Sales declined from last year, but rising prices mean overall value is up
Derrick Penner
Sun
B.C.’s real estate markets are no longer sellers’ markets for the most part, although they aren’t buyers’ markets just yet, according to statistics compiled by the B.C. Real Estate Association.
The association released its first-quarter provincial sales report Thursday, which showed that the ratio of Multiple Listings Service real estate sales to the number of homes in the inventory declined to 29 per cent in March compared with 39 per cent in March of 2006.
“This year, at least for March, [the sales-to-listing ratio] is on the higher bounds of a balanced market,” association chief economist Cameron Muir said in an interview.
That means there were enough people selling homes to meet the demand of buyers, though not so many that they flooded the market.
MLS-recorded sales declined six per cent to 22,198 units in the first quarter of 2007 compared with the same months of 2006, the real estate association reported.
Steady demand, however, continued pushing prices up in the same period to hit $415,765, which is 12 per cent higher than the same point last year. So the total value of real-estate transactions for the quarter reached $9.2 billion, some $462 million higher than the total in the first quarter of 2006.
Muir added that provincial unemployment remains at a record low (3.9 per cent at the end of March), the economy is growing and still adding jobs, average wages are rising faster than inflation and mortgage rates remain relatively low and are not projected to rise quickly.
“Those are all positive for the housing market,” Muir said.
“What’s not as positive is [high] home prices. Low-equity buyers, typically younger people buying their first home, some of them are facing a price-lead affordability squeeze.”
That, Muir added, is cutting into demand.
Robert Helsley, an economist and professor in the Sauder School of Business at the University of B.C. said the sales-to-listings data reported by the B.C. Real Estate Association is the best evidence that real estate markets are slowing.
However, Helsley added that the provincial economy is still doing well and the prospects for population growth, particularly in Vancouver, are so strong “it is hard to forecast a substantial softening.”
It would take a sudden rise in interest rates or a large global economic shock to shake B.C. into a real estate downturn, Helsley said, and the meltdown of subprime mortgage markets in the United States won’t be it.
“Markets are somewhat softer than they were a year ago, sort of taking a breather,” Helsley added. “But it certainly doesn’t appear to have turned down, at least in terms of price.”
© The Vancouver Sun 2007