People are still shying away from investing in Vancouver real estate, April sales numbers show.

This April’s sales were the lowest April total since 2001 and 20.9 per cent below the 10-year sales average for the month, the Real Estate Board of Greater Vancouver reported yesterday.

“While the number of home sales remains below average, properties that are priced right are selling and we’re seeing greater balance between buyer demand and the number of homes listed for sale,” says Sandra Wyant, REBGV president.

There were 2,627 home sales in Vancouver in April, a decrease of 6.1 per cent from last April and an increase of 11.9 per cent from March.

In the Fraser Valley, sales were also up from March, but down from last year, the Fraser Valley Real Estate Board reported.

Board president Ron Todson said sales usually increase in the spring, and this year is no exception.

“What’s different this year is that a number of external factors, such as tighter credit rules and the government’s spotlight on consumer debt have made some consumers more cautious about buying or selling a property,” Todson said in a news release.

Despite sluggish sales, prices have been creeping up again across the Lower Mainland, the real estate boards said.

“There have been modest increases in home prices across the region over the last three months. This comes on the heels of home price declines of approximately five to six per cent in Greater Vancouver during the last half of 2012,” Wyant said.

The home price index composite price in Greater Vancouver is now $597,300 for all property types, the board’s numbers show. Although this is down 3.9 per cent from April 2011, it is up 1.6 per cent from this January.

In the Fraser Valley, the benchmark composite price is $426,900 for all property types, down 0.2 per cent from a year ago, but up 1.4 per cent from January, the RVREB numbers show.

“Pricing is incredibly important in slower than average markets,” said Todson. “We’re not seeing the rapid increases in home values of the last decade, which means that sellers may need to sharpen their pricing in order to be competitive, but buyers won’t see dramatic price drops.”

On April 1, the province reverted to the GST and PST tax structure. Buyers in April saved a bit of money on their real estate commissions under the new rules, because tax on real-estate commissions is reduced to five per cent from the 12 per cent HST.

The Fraser Valley region includes North Delta, Surrey, White Rock, Langley, Abbotsford and Mission, while the REBGV includes Vancouver, Richmond, Ladner, Tsawwassen, North Vancouver, West Vancouver, Burnaby, Coquitlam, Bowen Island, Maple Ridge, New Westminster, Pitt Meadows, Port Coquitlam, Port Moody, Squamish, the Sunshine Coast and Whistler.

Meanwhile, a new BMO report out Thursday found that Eighty per cent of prospective buyers know if a home is right for them as soon as they step inside.

The BMO Psychology of House Hunting Report says Canadians spent an average of five months house hunting and viewed 10 homes before buying.

Nearly 70 per cent of buyers are willing to settle for less than perfect, but one-third feel rushed into making a purchase, the report says.

Canadian homeowners spent an average of five months house hunting and visited ten homes before making the decision to buy, the report says.

Source: Tracy Sherlock, Vancouver Sun

Sandra Wyant has come across tantalizing clues that she believes point to a gradual turnaround in Vancouver’s tepid housing market.

The new president of the Real Estate Board of Greater Vancouver sees modest but encouraging signs of a stalemate easing between buyers and sellers. Sales volume in the Vancouver region fell 18.3 per cent in March, compared with the same month in 2012, but there is a silver lining: Decreases in year-over-year sales have slowed since last fall, when the number of homes sold tumbled nearly 27 per cent. Another clue? An industry statistic known as the sales-to-listings ratio has improved in Greater Vancouver. “There seems to be more of a meeting of minds going on,” Ms. Wyant said in an interview.

After a pricing slump that began in the spring of 2012, it means that a recovery – albeit tenuous – for Vancouver real estate is finally within sight, she said. After house prices in Greater Vancouver more than doubled from 2004 to 2011, they fell roughly 6 per cent last year. Prices are expected to be flat or slightly down this year, before a rebound in 2014, housing experts say.

Vancouver and Toronto have been the focus of Canada’s cooling housing market, with sales volume slumping in both markets. But it is in Vancouver where residential resale prices have fallen while Toronto has still managed to eke out small pricing gains.

