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A woman walks past homes for sale in the Kitsilano neighborhood in Vancouver, B.C., Sept. 18, 2012.


As he drives through Kitsilano in Vancouver's coveted westside district, real estate agent Chris Frederickson points out the For Sale signs, block after block.

Of 62 active listings, only three homes have sold over the past 30 days in Kitsilano, underscoring the slowdown in residential sales that has hit Canada's most expensive city for housing. In Greater Vancouver, the number of residential units sold tumbled to 1,670 last month, down 31 per cent from August, 2011.

Still, benchmark residential prices in Kitsilano remain out of reach for many prospective buyers, ringing in at $1.44-million in August based on a housing index. "My family still can't afford a house in Kits," said Mr. Frederickson, a 31-year-old agent with Sutton Group West Coast Realty, who co-owns a condo in the neighbourhood with his wife.

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But prices are slipping. Kitsilano prices were down 0.55 per cent in August from the same month in 2011. On Vancouver's west side, the index shows prices in August fell 3.7 per cent year over year to $2.12-million.

After years of booming sales and surging prices in British Columbia's largest city, the slowdown in Vancouver real estate is triggering growing worries about the national housing market. Vancouver experienced the greatest price gains in recent years among big cities and has the most to lose in a downturn, and experts worry the city's malaise is spreading.

"The housing market correction appears to be under way, driven by a sharp downturn in Vancouver," TD chief economist Craig Alexander said in a report Tuesday. "We expect the slowdown will become more broad-based following a fourth round of mortgage insurance regulation tightening by the federal government in July."

Statistics compiled by Toronto-Dominion Bank show that in the second quarter of this year, residential resale prices in the Vancouver region averaged $713,649, or a level that is 9.4 times higher than average annual household income of $75,918. For Canada as whole, prices averaged $364,349, five times higher than average annual household income of $72,705.

The average residential price in Greater Vancouver declined 6.9 per cent last month from August of 2011, though last year's figures got lift from sales of high-end homes. The survey excludes the sprawling and less expensive Vancouver suburb of Surrey.

"People in Central Canada tend to talk about the housing bubble in Vancouver more than anyone on this side of the Rockies," said Cameron Muir, chief economist for the Vancouver-based B.C. Real Estate Association. "I always joke that Vancouver is okay, but I'm not sure about Toronto."

Still, Mr. Muir acknowledges that the tide has turned, and Vancouver has become a buyer's market. For consumers, it means having the time to carefully shop around instead of being rushed into entering bidding wars on homes that aren't quite suitable for their needs or need substantial renovations.

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An industry statistic known as the sales-to-active listings ratio underscores the change. It takes the number of homes sold in a month and divides it by the number of active listings, and real estate agents consider it a neutral or balanced market when the ratio is between 15 per and 20 per cent. It's a buyer's market below 15 per cent, and in August, Greater Vancouver's ratio stood at 8.9 per cent.

The Real Estate Board of Greater Vancouver notes that its house price index slipped a mere 0.5 per cent in August, compared with the same month last year, emphasizing that the index comprising single-family detached homes, townhouses and apartments provides estimates of changes in price for "constant quality properties" in an effort to make appropriate comparisons.

"Housing markets don't operate like the stock market. People don't decide to sell their house and buy it back in six months," Mr. Muir said. "To see a substantial price decline, you need a macroeconomic shock or household financial disaster, writ large, which is what happened in the United States. You need a recession, high unemployment and extremely high interest rates, where people can't afford to make their mortgage payments and houses get flooded on the market and there's no one there to buy them because there are no jobs. But there's no evidence of that here."

Back in Kitsilano at the St. James Community Centre, of the parents and relatives who watched children do their gymnastics workouts this week, only a handful live in the neighbourhood.

Rose Fong, who lives in the more affordable Mount Pleasant area, briefly pondered whether it would be worthwhile to take advantage of softening prices and buy into Kitsilano. But Ms. Fong said she likes it where she is and Kitsilano is still too expensive. "Kits is overrated for what you get for the price," she said.

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