Residential real estate markets in the West are thriving despite hefty housing price increases, statistics show.

In May, residential sales in Vancouver, Calgary and Edmonton increased from a year ago despite strong price hikes. Greater Vancouver residential sales improved 19.5 per cent while Calgary’s rose 7.9 per cent and Edmonton’s climbed a whopping 24 per cent.

According to the Real Estate Board of Greater Vancouver, sales of detached, attached and apartment properties jumped 19.5 per cent to 3,918 units sold in May 2004, compared to 3,279 in May 2003.

Calgary Real Estate Board figures indicate that total residential sales rose to 2,643 in May, compared to 2,449 in May 2003. In Edmonton, residential sales rose to 1,961 from 1,581 in the same month last year.

Andrew Peck, president of the Real Estate Board of Greater Vancouver.

“There’s still a lot of demand and we expect that there’s going to be continued demand, particularly in the lower end,’’ said Vancouver board president Andrew Peck.

Vancouver’s increase came while the benchmark price of a detached home soared 21.2 per cent to $503,890 from $418,060 in May 2003. The benchmark price of an apartment rose 22.4 per cent to $240,160 from $194,220, and the benchmark price of an attached unit climbed 19.3 per cent to $319,950 from $268,830 a year ago.

The benchmark price is described as the price of a consistent quality home.

‘‘The predominant market that we’ve had has been in the lower end,’’ said Peck. ‘‘The market that we’ve had in the high end has not been a huge mover and shaker.’’ Although prices are high, low interest rates effectively reduce the total price, he added.

As a result, low rates are spurring the activity.

Government policies, immigrants from other countries, migrants from other provinces and the forthcoming 2010 Winter Olympics have also combined to keep sales strong, said Peck.

Barring a 9/11-like disaster or a drastic change in government policy, he expects investor confidence to remain strong.

Condo sales were the market’s biggest driver in Greater Vancouver as sales of apartment properties increased 45.9 per cent to 1,767 sales, compared to 1,211 sales in May 2003.

The provincial government recently gave new condo buyers a break when it changed the rules on a transfer tax that applies to all home sales.

Previously, people who bought their condos before they were built had to pay tax based on market value rather than the purchase price. If the value increased by the time the condo was built, they faced a heavier tax than they expected.

The tax also hurt buyers who would have been exempt from the tax had they bought for less than $275,000.

The province made the rule change retroactive to 2002 and provided a tax credit to those who had paid tax based on market value.

Peck said the change should help to increase investor confidence and provide more certainty for builders and realtors.

Sales of attached properties in Greater Vancouver increased 16.8 per cent in May to 584 units sold from 500 units in the same month a year ago, while detached home sales remained virtually unchanged at 1,567 sold versus 1,568 a year ago.

Bruce Kagetsu, an agent with Sutton Group Killarney Realty, said activity is about the same as last year. Vancouverites are not deterred by high prices because of favourable financing arrangements, he noted.

‘‘For example, if someone increases their mortgage by 100 grand, it’s no big deal because interest rates are low,’’ said Kagetsu.

Kagetsu, who has been selling real estate for 15 years, said most of his clients are repeat buyers.

But low interest rates are also allowing first-time buyers to enter the market despite high prices.

‘‘For first-time buyers, it’s cheaper to buy than to rent right now,’’ said Kagetsu. ‘‘Why would somebody want to pay rent when they can build equity?’’ The biggest demand for apartments occurred in Burnaby, where sales rose 81.3 per cent to 203 from 112 in May 2003, and South Delta, where sales climbed 71.4 per cent to 24 units from 14 in the same month last year.

Burnaby was also the most popular area for detached home sales as the number of houses sold in May jumped 20.6 per cent to 152 from 126 in May 2003.

Coquitlam led the way in attached unit sales, which climbed 59.3 per cent to 43 from 27 a year earlier.

Peck said the sales increases show there is still a huge pent-up demand for residential real estate in Greater Vancouver.

Calgary Real Estate Board figures indicate that total residential sales rose to 2,643 in May, compared to 2,449 in May 2003.

On a full-year basis, Calgary is approaching its record sales year of 2002, when 11,569 properties sold up until the end of May.

