Home sales in the Vancouver region spiralled lower in September while prices are slowly easing in Canada’s most expensive housing market.
The Real Estate Board of Greater Vancouver (REBGV) said the number of homes sold in September fell 43.5 per cent compared with September last year, marking the weakest September for sales in six years.
The decline follows a trend that has unfolded in recent months. The number of homes sold in the Vancouver region fell 36.6 per cent in August, 30.1 per cent in July and 37.7 per cent in June compared with the same months in 2017.
The steep drop began after the B.C. government announced a package of changes in late February aimed at making housing more affordable by deterring speculation, including a higher foreign-buyers tax and a new tax largely aimed at out-of-province buyers in certain regions of the province. Those changes also came on the heels of tougher mortgage stress test rules introduced by the federal government on Jan. 1.
Brad Henderson, president of Sotheby’s International Realty Canada, said the province’s policy changes have had a major impact on the market, moving many buyers and sellers onto the sidelines out of fear the market is poised to drop further.
“When there’s a significant change like that, a lot of people take a wait-and-see approach to see if the market is in fact going to soften and if there is going to be any kind of significant price correction," he said. “The big fear if you’re a buyer is that you’ll pay too much, and the big fear if you’re a seller is that you’ll sell for less than what you believe it’s worth or what the market will come back to at some point in time.”
Mr. Henderson said government policy can dampen sales, but it has not been as effective at driving prices lower. That’s because many people who can wait are not listing their homes for sale or not accepting bids below the price they want, so it takes a long time for market prices to fall significantly even when sales are dropping.
REBGV said the MLS home-price index benchmark price for all properties in Metro Vancouver is down 3.1 per cent over the past three months, but still up 2.2 per cent compared with September, 2017. The year-over-year price gain is due entirely to strength in the condo market, where prices remain 7.4 per cent ahead of last September, while detached house prices are down 4.5 per cent compared with September, 2017.
The benchmark price for all types of homes sold in September was $1,070,600, while the benchmark price for a detached house was $1,540,900 and condominiums sold for a benchmark price of $687,300.
Jason Turcotte, vice-president of Cressey Development Group, said people who own single-family detached houses in Greater Vancouver have seen the market value of their properties decrease month-over-month during the summer, and realize prices are down compared with a year earlier.
“It takes a while for an erosion of confidence. There has been a trend downward in the single-family detached market in terms of sales volume and price,” he said.
Mr. Turcotte said falling prices could mean baby boomers who have built up equity in their homes might be less willing to help their adult children with down payments. “There is less equity moving around, looking to reinvest,” he said.
September’s sales volume was 36-per-cent below the 10-year average for September, REBGV said, pushing the volume of listings in the market back to levels not seen for four years. There are 13,084 properties listed for sale in the Vancouver region, a 38.2 per cent increase over last September.
“Metro Vancouver’s housing market has changed pace compared to the last few years,” said Ashley Smith, REBGV president-elect.
Ms. Smith said Vancouver’s townhouse and condominium markets are “in balanced market territory,” while the detached home market is “a clear buyers’ market.”
Sales are also falling outside of Vancouver, with the Fraser Valley Real Estate Board reporting Tuesday that sales fell 36.1 per cent in September over last year, making September the weakest month for sales so far this year.