To arrive at the sales-to-listings ratio, take the number of homes sold in a month and divide it by the number of active listings for that same month. With March’s 2,347 sales divided by 15,460 active listings, that equals a ratio of 15.2 per cent – a statistical reading for being a balanced market, but just barely.

Real estate agents consider it a balanced or neutral market in the Vancouver region when the ratio is between 15 per cent and 20 per cent. It is deemed a buyer’s market below 15 per cent and a seller’s above 20 per cent.

Cameron Muir, chief economist at the B.C. Real Estate Association, cautioned that such numbers are rough guidelines, and it’s too early to declare that Vancouver is swinging back toward a seller’s market, let alone becoming red-hot again. “I don’t think anyone expects to see prices accelerate any time soon like in the previous run-up,” Mr. Muir said.

Tsur Somerville, a professor at the University of British Columbia’s Sauder School of Business, said sluggish prices could be in store for Vancouver for the rest of 2013, but a crash landing is unlikely. “Given where interest rates are, it would be silly to expect a large change in prices,” he said. Still, Prof. Somerville cautioned that if interest rates skyrocket and if there is a major meltdown in financial markets, then Canada’s housing market, not just Vancouver’s, would face turmoil.

The Vancouver area’s residential sales volume began weakening in the fall of 2011. Buyers are waiting for further softening in the market while sellers are holding out for better bids or pulling their homes off the multiple listing service if no decent offers emerge. Benchmark house index prices in Greater Vancouver peaked at $625,100 last May for detached homes, townhouses and condos. Index prices (which strip out the most expensive properties) fell to $588,100 in January, a 5.9-per-cent drop from last May. Monthly prices edged up slightly to $590,400 in February and $593,100 in March. Last month’s index price is down 3.9 per cent from $617,100 in March, 2012.

Source: Brent Jang, The Globe and Mail

Real estate has been slumping in the Lower Mainland, with sales volumes off by a third from long-term averages and prices down about five per cent from their peak.

Central 1 Credit Union is predicting a slow, weak recovery for real estate in British Columbia, saying it expects a flat market for both unit sales and prices for the next few years.

In its annual forecast released last week, the credit union predicts home sales in the province will gather a bit of strength this fall and hold steady for the rest of the year.

“The year-long correction in home sales is likely to bottom out in the first quarter of 2013, and we’ll see a slow recovery through the rest of the year. But the gains will be modest,” said Bryan Yu, an economist with the credit union.

Yu said there is always a market for homes that are priced well or have a special selling point.

“There’s always going to be some properties that sell quickly, if they’re priced well, or under-priced, perhaps,” Yu said. “But we’re not seeing that reflection in the over-all market that it’s anywhere near a strong market. Listings are high, overall sales levels are low and the reality is the price trends have been negative over the past couple of quarters.”

Yu said it is normal for the real estate market to become busier in the spring.

135 single-family homes have sold on the west side of Vancouver this March, which should result in 160 sales once the month is done; in March 2012, there were 152 sales.

Last year hit a 12-year low in sales, with only 64,400 sold (compared with 76,817 in 2011), and Yu anticipates there will be slightly fewer homes sold this year.

Yu said the resale housing market is hampered by sluggish employment and population growth as well as tighter mortgage requirements that have pushed some first-time buyers out of the market.

Following 2012’s four-per-cent decline, the credit union expects the province’s median annual price to slip five per cent in 2013 to about $363,000, a level last seen in 2009.

In Greater Vancouver, annual resale activity is forecast to decline about four per cent this year to 31,500 homes. The median price will dip six per cent to $474,000 but is expected to rise by the end of 2013, according to the forecast.

The report also says house sales in the Okanagan, Kootenay and Vancouver Island are expected to rise but for now remain near recessionary levels because of weak demand and excess inventory.

The forecast calls for an uptick of 13 per cent in unit sales in 2014 and a further eight per cent in 2015 as the economy improves and consumer confidence grows. Yu expects prices to remain flat through 2015.

Source: Tracy Sherlock/Tiffany Crawford Vancouver Sun

Fear and resentment simmer just below the surface for most Metro Vancouverites. Yet the issue that worries so many has mostly come up against public silence. Until now.

