Is this the best time to upgrade from a Vancouver condo for a house?
For years, the gap between the price of a condo and a house has widened in Metro Vancouver. In 2005, the difference in prices was around $350 thousand and by 2016 it had reached $1.1 million. Recently that trend has changed.
In the past year, detached home prices have flattened or drifted downward in Vancouver while condo prices have surged so the price gap between the two has narrowed. At the end of this article we explain our belief that now may be the best time to trade in your condo or townhouse for a detached home.
The market for detached homes
The benchmark price of a detached single-family home in Metro Vancouver has been declining slightly and hasn't changed much since the summer of 2016.
House prices dropped for several months in 2016 after the foreign-buyer tax was implemented, bounced back to reach a peak of just under $1.6 million in November 2017, and have drifted slightly downward since then.
There are so many homes for sale in Metro Vancouver that the negotiating power has shifted in favour of buyers.
The market for condos
Condos have had an amazing run with benchmark prices rising steadily in Metro Vancouver.
A person who bought an Westside Vancouver condo in 2015 and sat at home watching TV would have made approximately $74,000 per year. That's almost as much as the $79,930 median household income for a Metro Vancouver (i.e., the median household has more than one income earner) .
The condo market is still pretty tight with the negotiation advantage sitting with the seller.
Can condo prices continue like this?
It seems unlikely that condo prices can continue at this pace. Westside Vancouver condos have stayed flat since February of 2018 and Eastside condos peaked in May. Rising interest rates and government intervention seem to be cooling the market. Sales have dropped for both condos and houses over the past three years and this puts downward pressure on prices.
Time to trade-up
The gap between detached home and condo prices has narrowed by $200,000 as a result of stagnant house prices and the tremendous condo price gains. A condo owner looking to upgrade to a detached home is in a better position today than they were a year or two ago.
If we look at the gap over time, it becomes apparent that house prices may have more room to fall. In 2005 price difference between a condo and house was $250 thousand and by 2016 it had climbed to over $1 million. If the market is experiencing a “soft landing” the it is possible the gab in prices could narrow further over the coming year.
Most forecasts for Vancouver anticipate that detached homes will stay flat or drop in 2018 while condo prices are expected to continue to rally. Take advantage of the condo price rally because it is unlikely to continue beyond 2018.
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