Exploring The Largest Price Gains Across the Valley
Now that the dust has settled and the FOMO (Fear of Missing Out) has disappeared we are left wondering, what the hell happened? Bidding wars plagued Vancouver, but perhaps more surprisingly the suburban outliers. A stampede of buyers trampled suburban doorsteps, driving prices through the stratosphere. As the herd disperses we’re left to observe the damage. Prices exploded almost vertically on a graph. This is what most economists would call “the mania phase.” Let’s explore some of the damage done in these suburban cities.
Langley
Langley detached house prices weren’t always hovering around 1 million dollars. In fact, from January 2010- January 2015 Langley house prices only grew 7.2% (less than inflation). As of January 2015 the benchmark price of a single family home was just $580,000. From January 2015 to it’s eventual peak in August 2016 house prices soared 52.3% to a staggering $883,600. Perhaps more concerning, during the mania phase between January 2016 to July 2016 prices exploded 25% in those 7 months. The phenomenon moved to Langley townhouses as buyers got priced out of single family homes. From January 2010 to January 2015 benchmark prices for a townhouse went up $300. From January 2015 to November 2016 townhouse prices soared 51%, or $147,300. Langley condos became the next prized possession. Condo prices in Langley went from $213,900 in January 2010 to $197,400 in January 2015 (a 7.7% loss) to exploding 34.7% in the following 23 months.
Abbotsford
From January 2010 to January 2015 prices went up a meager 4.5%, or $18,000. From January 2015 to it’s peak in September 2016 prices went up 53%. Or perhaps more impressive, from March 2016 to June 2016 prices went up 16.4%. Meaning prices went up more in one month than they did in all of the previous 5 years. The unthinkable happens and Abbotsford condos soar. The benchmark price of an Abbotsford condo in January 2010 was $170,600. By January 2015 the benchmark was only $148,900, a 12.7% loss. Overnight, a supposed “supply issue” ensues and prices explode 40% from January 2015 to November 2016.
Surrey Townhouses
Surrey townhouse prices were flat from January 2010 to January 2015. Well, actually they declined about 1%. From January 2016 to August 2016 they boomed 31%. This vertical price growth shows just how insane things were.
Mission
Mission detached prices stagnant for over 5 years explode 31% in a short 8 months. Thirty one percent appears to be the magic number in most suburban cities. A staggering chokehold that will likely have side affects on the Canadian economy for years to come. “A speculative bubble is a situation in which news of price increases spurs investor enthusiasm, which spreads by psychological contagion from person to person, and, in the process, amplifies stories that might justify the price increase and brings in a larger and larger class of investors, who despite doubts about the real value of the investment, are drawn to it partly through envy of others’ successes and partly through a gambler’s excitement.” – Robert J. Shiller