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Real estate is seen stretching from Granville Island to Kitsilano in Vancouver in October 2012.Rafal Gerszak/The Globe and Mail

2.3% – Decline in Vancouver home prices in December from a year ago, according to MLS Home Price Index

How 2012 shaped up

Prices have softened in Vancouver, with the MLS Home Price Index benchmark price sliding 5.8 per cent, to $590,800, since reaching a peak of $625,100 in May.

That's the impact so far of the steep drop in sales that began in this city earlier than in the rest of the country, and has continued right through December. It's a sharp reversal for a city whose market was flying high in 2011, which set a record for sales with 30,595 homes changing hands over the MLS. Last year 25,030 homes changed hands, down 22.7 per cent. Economists had been predicting a correction, characterizing the market as frothy and overheated.

Sales last month were 38.4-per-cent lower than the average sales for December over the past 10 years. New listings were down 12.6 per cent from a year ago.

Local perspectives

Whether today's conditions amount to a correction, a cooling or a passing standoff doesn't matter much to Jason Stewart, a retiree who moved from Toronto to Vancouver last year.

After scouring B.C. listings and trudging through dozens of open houses, he and his wife have decided to remain renters.

"We just found that going through a multitude of open houses, both in downtown Vancouver, the Main Street area, Commercial Drive – and out in Port Moody – people were asking a heck of a lot for very little," Mr. Stewart says.

One house he has had his eye on, a fixer-upper he has been told was once used as a grow op, is still on the market nearly three months after it was listed for more than $500,000.

"It's still listed at $599,000 – which means, drop the price – if you're serious, drop it," he says.

"I think what's happened is that, last year, a lot of people were unrealistic in what they thought they could sell their properties for," says Ed Gramauskas of Dexter Associates Realty in Vancouver.

"We saw the big spike the previous year … West Side detached houses just went through the roof and everybody thought it would continue.

"Everybody's expectations were way too high."

Some would-be sellers took their homes off the market, discouraged by softening prices and a glut of listings.

"The consumer nowadays is very savvy as to what values are," Mr. Gramauskas says. "And when they saw this enormous amount of inventory that was way overpriced, a lot of consumers backed off and said, 'No, I don't think so.' "

He expects some of those listings to resurface at reduced prices.