Condo sales as well as prices are surging in Greater Vancouver and the Fraser Valley.
Dexter Realty offers a possible explanation behind what is happening.
In a report, the Vancouver-based realty company states that the “record-setting sales pace may underline desperation in the market”.
“We suspect more buyers are opting for a condo apartment because there is simply such little choice amidst unprecedented low inventory across all of Metro Vancouver,” states the report prepared by Kevin Skipworth.
Skipworth, a partner, broker and chief economist with the company, was referring to the overall low supply of all types of homes on the market, which include detached properties and townhouses.
“As well, apartments attract more investors than other sectors of the housing market, which further reduces the inventory,” the realty executive added.
Skipworth’s report came out December 3, a day after real-estate boards released their monthly tallies.
Notably, sales of condos accounted for 53 percent of all housing sales in markets covered by the Real Estate Board of Greater Vancouver (REBGV) in November 2021.
A total of 1,828 condos were sold last month, representing a 33.3 percent increase compared to the 1,371 sales in November 2020.
Higher prices come with huge demand.
The benchmark price of a condo in REBGV markets rose to $752,800 in November 2021.
This means an 11.4 percent increase from November 2020, and 0.9 percent higher compared to October 2021.
The same story is seen in the markets covered by the Fraser Valley Real Estate Board (FVREB), which include Surrey.
In his report, Skipworth noted that November 2021 sales of condos were up 42.8 percent from November of 2020.
In addition, the benchmark price was up 21.7 percent compared to November 2020.
The FVREB has reported that the typical price of a condo in its area rose to $530,400 in November 2021.
That represents a 3.2 percent increase compared to the previous month of October.
Skipworth also noted strong demand for pre-sale condos or apartments that have yet to be built.
“The average pre-sale price for a new condo in Metro Vancouver is now $1,050 to $1,150 per square foot, based on recent pre-sales,” he wrote.
The Dexter Realty executive explained that this means that a typical new one-bedroom, 480-square- foot condo “costs around $500,000, and this average holds steady throughout most Metro Vancouver suburbs”.
“Investors and owner-occupiers continue to buy due to expectations that prices will be even higher in the months and years ahead, which does appear certain due to the stubbornly low inventory,” Skipworth stated.
Earlier this month, the B.C. Real Estate Association released a report indicating that October 2021 listings of all types of residential properties, meaning detached, townhouses, and condos, are the lowest in two decades.
A BCREA graph showed that the number of home listings needed for a “long-term balance” in the housing market is between 40,000 to 50,000.
As Skipworth wrote in his December 3, 2021 report, the housing supply in Metro Vancouver is “seriously out of whack with market demand”.