Deneka Michaud, North Shore News, July 9, 2008
After years of favourable conditions for home sellers, the North Shore real estate market appears to be giving buyers the upper hand, according to a new report issued by the Real Estate Board of Greater Vancouver.
Multiple Listing Service figures released by the board last week show that sales for both North and West Vancouver in June were down from the same time last year, while listings were up.
The percentage of sales-to-listings for detached homes in North Vancouver last month was 38 per cent, while in June 2007 that figure stood at 93 per cent. In West Vancouver, the percentage was 29 per cent last month and 64 per cent for the same time last year.
For several months now there have been signs of moderation in the British Columbia home market as demand has eased off from the highs of last year, explained Cameron Muir, chief economist with the B.C. Real Estate Association. The market has been rebalancing itself from a high-demand state, and now there is actually higher supply than demand, meaning the market is now favourable towards buyers.
"More balance between demand and supply means less upward pressure on home prices. It also reduces the chance of multiple bids on the same house, giving homebuyers more time to investigate properties thoroughly before purchasing," said Muir in a recent press release. "This is probably a long-anticipated realignment of the market," he added in an interview.
The B.C. Real Estate Association forecasts that residential sales for the Greater Vancouver area will fall by eight per cent this year, from 38,978 unit sales last year to 35,900 for 2008. They anticipate that in 2009 sales will again drop by three per cent for the area to 34,800 unit sales.
Yet despite the fact that sales are dropping, home prices are not, explained David Watt, president of the Greater Vancouver Real Estate Board. According to the board's recent report, overall prices in the Greater Vancouver area were up 7.3 per cent in June compared to the same time last year, bringing the average residential property selling price to $564,982 last month.
In North Vancouver, since June 2007, the benchmark price of a detached home increased by 4.7 per cent to $893,639, the average attached home price increased by 8.1 per cent to $608,225 and the average condo price rose by 4.4 per cent to $386,212.
In West Vancouver, over the past year, detached home prices have risen by 0.9 per cent to an average $1,428,139, while the average attached home price increased by 4.9 per cent to $719,783, and the average condo selling price was up by 6.9 per cent to $711,268.
BCREA expects that price increases will continue, but at a slower pace than the double-digit increases seen over the past several years. According to their spring 2008 housing forecast, the association predicts that overall MLS selling prices for the Greater Vancouver area will rise by nine per cent this year to an average $621,000 and will increase by an additional five per cent next year to $651,000.
Lower year-over-year increases are a result of the rebalancing of the market, said Muir. With more homes on the market, sellers need to be more educated and need to price their homes at reasonable prices so that their homes will sell. Homes that have been on the market for some time and that have been listed in anticipation of continued rising prices may have to re-evaluate their pricing, he said.
"Although housing prices, on a year-over-year comparison, continue to show single-digit percentage increases, we are beginning to see more price reductions in properties listed on the market today," Watt said in a press release. However, lower listing prices do not mean that home prices are decreasing, he explained in an interview. "It's not even that prices have gone down, it's just that they aren't marked up," he said.
With the housing market taking a downturn south of the border, many Canadians have grown wary that Canada will suffer the same fate as the United States, but comparing the two industries is a far stretch, said Gregory Klump, chief economist with the Canadian Real Estate Association. The U.S. housing market experienced extremely rapid price increases and poor lending practices which has now resulted in price corrections, he said. In Canada, on the other hand, price increases of the magnitude seen down south did not happen and Canadian lending always remained conservative, so a real estate market crash in Canada is not likely, he said.
"We don't see a crash on the horizon, we see it returning to more normal levels," he said.
Some areas in Canada, however, have seen falling sales prices, according to a summer 2008 report issued by BMO Capital Markets. In Calgary, prices are down 2.4 per cent since last year and in Edmonton prices have dropped by 4.8 per cent. Prices are also expected to drop in Saskatchewan, said Michael Gregory, senior economist with BMO Capital Markets.
British Columbia, on the other hand, did not see the major price mark-ups seen in Alberta and Saskatchewan, and so B.C. remains in good shape, he said.
"The rate of price increases will slow, but it (B.C.) still has a pretty strong economy," he said, adding that he predicts, "a soft landing, rather than a collapse."
A report issued by Landcor Data Corporation at the end of last month shows that some areas in British Columbia are faring better than others.
In 2001, sales values in the province totalled $19 billion; last year they totalled $62 billion and at the end of this year the rate is expected to be over $61 billion, explained Rudy Nielsen, president of Landcor Data Corporation.
"Things are cooling, but things aren't bad," he said. "Overall, I look at B.C. as very positive," he added, explaining that the province has great natural resources, good tourism and a high quality of life. Even in places where prices may decrease, he says homeowners just need to wait it out because prices will again increase. He said he expects the cooling period to only last two to three quarters before turning around next year sometime.
As for the North Shore market specifically, Watt said he believes it is secure and, if anything, real estate in North and West Vancouver will become more desirable as gas prices rise and people look at living in areas that are closer to the city core.