A recent survey by the respected Vancouver Foundation found three out of four Metro Vancouver residents who had an opinion agreed with the statement: “There is too much foreign ownership of real estate here.”

And Simon Fraser University explored this hot-button issue Wednesday evening in Vancouver through a panel discussion at the Djavad Mowafaghian Centre, which quickly sold out.

The speakers did what they could to respond to heated discussion of the growing housing dilemma in Vancouver, which Demographia has ranked the second most unaffordable city out of 325 around the world.

The average cost of a single-family detached home has jumped in Vancouver to $1 million. Meanwhile, median incomes have barely budged for decades. Only Hong Kong is more expensive.

“Housing affordability in B.C. remains poor and worsening,” says RBC senior economist Robert Hogue.

Vancouver’s unaffordable housing prices, he said, “depend on a constant flow of imported money.”

Young wanna-be homeowners are being frozen out of the city of Vancouver, as well as the North Shore, Vancouver, Richmond, Burnaby and elsewhere.

Local businesses, hospitals, organizations and universities can’t recruit top candidates because even skilled professionals can’t afford to live here.

Like Hogue, many say the region’s stratospheric prices are being heated up by real estate investors and speculators. Many are wealthy non-Canadians simply looking for a safe place to park their money.

What to do about this affordability crisis?

It’s a complex question. But one of the strongest factors working against coming up with a working solution is there is no solid data on which to base a strategy.

Unlike most countries, cities and jurisdictions around the world, neither Metro Vancouver, British Columbia nor Canadian government agencies keep public records on foreign ownership of real estate.

For some unstated reason, B.C. public officials are unwilling to learn from what has been done for decades in diverse political places — such as Florida, Switzerland, Austria, Prince Edward Island, Manitoba, Alberta, Denmark, Japan, Indonesia, Bali, Thailand, Australia, Turkey, Singapore and Beijing.

Indeed, these jurisdictions do not only collect data on foreign ownership. They have brought in various taxation methods to restrict property speculation and foreign ownership, so as to reduce investor demand. That’s what specialist say drives up prices and squeezes out locals.

Sadly, when British Columbians are forced by politicians to operate in a vacuum about rates of foreign ownership, we are not able to fully back up our opinions in this debate — which often pits homeowners and the real estate industry against young people and renters.

One side in the dispute doesn’t want to discourage foreign investment, admitting they like the out-of-country real estate profits. Some of them add that condos not filled by offshore owners can be rented out.

The other camp talks about how hard-working people deserve the chance to own a home. And they lament that untold Metro Vancouver homes sit largely empty, without residents who would be contributing more strongly to the neighbourhood, the wider economy and the tax base.

If we are to have an authentic dialogue about these competing arguments, we need to press governments to start gathering the facts. Fast.

So far B.C. politicians have shown no willingness to gather accurate data. As elected officials who are supposed to answer to voters, their inaction seems irresponsible.

Perhaps they fear being labelled racist. But that doesn’t make sense, for many reasons.

The foreign investor debate is not about immigrants to Canada buying homes for themselves. And it should make no difference to government officials collecting property data whether non-Canadian investors come from Seattle or Dubai, Paris or Singapore.

In addition, concern about foreign ownership clearly cuts across Metro’s ethnic spectrum. The Vancouver Foundation survey, for instance, found residents who speak Chinese in their homes, by a margin of almost three to one, also agree “there is too much foreign ownership of property here.”

So far there have been only a handful of public figures willing to openly air this burning issue. They include Peter Ladner, former Non-Partisan Association councillor and a current fellow of SFU’s Centre for Dialogue.

“Because our housing prices are around 10 times median income – with five times being ‘severely unaffordable’ — potential newcomers to the region stay away and the valuable workers move away,” writes Ladner.

“If we are really serious about affordability in Vancouver, we would be looking at more homes for more people and fewer homes for investors and speculators.”

Ladner is supported by Sandy Garossino, a prominent businesswoman and arts philanthropist. Andy Yan is another weighing in, trying to figure out the extent of foreign investment, and empty dwellings, in Metro Vancouver.

But Yan, who spoke at the forum sponsored by SFU’s Vancity Office of Community Engagement and the SFU City Program, would be the first to admit he has had to use desperate measures to try to collect any sort of information on foreign ownership.

