Buyers see hope as home prices decline
The turn of the Lower Mainland real estate market's cycle has been more dramatic than expected, with real estate boards reporting another drop in sales and slide in prices at the end of August.
In Greater Vancouver, August Multiple Listing Service sales were down almost 54 per cent to 1,568 units, compared with 3,348 units in the same month a year ago.
So-called benchmark prices across Greater Vancouver in August, while still up from 2007, continued their slide from May.
The typical Metro Vancouver detached home sold for $737,985 in August, down 4.3 per cent from May. The typical apartment, at $374,366, was down 3.9 per cent. The typical townhouse, at $463,433, was down 3.2 per cent.
Sales in the Fraser Valley market dropped 48 per cent in August to 910 units, compared with 1,763 units in the same month a year ago.
The average detached home price, the Fraser Valley board said, has fluctuated on a downward trend since about March to hit $541,795, down 1.5 per cent since then.
Urban economist Tsur Somerville said there are a lot of signs that suggest Vancouver markets are out of equilibrium and the boom market would reach an end, but many observers, including himself, have been surprised at how quickly sales have contracted.
"This summer, sales went off a cliff," added Somerville, who is director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C.
Somerville added that prices reflect more than just the balance of supply and demand, in which buyers currently have the advantage: They also reflect the expectations of buyers.
"Clearly buyers are certainly changing their expectations around the price at which they're willing to buy," Somerville said.
In some markets that shift has been bigger than in others. Port Moody's benchmark price for a detached home, at $725,020, was down almost 11 per cent from August a year ago. In Pitt Meadows, the August benchmark of $461,096 was 8.1 per cent below August 2007.
Growth in the inventory of unsold properties that spiked through the spring and summer stalled in August.
The Real Estate Board of Greater Vancouver reported 4,331 new listings in August, 1.7 per cent below the number of homes put on the market in August 2007. Total inventory of 17,950 is down 6.2 per cent from July.
The inventory decline, Somerville added, is to be expected since "at some point when people aren't selling [their homes], they stop trying to sell them."
Listings in the Fraser Valley also dipped in August to 11,770 units, compared with the record 12,299 units in July.
Robyn Adamache, a market analyst with Canada Mortgage and Housing Corp., added that the levelling in inventory might be a positive sign that the market is levelling off.
Adamache said that job growth and population growth through migration, which support the housing market, are still in positive territory, so "the magnitude of the changes are a little bit more than was expected."
David Watt, president of the Real Estate Board of Greater Vancouver, said he believes the market simply reached a ceiling.
"I think it was not a willingness to pay more," Watt said. "We hit a level where buyers simply could not. They weren't able to borrow more money or whatever. That's a real, true market taking care of itself."
Watt added that the number of sales reflects levels similar to those seen in Metro Vancouver through the late 1990s.
So far, the shift in Vancouver's markets has not worried Heidi Samuda, a west-side interior designer, who listed her Arbutus Village townhouse for $829,000 three weeks ago.
"I've had some pretty good responses," Samuda said, though she understands sellers have to be realistic about the prices they are asking.
Samuda added that she has bought and sold several times, and has managed to get the price she has wanted, even in markets turning down.
"It was just a matter of wait and see and the right buyer will walk through the door," she said. "I think one has to hold firm to that, obviously within reason."
If the discussions she and her realtor have been having with potential buyers don't pan out, "then we'll have to adjust," she conceded.
Samuda's agent, Lorne Goldman with Macdonald Realtors Lorne Goldman Ltd., said houses are selling, but the market has become "extremely competitive."
"It's no different than markets we've seen in the past in Vancouver," he added. "It's a market where 50 per cent of the people are extremely happy: Buyers."