Home sales in the Vancouver region slid to an 18-year low in July, extending a slowdown that threatens to push down prices that have stayed strong in Canada’s most expensive real estate market.
It marks the sixth consecutive month in which sales have fallen year over year and while prices for detached houses within the City of Vancouver have declined, the pricing for all housing types regionally has proven to be resilient, propped up by condos and townhouses in the city and the suburbs.
The market psychology today is a dramatic change from two years ago when bidding wars were common and, so far, sellers have been largely unwilling to deeply discount their prices, resulting in a stalemate and fewer sales, said Bryan Yu, deputy chief economist at Central 1 Credit Union.
“We might see moderate price drops but not major, unless you’re a speculator or investor and think it’s a good time to get out,” he said in an interview on Thursday. “You’re not hearing about people being forced out of their homes because they can’t make mortgage payments.”
Sales in the Real Estate Board of Greater Vancouver’s territory declined in July to 2,070, down 30.1 per cent from the same month in 2017. It marks the lowest level of sales for July since 1,758 properties traded hands in that month in 2000. Last month’s transactions were 29.3 per cent beneath the 10-year sales average for July.
Housing policies at the federal and provincial level have combined to cool off the Vancouver area’s sales in the first half of 2018. The B.C. government raised the foreign-buyers tax to 20 per cent from 15 per cent in February, while expanding that tax beyond the initial target of the Vancouver region – one of several provincial measures designed to dampen demand and reduce prices. Federally, Canada’s banking regulator implemented a stress test on Jan. 1, making it tougher for buyers to qualify for mortgages.
“It’s pretty weak sales volume. Keep in mind that this is not economically driven but it has been largely a policy-oriented downturn in sales,” Mr. Yu said. “It’s an ice-cold market now for detached house sales above $2-million because there’s a small pool of buyers for those properties.”
While the B.C. economy remains strong, Mr. Yu said, the Vancouver area’s benchmark price for all housing types could fall 5 per cent in 2019, compared with 2018. The benchmark price is an industry representation of the typical home sold in an area.
The benchmark price for all housing types in Greater Vancouver has flattened, slipping to $1,087,500 – down $6,100 from the previous month but up 6.7 per cent since July, 2017.
"With fewer buyers active in today’s market, we’re seeing less upward pressure on home prices across the region,” board president Phil Moore said in a statement. He said the market for detached houses has sagged the most, while demand is also softening for condos and townhomes.
Average prices for detached houses already have fallen, as fewer luxury transactions are completed on the Multiple Listing Service. The price for detached houses sold in Greater Vancouver averaged $1,609,703 last month, a 5.4-per-cent drop compared with July, 2017. Average prices for condos and townhomes, by contrast, are higher than a year ago, with condo prices up 7.1 per cent to $712,092 and townhome prices gaining 9.5 per cent to $932,259.
Real estate agent Steve Saretsky said the condo market has been relatively steady in the City of Vancouver. “Despite the slowdown, there’s no reason for sellers to panic, and they haven’t,” Mr. Saretsky wrote Thursday in his newsletter. “While bidding wars appear to be a thing of the past, prices are still holding up relatively well.”
In the suburbs, the benchmark price for condos sold in Pitt Meadows has climbed 33.7 per cent to $476,100 over the past year, despite pricing declines since April.
That contrasts sharply with Vancouver’s pricey west side, where the benchmark price for detached houses was $3,356,500 last month, for an 8.4-per-cent decline since July, 2017. On Vancouver’s east side, the benchmark price for detached properties sold last month was $1,535,500, down 1.7 per cent from a year earlier.
The Fraser Valley Real Estate Board, whose territory includes the sprawling suburb of Surrey, saw 1,290 sales last month, down 33.4 per cent compared with July, 2017. Last month’s sales were the lowest for July since 2010, when there 1,101 transactions.
Fraser Valley board president John Barbisan said the stress test and rising interest rates are part of the reasons behind slumping sales. The average price for detached houses sold in the Fraser Valley’s area last month reached $1,095,339, up 6.4 per cent from the same month last year.