Vancouver & Victoria – home prices coming down with a 20% decline, market is cooling

Sunday, June 29th, 2008

Cassidy Olivier

After years of listening to customers vent about soaring housing prices, says North Vancouver realtor Jackie Reid, it’s nice to see a return to days where buyers have more selection and bidding wars are scarce.

“They [buyers] just couldn’t afford it,” she said of the boom years. “Who can? Think about it; it is ridiculous.”

But based on a report released last week by TD Economics, those boom years are over for most of Canada‘s housing markets, especially the previously red-hot spots of Calgary, Edmonton, Toronto and Vancouver.

And in Victoria and Vancouver, there is new evidence of some prices coming down.

More listings and weaker demand, the report said, have caused a fall in sales and “softer” prices not seen in the past six to seven years.

Year-over-year price growth for existing homes in the country’s major markets is slowing. As of May, the increase was 1.1 per cent, down from 8.6 per cent four months ago.

The report predicted further sales slips and a decline in year-over-year national price growth of 2 to 3.5 per cent by 2009.

Most recently, in Victoria, sales are down 11 per cent and the total value of sales is down 1.95 per cent.

But Tony Joe, president of the Victoria Real Estate Board, said “it’s certainly not a time for panic.”

“There is no question things softened a bit,” he said. “We have to remember, 2007 was an exceptional year.”

For Vancouver, the cooling has seen resale activity slip “far below” last year’s levels, with 2008 sales expected to be 20 per cent lower than sales posted in 2007.

And like the rest of the country, price growth is on the slide.

May 2008 statistics show the average residential sales price in greater Vancouver was $624,639, up 5.6 per cent from the previous year, but down from the 2006-2007 increase.

In October 2007, the average price of a house was $590,577, a 7.8-per cent jump from 2006.

Rob Chipman, a Greater Vancouver realtor, said a drop to single-digit growth wasn’t unexpected and doesn’t mean the market’s in crisis.

“The market hasn’t panicked. We haven’t seen prices drop,” he said. “But it is also now really tough for sellers,” he added, mostly for those investors needing a quick sale.

Demand, said Cameron Muir, a chief economist with the B.C. Real Estate Association, has been affected by shaky consumer confidence, the U.S. subprime mortgage scare and rising fuel and food costs.

“It is a return to more normal conditions,” he said. “The market is no longer in the seller’s advantage.”

Muir couldn’t predict the effect on prices but said sellers now will have to have a “sharper pencil” when pricing their homes.

Caroline Hong, a realtor with Sutton Group West Coast Realty, said she’s already noticed many sellers in her West End region are slashing asking prices to attract buyers, generally by 5 per cent.

“It all depends on how desperate they are,” she said.

Hong stressed, however, that this just brings property to more “normal levels.”

Back in North Vancouver, Reid said she doesn’t think the downturn will result in price-slashing, and she cites a recent sale in Norgate of a $925,000 home as evidence.

“It is going to take longer to sell your house, but it will sell,” she said.

© The Vancouver Province 2008


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