November homes sales up in Vancouver, but will it last?

VANCOUVER – Home sales in the Vancouver area posted their second-highest ever November sales as they climbed 40.1 per cent compared with a year ago.

The Real Estate Board of Greater Vancouver says home sales on the Multiple Listing Service in Metro Vancouver totalled 3,524 last month.

That was up from 2,516 a year ago and down slightly from 3,646 in October.

“The ratio of sales to home’s available for sale reached 44 per cent in November, which is the highest it’s been in our market in nine years.”

New listings for detached, attached and apartment properties in Metro Vancouver amounted to 3,392 in November compared with 3,016 in the same month last year.

The strength in the Vancouver market has continued even as the housing market in many areas of the country has cooled with the economy.

The sales for November were 46.2 per cent above the 10-year sales average for the month.

The report Wednesday also said the MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver reached $752,500, up 17.8 per cent from a year ago.

The benchmark price for a detached home increased 22.6 per cent from a year ago to $1,226,300, while the benchmark apartment price increased 14 per cent to $435,000.

The benchmark price of an attached unit increased 11.3 per cent to $536,600.

Bubble to burst?

And that’s once again setting off alarm bells.

“The risk of a severe home price correction in B.C. and Ontario has risen to a medium probability event given the continued run-up in prices in Toronto and Vancouver,” TD economist Diana Petramala said in a new research note on Monday.

Households in those provinces “have built up the highest degree of froth in their housing market over the last decade,” she said.

The commentary follows yet another warning from the OECD of overheated housing markets in Canada – with Toronto singled out in particular for being at risk for a “sharp market correction.”

The CMHC, the federal housing agency, is also escalating its concerns, suggesting last month home prices across much of the country are overvalued.

“The evidence of overvaluation has increased since the previous assessment in Toronto, Vancouver, Montreal, Edmonton, and Saskatoon as price levels are not fully supported by economic and demographic factors,” CMHC’s chief economist Bob Dugan said.

“Problematic overvaluation conditions in local housing markets could be resolved by moderation in house prices and/or improving economic conditions.”

The CHMC believes a prolonged slump in the price of oil could lead to a an unemployement rate pushing 12 per cent nation wide. With that level of joblessness, the housing market would take a sharp turn downward in Alberta or Newfoundland.

But according to analysts, the price of oil is largely irrelevant to Vancouver’s market.

“The economy of Vancouver and B.C. is not dependent on oil. We produce very little oil,” says Helmut Pastrick, Chief Economist for Central 1 Credit Union.

“A prolonged low oil price would not have a negative impact on Vancouver housing prices.”

Jamie Sturgeon - The Canadian Press