Greater Vancouver: Housing Outlook 2006

and posted the strongest employment picture in the country according to a recent report prepared by ReMax. Job gains were particularly evident in the natural resources and construction sectors, given solid housing starts and breakneck non-residential construction in the run-up to the 2010 Olympics. Low
borrowing costs have also bolstered activity and, as a result, demand
for housing hit an all-time high. Tight inventory levels characterized
the market throughout the year, with a severe shortage of product
across all neighbourhoods and price ranges. With resale housing running
full steam ahead, the city is expected to break the 40,000 threshold
in unit sales by year-end, an increase of eight per cent. Given the
significant supply crunch, Greater Vancouver is forecast to post its
second consecutive year of double-digit gains in 2005, as average price
rises 12 per cent to $420,000.

The limited availability of listings will remain one of the most influential
factors affecting Greater Vancouver's housing market in 2006.
Yet purchasers remain grounded, unwilling to pay more than fair market
value. As such, overpriced listings will stagnate next year, much as
With land at a premium, the city and developers have shifted gears,
committing to a greater focus on multi-unit residential construction
including high-rise condominium product and low-rise units above
commercial/retail space. With entry-level prices reaching new heights
even on a month over month basis, the demand for affordable housing
in the form of condominiums has climbed in recent years. Most units
that come on stream, whether new or resale, are snapped up quickly.

In fact, in many cases, the new pre-sold units are commanding a premium
on Greater Vancouver's resale market, as purchasers cash in on
equity gains even before the shovel hits the ground. The impressive
momentum is also evident in the upper-end of the condo segment.
New luxury buildings, catering to the most elite purchasers and of a
calibre never before seen in the city, are generating considerable waiting
lists despite a $10,000 deposit being required for the privilege.
One such project, "The Erickson", considered the flagship building of
the Concord Pacific Development, had one unit recently selling at
close to $1,600 per square foot.

The upper end of the market overall in Greater Vancouver is
expected to remain strong into 2006. Sales of homes priced over $1.5
million should set a record once again. The move-up segment will
continue to be the driving force in the market, with Vancouver West
Side and East Side most active (multiple offers were more prevalent
here in 2005, with a greater share of homes realizing close to or full
list price).

The threat of higher interest rates is not expected to have an impact
on heated market conditions in Greater Vancouver in 2006. Rising
prices will present greater challenges and may serve to push homeownership
further out of reach for a growing number of first-time
buyers. Given the price escalation, young purchasers are being more
creative, looking to parents for assistance or taking advantage or low
or no down payment options. Compromise is a very evident reality in
Vancouver. A new bylaw change, legalizing one rental suite complying
with city requirements in any home with single-family zoning, may
present a new option for entry-level purchasers. Choosing a home
with income-producing potential might allow some first-time buyers to
make the leap. Those who can afford to ante up, however, are demonstrating
no hesitation in making a greater investment in real estate,
driving the trend toward new or newer product.

Little will change in Vancouver's booming real estate sector in 2006,
as the market is set for a repeat of 2005 conditions. Strong fundamentals
remain in place and the outlook is very positive. The province
of B.C., and Greater Vancouver especially, is preparing for an influx of
new residents over the next several years. New development and
infrastructure underway for the 2010 Olympic games is already sparking
revitalization and opening up new areas of possible
development/infill activity. The employment picture remains robust,
with solid performance being posted in several sectors including manufacturing,
forest products, construction, wholesale trade, as well as
transportation and warehousing--the latter two bolstered by trade
between Canada and Asia. Greater Vancouver's port is busier than
ever, and the area is now drawing serious attention from world trade
leaders for the first time. The economic flurry of activity will bode
well for housing in 2006, with sales set to match 2005's record pace.

Average price is forecast to climb a further 10-12 per cent, reaching at
least $460,000.