the rennie brief - Housing Differences - June 2022

the rennie brief - Housing Differences - June 2022

HOME PRICES

WHAT YOU NEED TO KNOW ABOUT THE RELATIONSHIP BETWEEN PRICES & APPRECIATION • Similar to “conventional” factors that affect the value of a home, existing price differentials also impact home values over time. • In the Vancouver Region, the lower a sub-market’s benchmark price compared to the regional average, the greater the price appreciation over time (and vice versa). • A greater relative appreciation in prices may be found in more affordable parts of the region, and among more affordable home types.

the rennie brief

JUNE 2022

In the Vancouver Region, relative home values—that is, how close to, or far from, the regional average that prices are—appear to be one predictor of potential value appreciation over time.

HOME VALUES & PRICE APPRECIATION Myriad factors influence the value of a home, from the size of the lot on which it’s situated, the square footage of finished area, its age and condition, and its location (...location, location) to broader macro and market features (like interest rates). These factors can, of course, also impact how the value of a home changes over time. Naturally, having a firm understanding of how these elements interact with each other to determine the price of a home—or the potential for its value to change over time—is really the holy grail of real estate analysis. And while we won’t be unveiling such a treasure here (unfortunately), our analysis of home values in various sub-markets within the Vancouver Region does reveal a somewhat robust negative relationship between a home’s current value and its potential for appreciation over time. Put slightly differently, the lower an area’s benchmark price is in relation to the region as a whole, the greater is the home price appreciation in that area, all else being equal. The opposite applies to areas that have relatively high values (that is, they appreciate less quickly). A CLOSER LOOK AT WHAT WE DID & WHAT WE FOUND As a starting point, we gathered monthly benchmark price >Page 1

Made with FlippingBook - professional solution for displaying marketing and sales documents online