The Vancouver housing market isn't the pressure cooker it used to be, which makes buying a house a far less painful endeavour than in years past. But no one's about to call Vancouver a "buyer's market."
Nice houses that are priced right are selling within days, some in bidding wars. But anything priced too high or considered undesirable is apt to sit idle in this market, which is, according to the Real Estate Board of Greater Vancouver, witnessing the lowest total sales for the region since July, 2000. The Board reported 2,098 property sales in July, a drop of 11.2 per cent compared to June. It's a drop of 18.4 per cent compared to July, 2011.
There are many anecdotal stories around the Lower Mainland about houses that have sat on the market for months, priced too high for the more price-conscious market. A six-year-old West Vancouver home on a 21,000-square-foot lot overlooking Capilano Golf & Country Club was originally listed at $3.695-million three months ago. The owners have reduced the price by $400,000 and it still hasn't sold.
"There is a lot of product but it's not selling for the price that people expected or hoped for," says real estate finance expert Tsur Somerville, who is director of the University of B.C.'s Centre for Urban Economics and Real Estate. "People aren't buying at the prices that are being set."
But Mr. Somerville also attributes other factors to the drop in sales. Immigrant investors aren't buying like they were back in 2010 and 2011, and tighter federal rules regarding mortgage lending have made it more of a challenge for property investors.
"Up until earlier this year, there was a two-year period where certain areas were very, very active," he says. "There were areas that tended to see more capital flowing in from overseas, whether it be from immigrants, investors, whatever. In the areas where we had these really strong price increases, they have flattened out."
Long-time realtor Rick Stonehouse says there is a lot of product that is over-priced, but sales are still buoyant if the price is right.
Mr. Stonehouse recently sold a three-level, two-bedroom townhouse in Strathcona for the asking price of $899,000 within five days of going on the market. Another renovated heritage house in Strathcona sold for the same price the second week after going on the market. He says the house would have sold for more but was close to a busy street and didn't have a basement. He's about to list a Vancouver Special on a 50-foot-lot on West 13th Avenue in Kitsilano for $2.3-million.
Helmut Pastrick, chief economist for Central Credit Union 1, says average sales price numbers are misleading because they are often skewed by outrageously priced houses. Instead, he relies on house price index (HPI) figures that remove the outliers and compare properties with similar features, in similar neighbourhoods.
"Market dynamics typically are such that we see changes in demand conditions obviously through sales first, then it has a ripple effect, on supply, inventory, and consequently, on prices as well," says Mr. Pastrick.
"When it comes to Vancouver, we have seen sales turn lower since roughly March, and I'm referring to the monthly, seasonally adjusted sales, which is the relevant figure."
Overall, the HPI shows little significant fluctuation until recently. The index went from 163.9 in May, 2012, to 161.5 in July, 2012, which is a significant drop compared to months past.
"That's significant in the world of HPI," says Mr. Pastrick. "And we expect to see prices to slide lower in coming months. At a minimum, we are going to see some supply adjustment occur – listings withdrawn from the market.
"I think in 2013, we'll also begin to see sales pick up as well. I'm not suggesting a big surge in sales, but something at higher levels than we are currently experiencing."
Teacher Barb MacKay says it took her about a year and a half to find the right house to buy. She found it recently on a 30-by-90-foot lot in New Westminster. She'd originally seen the bungalow a year ago, listed for $490,000. However, she thought it needed too much work. Someone else purchased the house, did the renovations, and recently relisted it. By now, Ms. MacKay knew the house was a good deal, especially with the renovations all done, and she made an offer. There were other offers, but she got the house a couple of months ago for $592,000.
"I think there is still stuff out there, but a lot of it is unaffordable," she says. "I noticed, in my overall impression, that there are lots of people with overpriced houses, and they'd either just let them sit there, or they'd come down in price, or they'd take them off the market."
The condo market has also been softening for some time, says Mr. Somerville.
"Other than a few notable projects that had dramatic presales, overall the condo market has been subdued for a while."
Jay Berman, who lives in Manhattan Beach, Calif., purchased an 800-square-foot condo in Vancouver's West End 20 years ago, with a dream of one day retiring there. His plan has changed, so he put the condo on the market two months ago, for $299,000, which would seem a steal for a large one-bedroom in one of the most desirable neighbourhoods in Canada. But so far, he's had no interest.
"We're not in a hurry, so it doesn't matter much, but yeah, I guess I thought it would be pretty quick at that price," says Mr. Berman.
"I think in a neighbourhood as nice as that, it would be at least $100,000 more for a comparable condo in Southern California."
That said, nobody is suggesting it's a buyers' market in Vancouver, where the HPI benchmark for a detached home is up 1.4 per cent since last year, at $950,200.
"I've made this comment before," says Mr. Somerville. "House price levels in this market are such that I will never use the term 'buyer's market.' I will say, 'prices are more restrained and less frenzied.'"