Random stories, from neighbours or realtors, are not enough, suggests Yan, who has been consulting for Bing Thom Architects and a committee of the city of Vancouver.

Wittily, Yan explains the research challenge: “The plural of anecdote is not ‘data.’”

To determine the extent of foreign ownership, Yan also admits it’s not entirely reliable to track the addresses to which B.C. property assessment reports are sent. Nor is it really dependable to determine if condos are vacant by measuring how much electricity they use. Which he has tried.

What’s stopping politicians from collecting proper data?

If scores of jurisdictions around the world, including in struggling developing countries, are able to collect solid information about foreign ownership of real estate, why can’t it to be done in our rich, technologically sophisticated province?

Hong Kong is just one of many places getting serious about the problem of foreign ownership. As Ladner has pointed out, Hong Kong officials have discovered that, since 2009, “half of new luxury apartments purchased are never occupied. Is this where Vancouver is heading?”

Foreign ownership of residential property is a divisive issue, which cuts to the heart of the hopes and dreams of most Canadians. Politicians, at the municipal, provincial and federal level, need to respond to it in the way of scientists.

Faced with important questions, good scientists and academics don’t just cast aspersions about someone else’s character. They get serious about collecting evidence. Then they move to solutions.

Only by checking the facts can our society creatively move forward for the benefit of as many Canadian residents as possible.

Source: Douglas Todd, Vancouver Sun

Nearly a quarter of condos in Vancouver are empty or occupied by non-residents in some dense areas of downtown, a signal that investors play a significant role in the city’s housing market.

And the city overall has a much higher rate of empty apartments and houses than other Canadian cities, with a rate closer to places like New York and San Francisco at the height of their mortgage crisis in 2010.

Downtown, the rate is so high that it’s as though there were 35 towers at 20 storeys apiece – empty.

That’s the latest discovery that adjunct UBC planning professor Andrew Yan made when he analyzed 2011 census numbers to try to add more information to the contentious debate over whether Vancouver is turning into a high-end resort or offshore investors’ holding tank.

He revealed those numbers Wednesday night, as a capacity crowd turned out to listen to speakers on a panel at SFU Woodward’s talk about “foreign investment in Vancouver real estate.”

In all, the city of Vancouver appears to have about 7,500 more vacant housing units than what would be expected in most other Canadian cities. For Metro Vancouver, there are around 15,000 to 20,000 more.

That sign of high vacancies and non-resident-owned units, which contradict some other studies and assurances that Vancouver is not being flooded with investors, should give the city pause, analysts say.

“What kind of community are you living in if there are that many empty? For a city to have that kind of vacancy, it’s like cancer,” said Richard Wozny, a real estate consultant, during an interview Wednesday. “It distorts density and it’s delaying the impact. It raises the question ‘Are we over-building?’”

Mr. Yan, who specified that it’s not possible to know exactly why so many apartments were empty, said data indicates Vancouver is creating neighbourhoods that appear to be very dense, but actually don’t have an active full-time population.

That gives a skewed picture of, for example, the amount of commercial activity they can support.

In Coal Harbour, where up to one in four condos is empty in the tower-dominated waterfront neighbourhood between Stanley Park and the downtown convention centre, the scattered shops in the area often struggle to stay in business. By contrast, the West End, which has a low rate of empty residential units, is bounded by three streets – Davie, Denman, and Robson – that are packed with busy small shops and restaurants.

Mr. Yan said that the high numbers of empty apartments don’t prove there’s a problem with foreign investors, but they do indicate that Vancouver has a large proportion of general investor buyers, be they offshore or Canadian.

Housing analyst Tsur Somerville, director of UBC’s Centre for Urban Economics and Real Estate, said the data he has seen also indicates that Vancouver built more housing in the 2006-2011 period than the number of new households that were added to the city’s ranks.

That means investors. There’s nothing wrong with that, as long as those units are occupied, said Mr. Somerville, also on the panel.

“The problem is vacant units since that’s demand for real estate without housing people.”

Mr. Yan’s analysis entailed isolating the census data on dwellings that showed up as either “unoccupied” or occupied “by a foreign resident and/or by temporarily present persons” on Census Day 2011, which was May 10.

