring20102013segment:
%ofNewHomePricing Eastside
95%
85%
VANCOUVEREASTSIDEVS.WESTSIDE
(%ofNewHomePricing)
YEARS20042014
WESTSIDE
%of
EASTSIDE
%of
YEAR
Avg(10+)
NewHome
AVERAGE
NewHome
OFSALES
SALEPRICE
(01Yr)
SALEPRICE
(01Yr)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014(March)
$835,101
$1,165,738
$1,400,122
$1,695,375
$1,894,333
$1,792,480
$2,427,891
$2,791,234
$2,618,556
$2,914,522
$2,481,699
73%
82%
78%
77%
78%
79%
85%
87%
79%
93%
73%
$416,674
$479,712
$582,203
$638,696
$680,933
$669,524
$749,186
$835,386
$883,399
$893,773
$942,555
72%
77%
80%
79%
79%
76%
82%
77%
75%
69%
74%
75%
65%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
(March)
2013
2014
(March)
NewHome(01Yr)
%ofNewHomePricing Westside
95%
85%
75%
65%
2004
2005
2006
2007
2008
2009
2010
2011
2012
NewHome(01Yr)
Focusingonthemostrecentstatistics,thefirst3monthsof2014indicatedWestsidehomes
10+ years old are showing both higher frequency of sales (324 sales in first three months
versus111/165salesin2012/2013intotal)atasignificantpricereduction(15%),however
productsellingisalsosignificantlysmallerinaveragesize(17%).Newhomepricesthough
intheWestsidehavecontinuedtheirupwardascentin2014.
For the first 3 months of 2014, Eastside homes 10+ years old are showing a steady
frequency of sales (333 sales) displaying good price growth (5%). However, new home
prices in the Eastside are relatively flat from 2013, although sale frequency is down
significantly(24intotal)andhousesaretakinglongertosell(averageDOMof82).
New homes across the Westside and Eastside in 2014 so far are taking longer to sell
almost1monthlongerthantypicalhistoricallevels.
altusgroup.com
7|P a g e
In summary, some clear historical trends have been identified in reviewing single family
housingsegment,withthemostobviousbeinganpriceincreaseofroughly2.2to3.0timesover
levelsobserved10yearsago.Adeclineinoverallsalesvolumeandanincreaseofhousesizes
arealsoquiteevident,whiletheWestversusEastsegmentreviewdisplaysaslightlagwith
respect to price appreciation. As well, existing single family home stock appears to roughly
reflect 75% to 80% of the value of new housing stock, while more recent trends suggest less
(Westside)ormore(Eastside)differentiationtonewhomepricing.Morerecentstatisticsfor
thefirst3monthsof2014suggestareturntostrengthinsalevolumeontheWestsideatlower
pricingversus2013levelsbutforsmallersizedhousingstock,whiletheEastsideiscontinuing
apricegrowthtrendthatisreflectingadecliningsalepriceratiotothewest.
Pedro Tavares is a Director of Altus Group Limited in the companys Vancouver office and has been
providingprofessionalservicessince2000.Pedrospecializesinthevaluationofcomplexandlargersized
realestateassetsandisanaccreditedAppraiseroftheAppraisalInstituteofCanada(AACI,P.App).
PedroTavares,B.A.,AACI,P.App
Director,Research,Valuation&Advisory
www.altusgroup.com
D:778.329.9270
E:pedro.tavares@altusgroup.com
AboutAltusGroupLimited
AltusGroupisaleadingproviderofindependentcommercialrealestateconsultingandadvisoryservices,software
and data solutions. We operate five interrelated Business Units, bringing together years of experience and a broad
rangeofexpertiseintoonecomprehensiveplatform:Research,ValuationandAdvisory;ARGUSSoftware;Property
TaxConsulting;CostConsultingandProjectManagement;andGeomatics.Oursuiteofservicesandsoftwareenables
clientstoanalyze,gaininsightandrecognizevalueontheirrealestateinvestments.
AltusGrouphasover1,800employeesinmultipleofficesaroundtheworld,includingCanada,theUnitedStates,the
UnitedKingdom,AustraliaandAsiaPacific.AltusGroupsclientsincludefinancialinstitutions,privateandpublic
investment funds, insurance companies, accounting firms, public real estate organizations, real estate investment
trusts, healthcare institutions, industrial companies, foreign and domestic private investors, real estate developers,
governmentalinstitutionsandfirmsintheoilandgassector.
altusgroup.com

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10 Year Review of the Single Family

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