Despite a new forecast that housing prices will drop 3.5 per cent in British Columbia in 2011, Jan Fricker and her husband Steve Lott are confident they will soon find a buyer for their east-side character house.
The house, at 431 E. 37th Ave. and listed for $899,000, is near Main Street, one of Vancouver’s hottest real-estate neighbourhoods.
Fricker, 49, and Lott, 55, love the neighbourhood so much they bought an empty lot one block away in 2006 and built their dream home.
Since then, they’ve been renting out the 2,400-square-foot 37th Avenue house, which also has a two-bedroom basement suite. They decided to carry two mortgages and the market appears strong, Fricker said.
Their confidence goes against the Canadian Real Estate Association’s lowered forecast for both sales volume and prices for 2011, based on a “weaker than expected start to the new year in British Columbia.”
The CREA says rising interest rates, a change to mortgage regulations and declining affordability due to rising prices are the reasons for its revised forecast, released Wednesday.
For the whole of B.C., the CREA’s forecast says prices are expected to rise 2.3 per cent to an average price of $476,400 for all home types this year and drop 3.5 per cent to $459,800 next year.
Sales in B.C. are expected to fall 5.9 per cent in 2010 to 80,000 units from 85,028 units in 2009. The forecast for 2011 is for 71,500 units to be sold, a decrease of 10.6 per cent.
On Tuesday, the Bank of Canada raised its overnight rate for the first time in three years, to 0.50 per cent.
“With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent price increases and rising interest rates,” said chief CREA economist Gregory Klump. “A downward trend in national sales activity combined with an increase in listings will result in a more balanced market.
Lorne Goldman, a Vancouver realtor for 30 years, says he places little faith in the new forecast.
“There was not an economist or a forecaster or an expert that correctly predicted the last change in the real estate market,” he said. “When February 2009 came, there was complete non-confidence in the real estate market as we were in the worst recession since the Great Depression. Prices were plummeting. [On] March 1, 2009, suddenly multiple offers showed up and prices rose significantly. Nobody predicted that.”
The most in-demand area for character homes in Vancouver is the Main Street neighbourhood, Goldman said, where houses start at about $800,000.
“The cachet of the Commercial Drive area is being usurped by the Main Street area,” he said. One listing near Main Street and 17th Avenue has been on the market one week and received three offers, he said, while on the west side, he does not have any multiple-offer situations for any of his listings.
Goldman attributed this to lower prices on the east side and the popularity of the Main Street neighbourhood.
Goldman has one couple selling their Kerrisdale home to buy a smaller one in either the Commercial Drive or Main Street neighbourhood, but they’ve found less selection and a more competitive market on the east side.
There were 800 listings as of Wednesday for single-family homes on the west side and 809 listings on the east side, but “the market seems to be hotter on the east side,” Goldman said.
Fricker and Lott have yet to have any written offers on their house, which has been listed for three weeks, but they’ve had lots of interest, with 50 or 60 people at each showing.
“We’re pretty confident we’ll get it sold,” Lott said. “Land in the city is going to increase no matter what.”
Goldman, who works for MacDonald Realty, said he has seen an overall decrease in the number of offers and calls he is receiving, possibly due to higher-than-normal demand earlier this year.
“The reason there was more demand is that there were people with pre-approved mortgages, and now rates have gone up. They were rushing to get their property before rates went up,” he said.
Although both Fricker and Lott grew up in the suburbs — one in North Vancouver, the other in White Rock — a passionate commitment against commuting led them to the city.
“We love living in the city. We have only one car and we ride our bikes and take transit. It’s really critical to us to live close enough in so that we can do that,” Fricker said.
Fricker works in Yaletown and commutes via bus and the Canada Line, while Lott, who is an elementary school teacher, rides his bike to work.
They bought the house in 1996 for $270,000, a price, they say, that reflected the state the house was in at the time.
“It was a dump,” Fricker said. “We’ve worked really hard on this house.”