Buyers' fear of being left out is waning as real estate sales in the Vancouver region decline to a six-year low while prices for various housing types weaken during a summer slump.
The Real Estate Board of Greater Vancouver saw 1,929 residential sales in August, down 36.6 per cent from the same month in 2017.
It marks the lowest number of sales for August since 2012, with total transactions down 25.2 per cent compared with the 10-year average for the month.
"The fear-of-missing-out mentality is much weaker. Buyers are being patient and not being rushed into purchases," said Josh Gordon, assistant professor at Simon Fraser University's School of Public Policy. "Speculative expectations, where people think that prices will continuously increase at strong rates, have been taken out of the market for now."
Housing policies at the federal and provincial level combined to cool off the Vancouver area's real estate market, where year-over-year sales have fallen for seven consecutive months.
Prof. Gordon said the B.C. government’s plans for what it calls a speculation tax, targeted primarily at out-of-province residents, have already dampened flipping activity. Industry experts describe the tax as largely a vacancy tax on people who pay little or no B.C. income tax.
"When prices fall, that isn't good for some people, but for affordability, it is a good thing," he said in an interview on Wednesday. "The demand-side policies are having a cooling effect on the market."
Steve Saretsky, a real estate agent who also writes a housing newsletter, said the trend of fewer detached houses being flipped could soon spill over to result in less speculation for presale condos in Canada's most expensive housing market.
Mr. Saretsky notes that the price for detached houses sold within the City of Vancouver averaged $2,493,952 in August, down 19 per cent from the record high of $3,080,907 in April, 2016 – four months before the introduction of the foreign-buyers tax in the Vancouver area.
In Greater Vancouver, the benchmark price for all residential types has decreased for three consecutive months, hitting $1,083,400 in August. The region's benchmark price, which is an industry representation of the typical home sold in an area, has fallen since reaching a record $1,094,000 in May.
“Home buyers have been less active in recent months and we’re beginning to see prices edge down for all housing types as a result,” board president Phil Moore said in a statement.
Benchmark prices have declined month-over-month, with the market for detached houses slipping the most. The benchmark price decreased to $1,561,000 for detached properties last month in Greater Vancouver, or a drop of 1.5 per cent from July.
The benchmark price for condos sold in the region fell to $695,000 in August, down 1.4 per cent from July, while townhouse prices declined 0.8 per cent month-over-month to $846,100. Prices for condos and townhouses are still higher than a year ago.
In the Fraser Valley Real Estate Board's territory, there were 1,155 sales last month, or a 38.5-per-cent decrease from the 1,879 transactions in August, 2017. The Fraser Valley board, which includes the sprawling suburb of Surrey, said its August sales were the lowest for that month since 2012.
The Fraser Valley board's average price for all property types dipped to $748,226 in August, down 2.8 per cent from July, but up 8.3 per cent from a year earlier.
Brad Henderson, president of Sotheby's International Realty Canada, said the Vancouver region could face further price declines through the rest of 2018. Recent government policies and higher borrowing costs have eroded sales, he said.
In February, British Columbia's NDP government raised the foreign-buyers tax to 20 per cent from 15 per cent, while expanding that tax beyond the initial target of the Vancouver region. Federally, Canada's banking regulator implemented a stress test on Jan. 1 making it tougher for buyers to qualify for mortgages.
Greater Vancouver's ratio of sales to active listings has tumbled for detached properties, falling last month to 9 per cent, which is considered to be a buyer's market.