Andrew Duffy, Victoria Times-Colonist, June 27, 2008
The boom has busted.
The number of real estate sales is down, the total value of sales is down and the real estate industry is suggesting the signs are pointing to the housing boom in Victoria being over.
"We are definitely seeing a shift in the marketplace, although it's certainly not a time for panic," said Victoria Real Estate Board president Tony Joe.
"For people hoping home values will be plummeting any time in the future, I don't think that's going to be happening any time soon."
Joe said the market has been cool so far in 2008, but he was quick to point out that comes in comparison to 2007 which he considered an "exceptionally busy year when we exceeded all the numbers."
"When we look at the numbers we're not just comparing to 2007 but we're also looking over last five or six years and what we're finding is things are just coming back to normal," he said.
According to Landcor Data's first-quarter residential home sales summary, the economic malaise in the U.S. fuelled by the subprime mortgage crisis is having an effect on B.C. and Vancouver Island.
The Island, Fraser Valley and northern B.C. have all seen the total value of sales in the first quarter drop compared with the first quarter of 2007, the first time all three regions have seen a quarterly decrease in the past four years.
"The cooling-off period is not unique to this region, and not to the province of B.C. -- the North American economy as a whole has seen a dramatic change in market value in the past year," said Landcor president Rudy Nielsen.
"It not only affected the housing prices in certain American markets, but it has been trickling into the demand for homes, the job market and commodity markets around the globe over the past year."
Over the first quarter of this year there were 4,661 sales of homes on the Island, a drop of 11 per cent, while the total value of those sales dropped 1.95 per cent to $1.7 billion.
Provincially, there were 26,860 home sales in the first quarter of this year, down 11.8 per cent from the first quarter of 2007, although total values were up 5.6 per cent to $11.69 billion.
"Speculation, both from investors and homeowners expecting a major financial payoff, makes housing more volatile than other economic sectors," said Nielsen. "Recently consumer confidence has dwindled, causing the market to correct. This is the normal real estate cycle and this is what we're seeing throughout B.C."
The boom is also over across the country, particularly in Alberta with prices continuing to fall this year by eight to 10 per cent from their peak, says a national real-estate report.
The report released yesterday by TD Economics says "the long-awaited end of the Canadian housing boom has occurred, reflecting more moderate demand and increased supply of properties for sale" and it is a trend that is broadly based "but it has been particularly sharp in some of the markets that had experienced the most dramatic price growth."
Evidence of the national downturn is evident in year-over-year price growth for existing homes in Canada's major markets, which fell to only 1.1 per cent in May, down from 8.6 per cent just four months earlier, the report said.
"The combination of significantly higher listings ... and weaker demand, due to the past erosion in affordability, are leading to declining sales and softer price performance across the country, particularly in the West," said the report.
While year-to-date sales have fallen by 12.5 per cent, sales are only returning to levels typically experienced in the three year (2004-2006) prior to the 2007 sales boom, the report said.
Nevertheless, "sales are also weaker in other parts of the country, with British Columbia and Ontario sales down by more than 10 per cent."