To the end of June this year, 11,462 properties had sold, while 10,451 sold by the same month last year.

‘‘We’re a little surprised,’’ said Don Dickson, president of the Calgary Real Estate Board.

‘‘We expected a little drop in the sales in Calgary this year and we didn’t see it.’’ The average residential sale price, regardless of the type of property, in May reached $219,445.

This compares to $210,734 in May 2003, but this year’s May price dipped slightly from the average April price of $220,245.

On a yearly basis, Calgary’s average sale price jumped to $220,207 from $208,146 last year.

Single-family homes led the way in sales with 1,938 units sold, while 692 condominiums and 13 mobile homes changed owners. Last year 1,834 single-family homes, 606 condos and nine mobile homes sold in May.

Calgary also is experiencing more listings than ever before, with 19,541 as of the end of May, compared to the previous record of 15,309 in the first five months of 2002.

Low interest rates and federal government incentives for first-time homebuyers that require less money down have been the key, said Dickson.

‘‘What has happened is we’re having an enormous shift of first-time buyers moving out of the rental market,’’ said Dickson, adding that probably explains why Calgary has a high rental vacancy rate.

Condominium sales are also playing an important role, comprising 26 per cent of sales compared to 25 per cent for the same period in 2003.

‘‘It took a long time for Calgary to accept condos, but they certainly are a big factor in our market now,’’ said Dickson, adding many Calgarians once preferred open bigger homes and open spaces.

In Edmonton, the average selling price cracked the $200,000 barrier for the first time in May.

‘‘Prices are rising slowly but steadily,’’ said Jon Hall, the Edmonton Real Estate Board’s manager of marketing and communications. Hall describes the market as “balanced.”

‘‘We’re suggesting if you price your house correctly, you can sell in a reasonable amount of time.’’ But prices in Edmonton are still much lower than other cities.

A recent survey, said Hall, showed that Edmonton’s prices ranked last among 10 cities.

‘‘The average price of a single-family home in Edmonton is lower than Calgary and Fort McMurray and lower than the Alberta average,’’ said Hall.

Edmonton’s and Calgary’s prices are able to stay low compared to other cities, he said, because there is enough open land in all directions, whereas Vancouver and Toronto, located next to water, are forced to go in one direction.

Edmonton’s most expensive house, on a rural property, sold for $2.4 million.

Only eight have sold for more than $1 million and only eight million-dollar homes were on the market as of last week.

Many people in Toronto are amazed that Edmonton has so few high-priced homes, said Hall. As a result, the city is attracting Torontonians, who paid $300,000 for suburban abodes.

‘‘They can get twice the house, so they’re doing it,’’ said Hall.

This year, Edmonton hit $2 billion in sales on July 2 – one month ahead of last year. Although full June figures were not yet available, Hall said 190 more units had sold than the same month last year.

On a full-year basis, Edmonton had sold 1,200 more units than last year.

Hall said Edmonton has 21/2 months’ worth of inventory – in other words, enough property to last for that long. But the board views four months’ worth of inventory as normal.

Builders are in an over- supply situation, said Hall, so they’re cutting down on their new homes.

Unlike Vancouver and Calgary, single-family homes were the biggest sellers in Edmonton, averaging $202,426.

But condos still sold for an average price of $139,044, which was 12.75 per cent higher than last year.

Condos now account for more than a quarter of Edmonton’s sales, and will likely become an increasingly important component of the market, especially in the downtown core where nine new developments are under way, said Hall.

Condos serve as the entry-point into the market for first-time buyers.

Baby boomers who are now becoming empty-nesters are also driving the condo market, along with family units that are breaking up.

Adult children are not living with parents as long, said Hall, and parents are purchasing condos for kids in university and then keeping the properties for investment purposes.

‘‘We have more single people than ever before living in housing units, so that’s an increasing trend,’’ said Hall. ‘‘In my condo building right now, there are only four couples in 22 units.’’ The average price of Edmonton’s duplexes and row houses gained 5.34 per cent to $155,157 from $147,294 last May.

(Monte Stewart can be reached at monte@businessedge.ca)