The Globe and Mail
Ryan and Crystal Lopez thought they could afford to stay in Tsawwassen after they saved a hefty down payment for a house in the community where they grew up.
But prices have jumped 40 per cent for detached homes over the past year in the Boundary Bay community, forcing the renters to examine other parts of the Vancouver region. Two weeks ago, they signed a contract to buy a new townhouse in Surrey for $660,000, plus $33,000 in GST.
“We first looked at detached houses, which were just a joke because prices are soaring in Tsawwassen. Then we looked at townhouses – and we will end up in South Surrey. You can buy something brand new in South Surrey for $700,000,” Mr. Lopez said in an interview. “Prices are still relatively low in the big scheme of things.”
Even with their down payment of $132,000, the Lopezes decided that their hometown of Tsawwassen has become too expensive a place to raise their two young daughters.
The family’s experience underscores how the ripple effects from high housing prices in the city of Vancouver are being felt far across the region: As housing demand increases in some suburbs, that leads to escalating prices, displacing many buyers who must in turn look at living in less expensive suburbs.
The B.C. Real Estate Association said Friday that while some housing observers claim there has been a large exodus of millennials out of Metro Vancouver, the number of people in the 20-to-34-year-old category who live in the region has jumped 18 per cent over the past decade.
But hidden gems of neighbourhoods are harder than ever to find, say the Lopezes. “It has been insane,” Ms. Lopez said. “Even a two-bedroom teardown went for $1.1-million in Tsawwassen. Some buyers are bidding over the asking price and offering cash.”
New data from Teranet-National Bank compiled for The Globe and Mail show that prices for detached homes, townhouses and condos in the Lopezes’ Tsawwassen postal code averaged $964,258 in the fourth quarter of 2015. That compares with $613,923 in South Surrey, located next to White Rock.
In the suburbs, gains have been rapid since the start of last year, helping to fuel the real estate boom. Home values have surged in places such as Delta (including Tsawwassen), Richmond, Port Coquitlam, Port Moody and South Surrey.
Last year, the composite house price index rose 19.7 per cent in Tsawwassen and 10.4 per cent in South Surrey. For the Vancouver census metropolitan area as a whole, the index in December was up 12.9 per cent from a year earlier.
In March, the index posted a one-year gain of 17.3 per cent, by far the sharpest increase among the 11 metropolitan markets in Canada measured by Teranet-National Bank.
The Teranet-National Bank house price index, which gauges trends in real estate markets, shows sharp climbs in property values well beyond the west and east side of Vancouver. Urban sprawl is one of the consequences of high real estate prices, according to Andy Yan, an urban planner with Bing Thom Architects. He said an underfunded public transportation network discourages some families from moving to less pricey suburbs, where transit expenses are higher.
Industry experts say several factors are contributing to surging house prices in the Vancouver region, including low interest rates, limited listings and buyers from overseas and other provinces. The Lopezes say the topic of buyers from China has been hot in Tsawwassen, a community that has witnessed an influx of international bidders in the past year.
Under new B.C. rules that took effect in February, home buyers need to pay a luxury-tax rate of 3 per cent on the portion of the purchase price above $2-million, compared with the former rate of 2 per cent. By that definition, eight postal codes qualify as luxury in Vancouver’s CMA, when measuring sales of detached homes, townhouses and condos.
The V7S postal code in West Vancouver had an average residential price of $3.48-million in the final quarter of 2015, topping the list of highest average prices compiled by Teranet-National Bank. Two other postal codes in West Vancouver made the top eight, as well as two in the area that includes Kerrisdale and Oakridge, two in the Dunbar-Southlands neighbourhood, and one that covers portions of Point Grey and Kitsilano.
Property values in neighbourhoods in the City of Vancouver have continued their upward march over the past decade. Using the house price index’s base value of 100 in 2005, the Dunbar-Southlands neighbourhood tops the list of areas that boast the highest increases in value over the past decade. Other areas showing big gains include Kerrisdale-Oakridge, Richmond South and West Vancouver.
Since 2005, the index in the Vancouver region has more than doubled.
The provincial government has been reluctant to intervene as prices skyrocket, avoiding any major measures to dampen the roaring housing market. The province recently launched a program that has the effect of providing incentives for Canadian citizens or permanent residents to bid on new, less expensive properties in the suburbs – either reducing or eliminating the property transfer tax.
Mr. Lopez, 34, works for a Richmond-based mechanical contractor, while Ms. Lopez, 33, is an esthetician who runs a spa business out of the rental house. Their two daughters are five-year-old Ava and two-year-old Ciera.
The Lopez family currently live on the main floor of a modest Tsawwassen house built in 1969 – a rental in which they have 1,400 square feet of space.
In August, they will take possession of a three-level, 1,800-square-foot townhouse that has four bedrooms, 3.5 bathrooms and a two-car garage. The Lopezes bought in the first phase of Adera Development’s South Ridge Club townhouse complex.
“We grew up in Tsawwassen and really love the small-town feel, but we have a real issue with paying $700,000 for just a total dump,” Mr. Lopez said. “We went out to South Surrey and it turns out to have more of a community feel than we thought there would be.”
Hot housing in Vancouver rippling across the rest of B.C.
April 22, 2016
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