Sticker shock drives house hunters into condominiums

Call it home hunting, not house hunting. Potential buyers in Greater Vancouver's real estate markets are increasingly giving up on dreams of a white picket fence and settling for townhouses or condominiums.

Builders in the region already build townhome and condominium units at a rate of almost three to each single-family home. And multi-family projects dominate overall real estate sales.

Re/Max, in its first-quarter 2006 condominium market report, found that more and more buyers are gravitating toward apartments and townhouses, citing sticker shock as the key reason.

Re/Max tracked 4,274 condominium sales in Greater Vancouver during the first three months of the year, a total that is up three per cent from sales for the same period of 2005.

Burnaby realtor Roland Tecson, with Sutton Group Priority Realty, has seen buyers go through that sticker shock. He is currently working with a family from Ontario who have had to shift their sights away from the house they gave up in their move.

"They're coming from a nice three- or four-bedroom home in a nice suburb, and they're coming here to find they're looking at townhouses, at best, in [the same] price range," Tecson said.

Tecson added that while incomes in Greater Vancouver have not gone up that much, housing prices have doubled within the past five years.

"People cannot get into the house they dream of," Tecson said.

Vancouver realtor Raymond Leung, with Amex Fraseridge Realty, said that almost every other day he gets a call from someone who asks about housing prices, "and when they find out . . . they hang up."

He added that the market has never been hotter, but buyers have become accustomed to the fact that only apartments are affordable now.

Ahmet Kadioglu, a realtor with Royal Pacific Realty in Vancouver, said he has had similar experiences with clients who have sold homes in Windsor or London, Ont., only to move into apartments here.

However, he added that he deals with a lot of international clients, "and for them, Canada is still a bargain, though it isn't for us."

Peter Simpson, CEO of the Greater Vancouver Home Builder's Association, said new buyers are acclimatized to the new reality. He noted that at the association's annual seminars to educate first-time buyers, the majority of attendees surveyed say they expect to buy a townhouse or apartment.

That is a sea change from when the association first started and the majority said they were looking for a house.

Simpson said prices for Greater Vancouver's limited land base are rising, and construction costs are going up, leaving builders no option but to "carve up that land into smaller pieces" to deliver affordable housing.

However, the trend toward condominiums is no longer unique to Vancouver. Elton Ash, Re/Max's executive vice-president for western Canada, said markets such as Victoria and Kelowna are also seeing more condo sales.

And in Edmonton and Calgary, the number of buyers snapping up multi-family units skyrocketed in the first quarter of 2006 about 40 per cent over the same period of 2005.

Ash said Re/Max realtors are seeing larger numbers of lifestyle buyers, such as baby-boomers and retirees, looking for low-maintenance property.

First-time buyers, however, are having to stretch budgets, despite low interest rates and long amortizations, and are discovering that condominiums are "the easy answer."

"Affordability is one of the key issues we're seeing, and that's what's driving a large part of the condominium market," Ash said.

(prepared by Derrick Penner/Vancouver Sun)