Hot Spots in BC Housing Market

Vernon chalked up the most dramatic rise in house prices in Canada over the past five years, with the average house there jumping 129 per cent to $355,000 from $155,000, according to an analysis released Wednesday by Century 21 Canada.

Kelowna wasn't far behind with an increase of 89 per cent over the same period and North Vancouverites saw their home equity boosted a hefty 87 per cent, putting an 1,800-square-foot bungalow with three bedrooms and two baths on a 50-foot-by-150 foot lot up to $650,000 from $348,000.

Western cities showed the largest increases, with the average house in northeast Calgary going up 121 per cent. In Fort McMurray, a typical 1,200-square-foot bungalow with three bedrooms and 1 1/2 bathrooms on a 65-foot by 100-foot lot that would have set a buyer back $200,000 in the spring of 2001 is now up 105 per cent to $410,000.

The news was better for buyers in Thunder Bay but not as good for home owners who saw prices rise by 12 per cent over five years.

Don Lawby, president of Century 21 Canada, said Canada's housing prices are the result of strong economic performance in every region of the country, with Western Canada showing the healthiest gains.

But other provinces had a head start over British Columbia on the price increases, he said, leaving this province to show the strongest gains in the time surveyed.

"2001 was the lowest prices in British Columbia," he said. "We were just coming off the recession and hadn't started to climb back.

"That's why the increases in B.C. are higher than in a number of other places. The housing market in British Columbia started to turn in the spring of 2001 while in other provinces it started to turn in late 1998 and early 1999.

"We had farther to go; therefore we have caught up faster."

Lawby said the robust western economy, along with B.C. simply being an attractive place to live, has helped bump up prices.

Mortgage rates declined slightly in the five years. The posted rate for a conventional five-year mortgage was 7.75 per cent in May 2001, 5.7 per cent in June 2005 and 6.75 per cent on May 15 of this year.

While buyers and sellers alike are speculating now whether or not it is a real estate bubble that will soon burst, Lawby said he doesn't expect any kind of meltdown in prices such as that experienced by overheated markets in Florida and California.

"I don't see anytime soon that the economies are going to turn dramatically down or that there isn't going to be demand," he said. "We are not seeing a huge increase in listing activity."

Lawby said it would take a substantial increase in inventory, accompanied by a slowdown in the economy, to bring prices down.

He said interest-only financing has been introduced in the United States, a trend that hasn't happened in Canada. "It was done on a dream that house prices were going to continue to increase dramatically," he said. "Our market hasn't been built that way."

The survey, which included 38 markets across Canada, rated increases on homes that were described as typical for each market.

Vernon, the country's hotspot when it comes to price hikes over the five years, had its typical home described as a 1,200-square-foot bungalow with three bedrooms and two bathrooms on a 55-foot by 100-foot lot.

Other substantial price hikes across the country include:

- Quebec City, up 67 per cent to $150,000.

- the Winnipeg suburb of St. Vital South, up 64 per cent to $200,000.

- Peterborough, Ontario up 54 per cent to $202,000.

- Dartmouth, Nova Scotia up 46 per cent to $155,000.

(prepared by Gillian Shaw/Vancouver Sun)