B.C. demand for detached homes driving up prices across province: expert

VANCOUVER (NEWS 1130) — It’s cooling down a bit, but the real estate market in British Columbia is still very hot, and an industry expert says it’s likely to stay that way for some time.

The BC Real Estate Association says the average price of a home in BC last month was just over $915,000 — up 22 per cent compared to June of 2020.

The group’s chief economist Brendon Ogmundson says demand for one kind of home is particularly strong, which is driving up that average.

“One of the consequences of the pandemic has been this real shift into single-family detached. One of the reasons why we’re seeing the average price spike so high really all over the province is that people really want space,” he explains.

“We’re still seeing things get very skewed towards single-family homes. If you look at the condo market, prices are only up about four per cent. So it’s really a tale of two very different markets, anything with space is going to be bid up pretty substantially.

RELATED: Greater Vancouver home sales explode in March, shatter 10-year average

Market activity has dipped slightly since hitting a record-high in mid-March, but overall sales are up about 35 per cent compared to last year. 

“We hit an all-time record high in the province, in Vancouver back in March. Things have cooled off from the spring when everything was really frenetic and you had 10 offers on every home that was listed for sale,” he says.

“We’re not in that environment anymore, but it’s still a very strong market with sales well above average levels. There’s still a lot of demand out there and just not nearly enough supply to meet that demand, and as a result, we’re still seeing very strong increases in home prices.”

Low interest rates, combined with the fact that some prospective homebuyers spent less money overall due to COVID-19, is making it easier for some to make larger purchases.

“A really odd artifact of the pandemic is that household balance sheets are in fantastic shape as people have been saving money all year,” Ogmundson says.

“We have this consequence where we can borrow for a very low rate, and they’ve been saving money all year and have this desire for extra space.”

As the economy continues to recover from the COVID-19 shutdown, Ogmundson doesn’t predict prices will drop any time soon.

“The economy is growing at a five or six per cent rate this year and is gonna post very strong growth next year. We’re coming off this very unusual amount of market activity, but into an environment that’s still very supportive of strong sales.”

With files from Paul James