July 19, 2021
What Influences Metro Vancouver Single Family Home Prices?
For the past decade, real estate has been a hot topic in Metro Vancouver. In May 2011, the average benchmark price for a detached single family home in the Fraser Valley was $525,700. Now, 10 years later, it has more than doubled to $1,298,200 in May 2021. The same can be said for Greater Vancouver real estate where the average price of a single family home was $916,800 in 2011 but today, sits at $1,790,300. So what’s causing the uptick in single family home prices in Metro Vancouver? There are several factors that influence real estate pricing but we have listed the primary ones below.
- Geographical Constraints – The value of land plays a huge role in the price of a house and with Metro Vancouver’s unique geographic location with the Pacific Ocean to the west, mountains to the east and the US border to the south, we are running out of land.
- Supply & Demand – As mentioned above, the supply of land available for development, especially for single family home construction, is dwindling. Municipalities are pushing for increased density (condos and townhomes) to help with affordability but this in turn limits the amount of land zoned for detached homes. With continued demand for single family homes but a short supply of inventory, prices continue to be pushed upwards.
- Interest Rates – Lower interest rates increase the purchasing power of a buyer by allowing them to borrow more and afford more house. Therefore, the lower the interest rate, the higher the demand (and the opposite holds true). Over the past few years, we’ve seen record-low rates which have helped fuel the Metro Vancouver real estate market and put it into overdrive.
- Immigration & Population Growth – Canada is aiming to welcome over 1.2 million immigrants over the next three years. It’s safe to say a good number of these people will end up in Metro Vancouver and will need a place to live.
We are often asked why single family home prices in Metro Vancouver are so high and hope this helped shed some light on the topic.