The Vancouver effect?: Surrounding real estate markets experience price boost
The entire province had a record month for real estate sales
Have you heard about the red-hot real estate market … in Parksville?
While the Vancouver's market has been in the spotlight for its rapidly rising values, these sky-high growth rates are now trickling out to surrounding locations.
Cameron Muir, chief economist of the British Columbia Real Estate Association, says the entire province experienced a record setting month for real estate sales in April, in part due to B.C.'s strong economy.
They've just sold for big bucks in Vancouver, Victoria and they don't mind spending a little more here- Jim Hoffman, real estate agent in Parksville, Vancouver Island
But he says the trickle-out effect from Vancouver's real estate market is also a factor.
"It's very common every time we see a strong market in Vancouver ... we tend to see that lag effect and it tends to go to other places."
'It's spilling over'
It's clearly the case for Vancouver Island.
Jim Hoffman, a real estate agent in Parksville, says he's seen an effect in the Vancouver island town of 12,000.
"It's spilling over," he says.
"The sellers all see what's happening in the big cities, so they think their place is worth more, so the asking price is up and a lot of people are paying more because a lot of buyers are coming from the big city. They've just sold for big bucks in Vancouver, Victoria and they don't mind spending a little more here."
Hoffman says real estate is a better investment than keeping money in the bank due to the low interest rate, so some buyers are picking up multiple properties on the Island after selling elsewhere.
The majority of buyers he sees are retirees or near-retirees, or people who were already in the market before prices went up.
Others have not been so lucky.
The demand for housing for first-time home buyers and young families is unprecedented in the Fraser Valley.
That area — which includes the suburban municipalities of North Delta, Surrey, White Rock, Langley, Abbotsford and Mission — saw a 30 per cent increase in the price of a single-detached home over the past year.
That's six times higher than the growth it experienced in 2015.
Charles Wiebe, president of the Fraser Valley Real Estate Board, says "it's almost a perfect storm of factors. We have a very strong provincial economy and job growth, low interest rates and lots of homes in the Valley that are still very affordable. It's all come together to create this immense, unprecedented drive to our region."
Wiebe says buyers in the Fraser Valley are typically looking for a detached home, but some buyers are looking for apartments and townhouses just to get into the market — driving up demand for all sorts of housing.
"It's uncharted territory ... I've never seen anything like it."
A cool-down coming soon?
But Cameron Muir says this demand can't last forever.
He says when supply and demand are so out of balance with one another, the market has historically moved to correct it.
"Whenever you have record levels of sales activity, to the extent that it is right now, it will likely be a short-lived event. And my anticipation is that either the summer, the fall or early next year, sales will begin to wane in some of the largest urban centres."
And when demand slows down in Vancouver, that effect will likely also trickle out to surrounding areas.