Salmon Arm Shuswap area real estate trend not unlike rest of BC: "Higher prices fuel real estate record"

The value of residential real estate sales in B.C. reached a record $37.8 billion in 2006, up seven per cent from 2005, fueled by higher house prices at a time when the number of sales dropped.

In 2006, B.C. realtors sold just under 97,000 homes through the Canadian Real Estate Association's marketing network, the Multiple Listing Service, a nine-per-cent drop from 2005's record of 106,000. But an 18-per-cent increase in the average price of a home in the province -- from $332,137 to $390,760 -- pushed the value of the sales to the record.

The British Columbia Real Estate Association, which represents the province's 12 regional real estate boards, expects the number of sales to continue to slow, dropping to 93,600, or by three per cent, in 2007. Prices, however, are expected to keep heading upward, albeit at a slower pace.

"The market is certainly trending toward more balanced conditions," BCREA's chief economist Cameron Muir said in an interview. "Underpinning the market today are some pretty solid fundamentals. Employment growth is strong, we have unemployment near record lows, we have wages in many sectors growing several times the rate of inflation, and we have fairly good migration numbers to the province."

At the same time, mortgage rates are expected to remain flat in 2007, Muir said.

"The one thing that's not as positive is home prices," he said. "Some home-buyers are feeling the squeeze, and as a result we're in a price-led affordability squeeze. As a result, some potential home-buyers are finding themselves unable to afford to buy the home they desire."

While the slowdown in activity began last July, the number of sales in 2006 was still the second-highest on record, behind only a record-breaking 2005.

"So there is still a high number of sales from a historical perspective. It's just we're no longer ramping up to ever-new records of home sales in the province," Muir said.

The most active market in 2006 continued to be Greater Vancouver, with 36,479 sales worth $18.6 billion, compared to 42,222 sales worth $18 billion in 2005. That's a 13.6-per-cent drop in volume, yet a 3.4-per-cent increase in value.

The slowest market was Powell River, which had only 293 sales, down 30 per cent from the 421 sales in 2005. The value of those sales were also down, from $70.1 million in 2005 to $60 million, a 15-per-cent drop.

The greatest increase in activity was in Northern B.C., which includes Prince George and Prince Rupert. There sales were up nine per cent, to 5,609 from 5,130, with the value of sales up 31 per cent.

(prepared by Fiona Anderson/Vancouver Sun)