Housing sales have slid to a 19-year low in Greater Vancouver as listings languish and prices fall to levels last seen in mid-2017.
Sales volume in May fell 6.9 per cent compared with the same month in 2018, and slumped 22.9 per cent beneath the 10-year average for May, the Real Estate Board of Greater Vancouver said on Tuesday.
Last month’s 2,638 sales in the region for various housing types were the lowest for May since 2000, when only 2,059 properties changed hands in that month.
The residential benchmark price, an industry representation of the typical home sold in Greater Vancouver, has declined month over month for the 12th consecutive time. It fell last month to $1,006,400, down from a record-high of nearly $1.1-million in May, 2018, and the lowest since June, 2017.
The number of listings has surged to the highest level since September, 2014.
For prospective purchasers today, the change to a buyer’s market is welcome in a region still struggling to cope with housing affordability.
Shane Miller-Tait, a 32-year-old electrical engineer, said he is hoping for prices to drop further to make it possible to present serious bids.
“I could tell the market was unsustainable because of speculators and money launderers, and clearly going to come down sooner or later. I wasn’t going to be the one left holding the bag,” said Mr. Miller-Tait, who is currently renting a one-bedroom condo with his fiancée.
For sellers of detached properties, the downturn has knocked hundreds of thousands of dollars off what they might have fetched for their homes in the first half of 2016, when detached prices set record highs in most neighbourhoods.
On Vancouver’s west side, the benchmark price for detached houses sold has tumbled more than $500,000 over the past year to $2,927,600.
Bryan Velve, who became a real estate agent in 1987, said the phenomenon among buyers known as fear of missing out, or FOMO, now seems a distant memory. “Today, sometimes a buyer will make an offer at one price and you finally persuade the seller to take that price. But nope, the buyer then decides the market is still going to fall more and wants a cheaper price,” Mr. Velve said.
Greater Vancouver’s condo segment began softening in mid-2018, including in the less-expensive suburbs. In Tsawwassen, for instance, the benchmark price for condos sold has fallen 8.5 per cent over the past year to $464,300.
Bryan Yu, deputy chief economist at Central 1 Credit Union, forecasts the regional benchmark price for detached homes, condos and townhouses could decrease another 5 per cent to 6 per cent by the end of 2019, before stabilizing in 2020. “You will see more buyers coming back to the market. Prices will continue declining even as sales start to pick up," said Mr. Yu, who noted that May sales rose 44.2 per cent compared with sluggish activity in April.
The federal banking regulator implemented a stress test on Jan. 1, 2018, making it tougher to qualify for mortgages.
“High home prices and mortgage qualification issues caused by the federal government’s B20 stress test remain significant factors behind the reduced demand that the market is experiencing today,” board president Ashley Smith said in a statement on Tuesday.
The previous BC Liberal government introduced a 15-per-cent tax on foreign buyers in August, 2016. The BC NDP government raised the foreign-buyers tax to 20 per cent in February, 2018, while expanding that tax beyond the initial target of the Vancouver area.
International purchases of real estate in the Vancouver region have decreased to less than 3 per cent in March, 2019, from about 13 per cent of the total in the seven weeks before the tax’s mid-2016 adoption.
Industry experts say other provincial factors include a crackdown on money laundering, taxes aimed at higher-end properties, as well as what the NDP government calls a speculation tax that is targeted primarily at out-of-province residents.
Sales activity for detached houses selling at more than $3-million on Vancouver’s pricey west side has hit a deep freeze. For example, only 29 detached properties sold for more than $3-million on the city’s west side in April, according to data service SnapStats. That is down 80 per cent from the 145 sales during the height of the housing market boom in March, 2016.
Sellers now have to reduce their price expectations to lure buyers. A listing for an 80-year-old bungalow went on the market on March 1 in the Point Grey neighbourhood on Vancouver’s west side. The property at 4247 West 15th Ave. sold in mid-April for $2,135,000, or $245,000 below the asking price of $2,380,000. The assessed value for the property in July, 2017, was $2,860,700, most of which was land value since the house itself is viewed by developers as a tear-down.
In the nearby Dunbar neighbourhood, a two-storey house built in 2016 sold in April for $3,485,000. That property at 3439 West 22nd Ave. sold in August, 2017, for $3,860,000.