A new report predicts condos as the next star in Greater Vancouver’s booming real estate market.
“Investors, we believe, are pivoting to condos,” according to Dexter Realty.
The Vancouver-based realty company released a report Wednesday (March 3) indicating that buyers of condo properties are “looking towards the easing of pandemic regulations”.
This easing “will bring vibrancy back to downtowns and foreign students back to Metro Vancouver campuses”.
According to Dexter, pricing and supply will fuel the ascendance of condos in the market.
“Affordability is part of the equation,” stated the report prepared by Dexter Realty’s Kevin Skipworth.
The report noted that in February 2021, prices of detached homes in markets served by the Real Estate Board of Greater Vancouver (REBGV) “soared” by 13.7 percent.
That represents a year over increase from February 2020, which brought the price of a typical single-family home to $1,621,200 last month.
Meanwhile, prices of townhouses increased 7.2 percent in February this year, reaching $839,800.
As for condos, prices increased “just” 2.5 percent year over year in February 2021.
Per REBGV’s latest market report, this means that a typical condo in the region cost $697,500
In its report, Dexter Realty cited East Vancouver as an example.
In East Vancouver, a typical condo was selling for $599,000 in February, while a neighbouring detached house was going for $1.58 million.
This phenomenon is mirrored in markets served by the Fraser Valley Real Estate Board, which includes Surrey.
In February 2021, a price of a typical single-family home in the FVREB region increased 19.9 percent year over year to $1,163,400.
For townhomes, the price went up to $600,300, a 10.1 percent increase.
For condos, a typical unit cost $450,900 in February 2021, representing a lower 5.3 percent increase.
This type of situation can only lead to one outcome.
“For an increasing number of buyers, condominiums are now the first, the smartest and only choice,” the Dexter Realty report stated.
With prices of single-family homes in the Lower Mainland going through the roof, the company anticipates that strata properties will see more action moving forward.
“Detached houses have been the headline news in Metro Vancouver for the past year, but we believe February marked the beginning of a major shift towards the townhouses and condominium sector,” according to the report.
The report recalled that February 2021 townhouses sales were up 82 percent year over year.
Meanwhile, condo sales rose 65 percent over that of February last year.
Together, according to Dexter Realty, strata property sales accounted for nearly 65 percent of all February 2021 transactions in Greater Vancouver.
The company’s report went on to state that condo properties apartments lead other housing types with a “blistering pace of 62 sales every day”.
Price is one part of the equation, and supply is another.
As Dexter Realty noted, “It may come down simply to supply.”
According to the company, there is a lack of detached houses to meet demand.
In addition, there has been a “chronic shortage of townhouses”.
More specifically, the market for townhouses has “just a 1.5-month supply now available”.
In his capacity as chief economist for Dexter Realty, Skipworth prepares regular market reports for the company, where he is also a partner and managing broker.
The Straight asked Skipworth about the report’s reference to “investors” in condo properties.
The Dexter Realty executive explained that the term refers to anyone wanting to purchase a condo.
It means that an investor is either a home buyer and occupier, or someone who wants an additional property to rent out.
“We are seeing those looking for an additional investment property come back to the market knowing they can provide a rental unit to the market when they purchase it,” Skipworth explained.
With low interest rates and increased savings among potential buyers, he said that there are opportunities to acquire a secondary property for investment purposes.
“This is what helps make the rental stock in cities,” Skipworth said.
On March 1, the B.C. NDP government announced that it is introducing legislation to extend the current freeze on rental fee increases to the end of 2021.
New Democrats also indicated that starting in 2022 and beyond, rent increases will be capped at the rate of inflation.
“With the NDP’s rental freeze announced and the cap they have put in place, that may dissuade some from entering the market to provide rentals,” Skipworth said.