While the real estate wars in Vancouver are heating up, it's not about buyers bidding for houses but rather banks and real estate organizations arguing about what's really happening in British Columbia.
Both CIBC and Central 1 Credit Union issued reports Thursday on why prices in the region have been overstated in other reports.
At the same time, realtor Royal LePage came out with its own report on second quarter home prices that said Vancouver's overall housing market experienced some of the largest price increases in the country over the past year, with detached bungalows rising 14.1 per cent on average and condos rising 2.5 per cent.
And when it comes to new home prices, Statistics Canada reported that Metro Vancouver posted a minuscule 0.2-per-cent increase in May from April and a drop of 0.8 per cent from May 2010 to May 2011.
Central 1's main complaint about real estate numbers and affordability is that high Metro Vancouver housing prices are being overstated because the price-to-income ratio which is used to measure housing affordability is based on Vancouver-area prices when lower-priced cities in the region, like Surrey are not included.
As well, Central 1 economist and report author Bryan Yu said, typical prices should be based on the median price - where 50 per cent of sales are below the mid-point of sales and 50 per cent above - instead of the average price, which is skewed upward when very expensive homes are sold in areas like West Vancouver, Richmond or the west side of Vancouver.
"They [expensive homes] are pulling up average prices, but not median prices," Yu said in an interview. "A lot of reports are based on the higher markets, including areas like West Vancouver, Burnaby and Richmond, but exclude high-growth areas like Surrey, Langley and North Delta."
Yu said he's not suggesting Metro Vancouver prices aren't high — "for many, they're unaffordable" — just that the erosion of affordability isn't as bad as some reports suggest.
According to the Central 1 report, the Real Estate Board of Greater Vancouver's pricing data, which measures price levels and growth in Vancouver and cities closer to the urban core, has limitations because it's most commonly referenced while Fraser Valley communities - generally cheaper — are measured in a separate survey.
If the two geographic areas were combined, Central 1 said, the average price for the entire region would be about $93,000 less than the REBGV average.
Benjamin Tal, deputy chief economist for CIBC World Markets agreed that average prices mean little.
"If you look at Vancouver, although it's the most expensive market in the country, if you remove properties [sold] over $1 million, then it's a normal market. The story in Vancouver is expensive product and that's why the average is so high.
Eighty per cent of the market is a normally functioning market consistent with income."
Tal said in his report, entitled Canadian Housing Prices — Beware of the Average, that the gap between average and median prices is reaching an all-time high.
Although the average house price climbed 25.7 per cent on a year-over-year basis to more than $800,000 in May, Tal found that by removing properties that sold for more than a $1 million there was a much more moderate price appreciation in the market. It also reduced the average sale price by $220,000 to just over $590,000.
Meanwhile, the Royal LePage report concluded that at the end of 2011, "average house prices in Vancouver are forecast to be 15.4 per cent higher than 2010," while sales are expected to rise six per cent over 2010.
For new homes, as opposed to resale homes, the StatsCan report said that Metro Vancouver also posted a drop of 0.8 per cent in new home prices from May 2010 to May 2011, while new home prices rose 1.9 per cent nationally over the year.
REBGV president Rosario Setticasi said he feels his agency's home price index is an accurate measure of property values, although he agrees that the average price is often not a true reflection of overall market conditions.
By Brian Morton, Vancouver Sun