The housing market in Metro Vancouver is overvalued, claimed the Canada Mortgage and Housing Corporation (CMHC) late last month.
But figures released last week by the Fraser Valley Real Estate Board (FVREB) tells a different story, one of already high real estate prices continuing to climb.
“As with all things, it’s about supply and demand,” said Charles Weibe, FVREB president. “We have a wave effect, where people in Vancouver are selling for record prices, and moving out to the Fraser Valley where – for them – it’s more affordable.
“And there’s migration to the Fraser Valley from other parts of B.C. and from the rest of Canada.”
FVREB statistics show the benchmark price of a house in the Fraser Valley (which includes Surrey) climbed almost five per cent in one month, and more than 30 per cent over the past year. A house that sold for $595,600 in April, 2015 went for $776,500 a year later. (A benchmark price is what a typical house on the market would sell for).
In Surrey, the benchmark price of a detached house was $879,300 in April, a 30.3-per-cent increase from a price of $674,900 a year earlier.
The statistics from the FVREB were released days after the CMHC said nine large housing markets in Canada were “showing signs of being overvalued.” Metro Vancouver was one of the nine and was in a group of four showing “strong signs of overvaluation.”
“Single-detached home prices are now observed to be at levels higher than those consistent with financial, economic and demographic fundamentals,” the agency said in its report.
Weibe said a slight market correction may occur in the future, but stopped short of saying housing is overvalued.
“In sharply rising markets, at some point there is a plateau,” he said. “And when it happens, it’s hard to predict. When there’s more product in the market, prices will plateau.”
But for now, demand is exceeding supply, and Weibe expects that to continue for at least the short term.
“The Lower Mainland and Fraser Valley are continuing to grow,” he said. “There’s migration from Vancouver to the Fraser Valley and from other countries and from elsewhere in Canada. People want to live here.”
The benchmark price of a detached home had the highest rate of increase in North Surrey, where a typical house climbed 34.1 per cent in the last year, from $579,400 to $776,900.
In Cloverdale, the benchmark price went from $624,500 to $796,200, a 27.5-per-cent increase.
The price in the Surrey-Central area increased by 28.3 per cent, to $773,300 from $602,600.
The huge increase in the cost of owning a home far exceeds the increase in median income in Metro Vancouver. According to the latest available figures from Statistics Canada, the median income for families in the region was $73,390 in 2013, a 9.4-per-cent increase since 2010.
The benchmark price of a home in Surrey was $580,337 in April, 2013, compared to $879,300 last month for a three-year increase of 51.5 per cent.
But Weibe said there are still options for first-time home-buyers.
“What I did when I got into the market was start with a strata home,” he said. “I couldn’t afford a house. But over time, I turned the strata home into a house purchase.
“You can get a condo in Abbotsford for less than $200,000, a townhouse in Langley or Surrey for less than $400,000. There are still affordable options in the Fraser Valley,” Weibe said.