The real estate market never goes in one direction forever. The Real Estate Board of Greater Vancouver (REBGV) reported “Greater Vancouver’s housing market hits summer lull.” Until recent years this was not uncommon. When looking at the residential property sales in Metro Vancouver for July they remained at a 10-year low. Interestingly, while the volume of properties listed for sale continued to edge down, prices remained relatively flat.
The REBGV reported 2,098 residential property sales in July for detached, attached and apartment properties. Compared to the sales in July, 2011, this is an 18.4% drop and when looking at the numbers from the month before (June 2012) there was an 11.2% decrease in number of sales. July sales were the lowest total for that month in the region since 2000. The sales numbers were 31.2% under the 10-year July sales average of 3,051. This indicates a definite slowdown in the summer market.
The REBGV President, Eugene Klein stated, “People appear to be cautious about making significant financial decisions right now. While our local economy appears to be quite robust, there may be some concern about the impact of international markets and the federal government’s tightening of mortgage regulations.” While there may be some truth to what he is saying there seems to be more to it.
I would argue there are no concerns about the mortgage rules affecting the market in the sense that they already have affected the market. The rule change was the equivalent of a 0.9% interest rate hike for high ratio buyers (buyers with 5%-20% down payment). When the entry level buyers have withdrawn from the market, the effect ripples throughout all the market levels. As well, there are many reasons for foreign buyers to be less prevalent, including the tightening of immigration programs permitting fewer foreign buyers access to our markets. As well, China has restricted the amount of money permitted to be taken out of their country. Finally, there is an upcoming provincial election. How individuals will fare through a likely change in government is an issue that buyers will be wrestling with over the next little while. With all this considered, it is really important to remember one does not buy the market! For the savvy buyer there could be a great opportunity as the old stock market adage of buy low- sell high also applies to real estate! If a person waits to see where things are going like everyone else, one could end up buying back into a seller’s market!
New listings for detached, attached and apartment properties in Metro Vancouver totalled 4,802 in July this year, which represented the lowest number of new listings for any month in 2012 so far. Compared to July of 2011, there was a 5.8% decrease when 5,097 properties were newly listed for sale on the Multiple Listing Service® (MLS®). Month over month there was a 14.5% fall when looking at the 5,617 new listings that were reported in June.
The total number of active residential property listings on the MLS® increased 18.8% to 18,081 from this time last year and only edged down 2.2% when looking at the totals from June.
Klein acknowledged, “With a sales-to-active-listing ratio of 11.6 per cent, conditions have favoured buyers in our marketplace in recent months…that means buyers have more selection to choose from and more time to make a decision. For sellers, it’s important to price properties competitively. For information on local market prices, contact your REALTOR®.” It is important for sellers to understand the real estate market will continue to move; sellers just have to make sure they are in the percentage of the market that is moving! Buyers are taking their time to really study the market and will not be fooled.
Over the last year the MLS® Home Price Index (MLS® HPI) composite benchmark price for all residential properties edged up 0.6% to $616,000. When comparing the numbers month-over-month, there is a decline of 0.7% which means at this point in the year there is not a lot of headway on prices.
Sales of detached properties in July, 2012 for Metro Vancouver:
– 787 units – ↓28.4% compared to 1,099 sales in July, 2011.
The benchmark price ↑ 1.4% from the year before to $950,200.
Sales of apartment/condo properties in July, 2012 for Metro Vancouver:
-927 units – ↓ 10.9% compared to 1,040 sales in July, 2011.
The benchmark price of an apartment property was unchanged from the year before at $374,300.
Sales of attached property/town homes in July, 2012 for Metro Vancouver:
-384 units – ↓ 11.1% compared to 432 sales in July, 2011.
The benchmark price of an attached property ↓ 0.05% from the year before to $468,700.
Source: News Release REBGV August 2, 2012