Vancouver Property Sales Slow
Vancouver real estate's record-setting, economy-defying sales surge may be drawing to an end.
In August, Vancouver area sales declined 36 percent from the same month of 2009, according to the latest data from the Real Estate Board of Greater Vancouver. While that may sound catastrophic, August of 2009 saw the second-largest volume of sales ever recorded by the association, part of a buying frenzy that pushed housing prices to all-time highs.
While markets around the globe struggled, Vancouver prices hit their peak in April, when the REBGV's residential index hit a price of $593,419 for a house. International buyers helped fuel the surge, especially investors from mainland China. Since April the index price has slipped 2.8 percent, to $576,597, which is still 6.9 percent higher than August of 2009.
"We're seeing moderate demand, low interest rates and a healthy but slowing stream of supply in our marketplace, all variables that favor those looking to purchase a home," Jake Moldowan, REBGV president said in a statement. "The last few months have also shown some stability when it comes to price fluctuations in the region, which is a welcome trend after reaching record highs in April."
But not everyone is so sure the market is stabilizing. A recent report from the Canadian Centre for Policy Alternatives warned that Vancouver's real estate market could be a bubble ready to burst. Values could drop by 30 percent if interest rates rise, according to the report.
"The real question is how long prices grind lower after that phase, and how many years it will last," former MP and author Garth Turner told a reporter for ctvbc.ca. "Those who thought real estate would always rise in value were blinded by the industry and by the cheapest mortgage rates ever. All booms end badly, and all bubbles burst."
But local analysts were skeptical of the report, noting there are few of the fundamental signs of a bubble situation. Few experts believed last year's sales were sustainable. And a dip in activity doesn't mean the popular market is ready to go over a cliff, especially since demand remains high and there is little new construction in the pipeline, the analysts note.
"Inflation today is well within range of the Bank of Canada. Nobody thinks rates will climb dramatically," B.C. Real Estate Association chief economist Cameron Muir told CTV. "When you see very large declines in prices is when households are in over their heads when it comes to their ability to repay debt.
"The question I would ask is, in order to see this so-called 30 per cent price correction, what kind of shock is going to occur to induce that?"
If anything, the latest numbers suggest the market may be returning to a form of normalcy, some analysts say.
"I think [the market] is settling down more," Tsur Somerville, director of the centre for urban economics and real estate in the Sauder School of Business at the University of B.C., told the Vancouver Sun