“These units could be non-resident occupied because their occupants were just away for the Census Day, between rental tenants, or moving in a just-opened building, but there is also a chance that they are someone’s pied-à-terre, vacation home or empty investment holding,” observed Mr. Yan.

In the city of Vancouver, the rate of those kinds of dwellings stood at 7.7 per cent overall, with some parts of the downtown as high as 23 per cent. In the city of Toronto, the rate was 5.4 per cent; in Calgary, 5 per cent.

If Vancouver’s “non-resident” category had the same rate as Calgary’s, it would have had only about 16,500 empty units on Census Day – the level to be expected in a regular city, where some part of the housing stock is always going to be empty for one reason or another. Instead, more than 22,000 units showed up in that category. An analysis for the whole Lower Mainland shows that it has between 15,000 and 20,000 more empty units, proportionally, than the Calgary or Toronto metropolitan regions.

Source: Frances Bula, Globe and Mail

Vancouver’s housing market fortunes closely mirror trends in the Chinese economy, according to an analysis by an economist with the Conference Board of Canada.

Robin Wiebe says his number crunching has found that there are strong links between home sales, price growth and housing starts in Vancouver and the overall health of the economy in China.

Wiebe made the same comparison with the Toronto housing market and found that Chinese gross domestic product figures were linked to growth in that city’s housing sales, but not to price or starts. GDP is the market value of all goods and services produced in a country.

All aspects of the Vancouver housing market and economic growth in China move together and are statistically significant, Wiebe said.

“It’s another piece in a puzzle,” he said by phone from Ottawa on Monday. “It’s evidence that the Chinese economy moves with various Vancouver real estate variables. It’s another piece of evidence that supports the link between Vancouver and China.”

In the Hot Topics in Economics blog on the Conference Board of Canada website, Wiebe wrote that the effect of China’s economic growth on the Vancouver real estate market rivals the effects of three domestic factors: Vancouver’s population growth, changes in employment, and mortgage interest rates.

“The chief implication is that observers need to pay attention to China’s economic health when assessing the outlook for Vancouver’s housing market,” said Wiebe, a senior economist at the Conference Board’s centre for municipal studies.

Determining the extent of foreign ownership of real estate is impossible in Canada. No level of government keeps track of the country of origin of purchasers who often use local buyers as proxies. Wiebe said that in the 1990s, Vancouver’s housing market was relatively sluggish, despite what he called a decent economy and favourable demographics. Annual employment increases averaged 2.3 per cent while population grew at 2.5 per cent. During that same time, average resale prices rose less than three per cent per year, and ended the decade up 24 per cent.

“The market performed much better during the following 10 years,” he said. “Annual sales of existing homes exceeded 36,000 units, a previously unheard-of volume, for five straight years between 2003 and 2007. The average transaction price doubled between 2000 and 2009, with a 20-per-cent spurt in 2006 alone.”

A big contributing factor, he said, was a substantial drop in mortgage interest costs, which helped people buy homes. A five-year-term mortgage, for example, dropped from 13.2 per cent in 1990 to below seven per cent in 1998, before increasing in 1999. By 2009, the five-year rate fell to an average of 5.1 per cent.

Wiebe wrote that China’s economy grew by only 3.8 per cent in 1990, following a 4.1-per-cent increase in 1989. That compares to the previous five years where GDP growth averaged roughly 7.8 per cent.

The 1990s “ended on a weak note with an annual GDP growth of 7.8 per cent in 1998 and 7.6 per cent in 1999. The 2000s were significantly better — annual Chinese GDP growth never dipped below eight per cent.

“Now the pendulum has swung again,” he wrote. “Despite slightly faster growth in employment (2.1 per cent on average in 2010-12) and population (1.6 per cent), along with even lower mortgage interest rates, Vancouver resale volumes fell 23 per cent in 2012 and average resale price dropped 6.4 per cent. One clue to this tepid performance is that China’s real GDP growth fell to a 12-year-low, estimated at only 7.8 per cent, in 2012.

“Statistical analysis confirms the importance of China’s economic health to Vancouver’s housing markets,” he wrote in the blog.

