Wednesday, April 3, 2019

Metro Vancouver home sales in March hit three-decade low

The composite benchmark price for all residential properties in Metro Vancouver dropped by 7.7 per cent year over year to $1,011,200.

Some Metro Vancouver realtors weren’t bothered much by a report Tuesday that March home sales in the region had hit a three-decade low.
The Real Estate Board of Greater Vancouver reported that home sales in the region totalled 1,727 in March, a 31.4-per-cent decrease from the 2,517 sales recorded in March 2018. The board also reported that last month’s sales were 46.3-per-cent below the 10-year March sales average and the lowest total for the month since 1986.
“I think it’s a nice change, to be honest,” said realtor Tom Gradecak.
Gradecak said the market correction is happening from the top down, and it has been interesting to watch the region enter an era of price discovery.
“There’s so few sales, so what do you compare things to?” he asked. “Even if you’ve priced it aggressively, there’s no guarantee you’ll sell it. There’s no buyers right now for high-end product.”
Gradecak said price changes vary widely in micro-markets across the region. He has seen prices for detached homes in West Vancouver come down by as much as 40 per cent, while in East Vancouver they have dropped only 12 per cent, he said.
Commissions are down, too, but like many experienced realtors, Gradecak had been setting aside a “rainy-day” fund in anticipation of a market slowdown, he said.
“I’m just as busy as I was before, it’s just harder to put a deal together,” he said. “Whereas I think some people were relying on quick-sales tactics — just get people in and out the door, don’t worry about building an actual business, try to make as much money as you can.”
Realtor Keith Roy said there’s a bit of price testing happening, but he’s also seeing “rational behaviour” in the market for the first time in about a decade. Sellers are carefully considering listing prices and doing multiple showings before adjusting those prices after two or three weeks, Roy said.
Meantime, buyers are looking at more properties and properly inspecting them, seeking advice from their families and professionals, and considering more financing options.
Roy said he expects more buyers and sellers will turn to experienced realtors, and believes the ones who got into the industry to cash in while the market was soaring will let their licences lapse when their two-year renewal cycle comes up.
“High-producing, competent realtors are very happy in a market like this,” he said. “I get to give advice and it gets listened to. Because you need a pro when the market goes bad, whereas everybody was a realtor two years ago.”
Licensing body the Real Estate Council of B.C. said 25,987 people were licensed as realtors in the province as of Dec. 31, 2018, down slightly from 26,023 in September. There were 24,951 licences active in 2017 and 23,336 in 2016.
Roy said the market itself isn’t “great,” but the pace isn’t as frantic, and it doesn’t feel as if a catastrophe has arrived.
“Everybody can enjoy the process a lot more,” he said. “Sellers can take their time, they don’t have to show their homes every day to 200 people. Buyers can look at homes a few times. Realtors can have dinner with their families.”
Board president Ashley Smith blamed provincial and federal taxes and borrowing requirements for the drop in sales.
Mortgage-lending restrictions, or B20 stress tests, which were brought in at the start of 2018, require lenders to prove they can make payments at two percentage points higher than the qualifying mortgage rate.
“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced,” said Smith in a statement Tuesday.
Dane Eitel, a realtor and founder of analysis firm Eitel Insights, said buyers are making what some sellers perceive to be low-ball offers, but sellers may come to regret not taking them two years from now. His firm anticipates the average sale price in Greater Vancouver’s condo market to bottom out at $525,000 to $550,000 in late 2021 to mid-2022, from a peak of $751,000 in January 2018.
For the detached market, $1.4 million has in recent years held as a “psychological price-test level,” but if that threshold breaks, the average price could bottom out at $1,225,000 by early to mid-2021, representing a correction of 31 per cent, Eitel said.
He said the mortgage stress test has slashed people’s options and believes there is a good reason for natural real estate cycles to exist.
“There’s a peak where everyone can’t afford, then it naturally comes back to a specific point, usually around 20 per cent,” he said. “But that’s an instigation for somebody to step into the market at a lower price. But a government dictating that they’re not trusting you with your own money is a real, real hard change to the game.”
According to the real estate board report, there were 4,949 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service in Metro in March, an increase of 11.2 per cent compared with the 4,450 homes listed in March 2018.
The report says the total number of homes currently listed for sale is 12,774, a 52.4-per- cent increase compared with March 2018.
The composite benchmark price for all residential properties in Metro is $1,011,200, a 7.7- per-cent drop from March 2018.
Only 529 detached homes sold last month, a 26.7-per-cent decrease over last March, as the price dropped 10.5 per cent year-over-year to just over $1.4 million.
As for condos, there were 873 sold in March 2019, a 35.3 per cent decrease compared to the 1,349 sales in March 2018. The benchmark price of an apartment property is $656,900, a 5.9 per cent decrease from last year.
Townhouse sales also fell in March to 325, a 27.1 per cent decrease year over year, as the price dropped six per cent to $783,600.
B.C. Finance Minister Carole James said Tuesday that the government will continue to watch the housing trend rather than focus on a specific month.
“Each month can bring different statistics forward, but I’m cautiously optimistic,” she said.
When asked whether the government’s policies were helping, given that home sales are stalling but prices are not dropping significantly, James said she doesn’t expect to see change yet.
“The housing crisis was ignored by previous government for years and years, and we are not going to turn it around overnight. But I think we are seeing some positive effect. We are slowly starting to see an uptick in vacancy rates … and we’ll be watching that data closely.”
— With files from Rob Shaw

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