The slowdown in the Metro Vancouver real estate market continued in February, with sales nearly one-third below the 10-year average, the Real Estate Board of Greater Vancouver reported Monday.
Home sales in the region have been trending below historical averages for a full year now and February 2013 had the second-lowest number of sales in any February since 2001, the REBGV said. “Sales in February followed recent trends and were below seasonal averages, though our members tell us they saw more traffic at open houses last month compared to the previous six to eight months, said Eugen Klein, REBGV president.
The perception that housing is overvalued may be a factor slowing sales. Rating agency Fitch Ratings says Canadian home prices are overvalued by about 20 per cent, while prices in B.C. are overvalued by 26 per cent.
The Fitch report released Monday states that the agency does not expect prices to fall by those amounts, but rather that “if growth halted tomorrow and prices began to drop, Fitch expects that it would take several years for home prices to revert to their sustainable values. This depends on a number of factors such as government support and credit availability. With this time frame, the observed nominal decline in prices could be as low as 10 per cent.”
The report describes B.C. as being highly desirable to residents because of its climate and coastline, and benefiting from restricted land supply.
“More recently, prices have been supported by an influx of foreign buyers, particularly from Asia, who have viewed the Canadian housing market as a safe haven for investment, increasing the speculative value of these properties without altering the traditional market dynamics.”
Meanwhile, BMO lowered its five-year low-rate fixed mortgage to 2.99 per cent from 3.09 per cent to drum up business.
While sales numbers for February are down significantly from last year at this time in both Metro Vancouver and the Fraser Valley, prices are not moving much.
In Metro Vancouver, the home price index composite benchmark price is down 5.6 per cent to $590,400 from its peak in May, 2012 of $625,100 and the composite benchmark price in the Fraser Valley was $422,700 up slightly from last year at this time.
In Metro Vancouver, 1,797 properties sold in February 2013, compared to 1,351 in January and 2,545 in February 2012. In the Fraser Valley, 913 homes sold in February, compared to 617 in January and 1,269 in February 2012.
Both boards reported that realtors have said more people are visiting open houses than in recent months.
“We’re seeing signals that the standoff between buyers and sellers over the last six months is coming to an end,” said Ron Todson, president of the FVREB, which includes North Delta, Surrey, White Rock, Langley, Abbotsford and Mission. “Business has picked up in the last month with increased traffic at open houses, sellers quicker to accept offers and homes selling on average two weeks faster than they did in January.”
Klein said the REBGV does a survey of its members monthly and in February, for the first time in eight months, two-thirds of realtors reported more traffic at open houses.
Todson said different areas of the Fraser Valley were showing much different activity, with condos in Abbotsford and Central Surrey and townhome sales in North and Central Surrey and Cloverdale proving popular.
“One commonality among these areas and property types is greater affordability. What’s not doing well generally anywhere in the Fraser Valley is sales of higher-end homes unless they are priced competitively,” Todson said.
In Metro Vancouver, proximity to transit is driving sales, Klein said, noting that sales of properties near the Canada Line and the planned Evergreen Line are seeing an uptick in both development activity and home sales.
“You’re also seeing buyers going there to buy homes because those are the most affordable and have the best opportunity for appreciation and they can buy more for their buck,” Klein said. “If you bought a home near Southwest Marine (and Cambie Street) before 2012, your commute to downtown Vancouver would have been 45 minutes in rush hour. Today, it’s a different equation.”
Source: Tracy Sherlock, Vancouver Sun