It's no surprise that real estate prices in the lower mainland are increasing and projections are that they will continue to increase. If you are thinking about purchasing property I think the first question to ask yourself is: What is more important, location or size?
Personally for me, location was more important. I really feel strongly that I would rather live in a smaller condo right in Vancouver than a townhouse/home in the outer cities. I made this decision last year when I bought my condo and I couldn't be happier. Yes I had to cut out a few things and downsize but I've gotten completely used to it and I really don't miss any of those things.
Living in a small space makes you think about every purchase you make. If I don't really need it, why would I take up space in my apartment to have it there. This was particularly helpful for clothing/shoes/accessories. I would say that I have 50% less clothing, but now I love everything that I have.
If you are thinking about purchasing your first home, or maybe an investment property ask yourself this important question, and then make sure to get your mortgage financing in order before you go looking. This hot market does not allow time to get your financing done after you find a place you like. By that time it will be sold.