Kerry Gold, The Globe & Mail, June 27, 2008
Vancouver homeowners shouldn't worry about the value of their homes falling this year, according to a new report.
The city might have seen the biggest drop in sales of detached homes in the last five years, but house prices are going up, says Rudy Nielsen, owner of Landcor Data Corp., a Vancouver-based real estate analysis company. Mr. Nielsen has 40 years of experience as an analyst, real estate agent and developer of recreational properties.
He says his report is the most comprehensive real estate data because it's based on B.C. Assessment data as well as land title searches. Mr. Nielsen has discovered that the number of homes sold may have plummeted in areas like Vancouver, the Kootenay region and the Okanagan, but overall, house values are even higher than last year.
"I did a speech to bankers in Kelowna a week ago and everybody's crying the blues about this and that," says Mr. Nielsen. "But the value is still holding strong."
Last year there was a record $62-billion in sales in B.C., and Mr. Nielsen forecasts $61-billion by the end of this year. So far, the number of B.C. homes sold is at its lowest level in five years, but the value of those sales increased more than 8 per cent compared with last year. In Vancouver, the total value of sales is projected to increase more than 10 per cent over last year — even though the number of sales is down by more than 4 per cent.
But lower figures are not all doom and gloom, he insists.
"Even if we drop from $63-billion to $55-billion [in sales], we're still in a real hot market," says Mr. Nielsen. "People don't realize that. People think you must keep climbing [in sales numbers] all the time. You can't — you've got to level off."
Brian Yu, an economist for the British Columbia Real Estate Association, says the moderation of sales figures was expected.
"We're still at pretty strong levels historically in terms of overall sales," says Mr. Yu.
"We had a major run-up in terms of number of sales. The year 2005 was a record and 2007 was the second best on record. Now, we're moving back toward more normal levels of sales."
In terms of prices, Mr. Yu says the market has gone from being a seller's market these last five years to a balanced market, which means prices are going up at the rate of inflation. Homeowners are not, however, feeling the need to slash prices.
"It's not the same thing as stocks, where people sell off. People hold their home at the end of the day."
A big reason for the drop in number of sales in B.C. is the waning Alberta economy, says Mr. Nielsen. "Alberta definitely dropped buying in B.C., strictly because some of the smaller oil companies have laid off a lot people. "The majority of them were looking at second homes to call their retirement home in the future."
As well, people aren't buying like they used to because of talk about the effect of the American sub-prime mortgage crisis on the Canadian market.
"People are cautious right now — everybody is sitting back. They figure prices will drop."
However, it's not good news everywhere in the province. On Vancouver Island, in the Fraser Valley and in B.C.'s northern regions, house values have actually dropped for the first time in four years, according to the Landcor report.