HOME PRICES
WHAT YOU NEED TO KNOW ABOUT CHANGING HOME PRICE DYNAMICS • The overall benchmark price in the Vancouver Region rose by 23% in 2021— amounting to a $233,600 increase in the price of a “typical home”. This was the largest calendar-year increase since the benchmark price was first developed in 2005. • Ground-oriented homes (detached and townhomes) experienced an above- average increase in prices (+30% and +27%, respectively), while condo prices rose at a below-average pace (+16%). • Price increases in the Fraser Valley board area (+30%) outpaced those in the Greater Vancouver board area (+17%).
the rennie brief
JANUARY 2022
As benchmark prices in the Vancouver Region rose to never-before-seen levels in 2021, some obvious challenges—and less-obvious opportunities—materialized.
FIRSTLY, WHY DO WE USE BENCHMARK PRICES? The benchmark price is reflective of an index that is calculated based on the value that home buyers implicitly assign to various housing attributes, and that tend to evolve gradually over time. The construction of the Home Price Index (or HPI) relies on a statistical model in order to define a “typical” home based on features of homes that have been sold. It is intended to provide an “apples-to-apples” comparison of home prices. Alternative price measures, such as average and median prices, can fluctuate significantly from one month to the next based on the specific homes that are sold in each respective month. As such, short-term value changes can be more difficult to ascertain in a statistically valid way when using average/median prices versus
been more than $79,500 prior to 2021. FRASER VALLEY PRICES CLOSED THE GAP WITH GREATER VANCOUVER PRICES The Fraser Valley board (FVREB) area, where detached homes and townhomes are prevalent, saw its overall benchmark price rise by 30% in 2021; in comparison, the increase was “only” 17% in the Greater Vancouver board (REBGV) area, where condos are relatively more abundant. On a home-type basis, price changes in each board area were similarly led by detached homes, with the FVREB at +39%, compared with the REBGV at +22%. For townhomes it was the FVREB at +33% and the REBGV at +22%, while for condos it was +25% in the FVREB and +13% in the REBGV. As prices in the FVREB have risen more quickly than in the REBGV, the gap in prices between the two areas has narrowed. Overall, the difference in the benchmark price of a home in the REBGV area to that of the FVREB area is the smallest it’s been since 2009 (at $86,600). As many buyers have shifted their attention towards larger homes in more affordable locations, this has had the ironic effect of eroding some of said affordability. OPPORTUNITIES IN 2022 The Vancouver Region begins 2022 with prices at an all-time high, while inventory is at an all-time low and demand has shown few signs of waning. Affordability remains a concern for many potential buyers, particularly first-time buyers and existing owners looking to buy a larger home. That said, there will be opportunities for some in 2022. For one, the condo segment will likely become more attractive as the price of condos becomes more palatable to would-be townhome buyers. For owners in the Fraser Valley, homes closer to the historic core may become more accessible due to relative gains in purchasing power. Finally—and most pointedly—empty-nesters will continue to have the opportunity to realize substantial gains, should they choose to downsize from their family home.
their benchmark counterpart. ALL PRICES SURGED IN 2021
Across the Vancouver Region in 2021, the benchmark price rose 30% for detached homes, 27% for townhomes, and 16% for condos. These changes reflect an increase of $403,700 in detached home values, $193,700 for townhomes, and $107,000 for condos in 2021, each of which is the largest gain seen in any single year going back to 2005 (when benchmark prices were first developed). Already-high prices that have been rising at such a rapid pace have made it more difficult for many first-time home buyers (and others) to be able to afford a home that meets their needs. THE GAP BETWEEN TOWNHOME AND CONDO PRICES WIDENED Elevated demand and constrained inventory have played a factor in these increases, along with the pandemic-related desire many buyers have had for larger homes and more outdoor space. These features are traditionally associated with ground-oriented homes (detached and townhome). This shift in preferences has driven an ever-larger wedge between townhome and condo prices, which have historically maintained a narrow gap between them: by the end of 2021, the benchmark townhome price was $144,700 higher than that of condos—the highest ever—with the gap having never
For further information please contact Ryan Berlin (rberlin@rennie.com) or Ryan Wyse (rwyse@rennie.com). The information set out herein (the “Information”) is intended for informational purposes only. RAR & RMS has not verified the information and does not represent, warrant or guarantee the accuracy, correctness and completeness of the information. RAR & RMS does not assume any responsibility or liability of any kind in connection with the information and the recipient’s reliance upon the information. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information may change any time without notice or obligation to the recipient from RAR & RMS.
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