Saturday, June 04, 2005

Record house prices

Record house prices
Sizzling city market shocks even industry vets

Sat Jun 4 2005

PETER Squire, the Winnipeg Real Estate Board's market analyst, was expecting another robust month of sales in May, but yesterday he did a double-take.

And then a second calculation.

"I wasn't quite ready for what I saw," Squire said. "Our dollar volume just fell shy of $200 million."

Never in the real estate board's history have there been more houses sold for more money than there were in May.

The actual number -- just over $198 million -- was $42 million higher than June of last year, which owned the previous record.

The indicators that May would set a record were there early.

House price increases

In Linden Woods, Hugh and Milly Matson listed their pretty little pristine blonde-brick bungalow for $227,000. A few days and 12 offers later, the 1,600-square-foot house they bought nine years ago for $145,000 had sold for a Calgary-like price of $265,400.

Meanwhile, in Crescentwood, a rare Tyndall stone house that listed for $275,000 was driven up all the way to $400,000, although the real cost of the 2,100-square-foot home that a Stonewall quarry-owner built for his daughter might be closer to $500,000 after the circa-1912 interior is updated.

On Wellington Crescent, meanwhile, another house became only the fifth Winnipeg home to sell for $1 million or more.

Five years ago, before Winnipeg's housing market began to take on boom-town-like growth, the board would have been happy with a $100-million month.

But it's not just the dollar value that's climbing.

So is the number of sales.
Five years ago, before Winnipeg's housing market began to take on boom-town-like growth, the board would have been happy with a $100-million month.

But it's not just the dollar value that's climbing.

So is the number of sales.

There were a record 1,434 sales last month, compared to previous best of 1,360 in May 2001.

Veteran real estate agents like Janne Young, who sold the Linden Woods bungalow, and Menno Friesen and David DeLeeuw, who have been around for more than two or three decades, all say they've never seen anything like it.

There are a number of reasons for what's changed since the 1990s, when Winnipeg housing prices were as flat as the landscape.

But it comes down to a basic three.

High demand, low inventory and low interest rates have created the perfect storm for the Winnipeg real estate market.

"There just aren't enough listings to satisfy demand throughout the city," says Dianne Himbeault, Canada Mortgage and Housing Corporation's senior market analyst for Manitoba.
Ideally, there should be four or five homes on the market for each buyer.

In Winnipeg, there aren't even two houses for one buyer.

"We have the lowest inventory, I believe, in the country," the real estate board's Squire said. "And it's been that way for the last two years now."

Plus, Winnipeg has the second-lowest vacancy rate, which exacerbates the perfect storm.

In certain neighbourhoods, houses are selling more quickly than they're coming on the market.

For example, last month in Norwood Flats, there were 16 sales but only five new listings.

In Whyte Ridge, 24 sold, compared to nine that were fresh listings.

Garden City had 12 sales to four new listings.

And in Wolseley, 18 homes sold while only five came on stream.
In Linden Woods, where the average sale price is among the city's highest, there were 19 sales and an equal number of listings.

No wonder that last month, multiple bidders pushed nearly half of all sales over list price, while another 11 per cent of homes went for list.

The real estate board doesn't like to talk about average stock, because Winnipeg has a large stock of older, inner-city homes that skew the average.

But lower-end areas like the North End, Weston and Elmwood are among neighbourhoods where prices have climbed the most over the last year.

The highest is North Kildonan, where the average price jumped 34 per cent, from $166,669 to $223,531.

Little wonder that the average Winnipeg selling price hit a high last month, too -- $148,000 -- up 11 per cent from last May, when it was $133,000.

Royal LePage Dynamic Real Estate does a national survey, using a set of generic styles of houses.

That survey tracks just how rapidly prices are spiking.

For example, the average River Heights bungalow was $180,000 in the first quarter, compared to $174,000 three months ago and $161,000 last year.
Compare that to somewhat-similar neighbourhoods in Toronto.

The average price of a bungalow in High Park, an older, leafy Hogtown neighbourhood, is $565,000. Similarly, the typical bungalow in The Beaches, a lakeside area a short subway ride from the centre of town, is more manageable at $406,000.

Rick Preston, the manager of the Royal LePage office on Corydon and Niagara, says the boom has raised some expectations among home-sellers that every house should have multiple bidders.

But it's still generally the premium, well-maintained properties that get those top dollars.

Like the Linden Woods bungalow that went or a whopping $265,400.

Who would have enough confidence in the marketplace to pay that kind of price?

Veteran real estate agent Menno Friesen, as it turns out.

"We better get over the sticker shock," says the CMHC's Dianne Himbeault.

These unreal prices for Winnipeg are for real.

These are the Winnipeg neighbourhoods that saw the biggest jump in average home prices between 2004 and 2005:

2004 2005 % difference
North Kildonan $166,669 $223,531 34.12 %
Weston $48,965 $62,525 27.69%
Deer Lodge/Bruce Park $92,844 $118,431 27.65%
North End $36,817 $45,939 24.57 %
Interlake $83,695 $104,100 24.38%
River Heights North $193,736 $240,476 24.13%
St. Vital $96,888 $120,145 24.01%
Elmwood $60,457 $74,818 23.76%
West End $76,397 $93,413 22.27%
East Kildonan $101,700 $120,833 19.56%
Riverview/Fort Rouge $104,653 $123,959 18.45%
Wolseley $122,917 $144,139 17.27%
Charleswood $169,613 $197,406 16.43%
Canterbury Park $113,207 $131,653 16.29%
Tuxedo $284,925 $328,727 15.37%
River Park South $170,118 $195,342 14.83%

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