Metro Vancouver sales should start to pick up as prices decline

Homebuyers in the Lower Mainland remained on the sidelines in January, with markedly lower sales in both Metro Vancouver and the Fraser Valley.

The Real Estate Board of Greater Vancouver saw 1,351 sales cleared through the Multiple Listing Service in January, down 14 per cent from the same month a year ago. And January’s sales were down 18 per cent from the previous month.

In the Fraser Valley, the sales decline was even steeper – 23-per-cent lower, to 617.

“January’s numbers are not a surprise,” according to Cameron Muir, chief economist for the B.C. Real Estate Association.

Muir said stricter mortgage rules introduced for first-time buyers last summer bit into sales earlier, but now the bigger factor in declining sales is consumer sentiment that home prices will continue to decline.

Prices in both regions have edged lower from peak levels seen last spring. In Greater Vancouver, the benchmark price for a typical home across the region declined six per cent to $588,100, from $625,100 last May. That price is now 2.8-per-cent lower than the same month a year ago.

In the Fraser Valley, the benchmark price of $420,900 across all property types for typical homes sold was down 2.5 per cent over the last six months.

In his most recent forecast, released last week, Muir estimated lower prices will make housing more affordable for more buyers, and help turn around the decline in sales by the next quarter.

He added that the fundamentals of employment growth, population growth and stronger economic activity that B.C. is experiencing should support a higher level of housing sales than the Lower Mainland saw in January.

“Some buyers may be sitting on the sideline waiting for a deflationary spiral to develop,” Muir said.

“When that doesn’t develop, when they realize they’re not going to see significant declines in pricing, they’ll get on with their lives and move on with purchasing decisions.”

The January numbers do hint at a slowing in the trend of declining sales, according to Tsur Somerville, director of the centre for urban economics and real estate in the Sauder School of Business at the University of B.C.

He noted that in December, Metro Vancouver’s decline in sales was deeper at 31 per cent, so January’s numbers “suggest that there is a possibility the decline in sales should well flatten out.”

And there are some signs home sellers are also beginning to head to the sidelines.

In the Greater Vancouver board, while its inventory of 13,246 homes is 5.6-per-cent bigger than the same month a year ago, new listings slowed 11 per cent to 5,128 in January compared with the same month a year ago. In the Fraser Valley, new listings in January dropped four per cent to 2,643 compared with the same month a year ago, and the overall inventory of 8,031 homes is down 3.5 per cent from last January.

“When a home seller isn’t receiving the kind of offers they want, there comes a point when they decide to either lower the price or remove the home from the market,” Eugen Klein, president of the Real Estate Board of Greater Vancouver said in a statement. “Right now, it seems many home sellers are opting for the latter.”

Source: Derrick Penner, Vancouver Sun

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