He said his analysis shows that local employment growth is not significantly related to existing home sales, price growth or housing starts.

“This could mean that a substantial proportion of Vancouver real estate purchases do not need local jobs to buy any home (new or existing) and that many do not need a mortgage to buy a new home,” he said. “On the other hand, better economic health in China gives its residents wealth to spend on Vancouver housing.”

Tsur Somerville, a professor at the University of B.C. and director of the Center for Urban Economics and Real Estate at the Sauder School of Business, said a correlation between the Vancouver real estate market and GDP growth in China is not causation.

“It implies that our housing market is driven by what is going on in China,” he said on Monday. “I think there is an element to the fact that changes in world commodity prices are affected by industrial output in China. That certainly affects all of us.”

Somerville said there is no doubt that the Chinese economy and the rest of the world are linked. But he believes bigger factors at play may be the internal market and total immigration from Asia, not just China.

“The house price growth has been stunning in Vancouver since the year 2000,” Somerville said. “I would argue that a decline in interest rates has had a much bigger effect than the growth in Chinese GDP.”

Source: Kevin Griffin, Vancouver Sun

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

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

Below is the January report from the Real Estate Board of Greater Vancouver (REBGV).

Home buyer demand remains below historical averages in the Greater Vancouver housing market. This has led some home sellers to remove their homes from the market in recent months.

Residential property sales in Greater Vancouver reached 1,351 on the Multiple Listing Service® (MLS®) in January 2013. This represents a 14.3 per cent decrease compared to the 1,577 sales recorded in January 2012, and an 18.3 per cent increase compared to the 1,142 sales in December 2012.

Last month’s sales were the second lowest January total in the region since 2001 and 18.7 per cent below the 10-year sales average for the month.

“Home sale activity has been below historical averages in Greater Vancouver for about seven months. This has caused a gradual decline in home prices of about 6 per cent since reaching a peak last spring,” Klein said.

Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver has declined 5.9 per cent to $588,100. This represents a 2.8 per cent decline compared to this time last year.

“It appears many home sellers are opting to remove their homes from the market rather than settle for a price they don’t want,” Eugen Klein, REBGV president said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 5,128 in January. This represents a 10.9 per cent decline compared to the 5,756 new listings reported in January 2012. Last month’s new listing count was 18.9 per cent higher than the region’s 10-year new listing average for the month.

The total number of properties currently listed for sale on the Greater Vancouver MLS® is 13,246, a 5.6 per cent increase compared to January 2012 and a 4.5 per cent decline compared to December 2012. This is the fourth consecutive month that overall home listings have declined in the region.

“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. Right now, it seems many home sellers are opting for the latter,” Klein said.

With the sales-to-active-listings ratio at 10.2 per cent, the region remains in buyers’ market territory. Since June, this ratio has ranged between 8 and 11 per cent.

Sales of detached properties in January 2013 reached 542, a decrease of 17.8 per cent from the 659 detached sales recorded in January 2012, and a 31.7 per cent decrease from the 793 units sold in January 2011. The benchmark price for detached properties decreased 3.1 per cent from January 2012 to $901,000. Since reaching a peak in May 2012, the benchmark price of a detached property has declined 6.9 per cent.

Sales of apartment properties reached 576 in January 2013, a decline of 12.3 per cent compared to the 657 sales in January 2012, and a decrease of 19.2 per cent compared to the 713 sales in January 2011. The benchmark price of an apartment property decreased 2.9 per cent from January 2012 to $358,400. Since reaching a peak in May 2012, the benchmark price of an apartment property has declined 5.6 per cent.

Attached property sales in January 2013 totalled 233, a decline of 10.7 per cent compared to the 261 sales in January 2012, and a 25.6 per cent decrease from the 313 attached properties sold in January 2011. The benchmark price of an attached unit decreased 1.7 per cent between January 2012 and 2013 to $449,900. Since reaching a peak in April 2012, the benchmark price of an attached property has declined 7.7 per cent.

Home sales are forecast to increase this year and next, with average prices dropping slightly in 2013 and crawling higher in 2014, the British Columbia Real Estate Association said Wednesday.

The association’s latest forecast calls for a 5.6-per-cent increase in the number of sales in 2013 and a further 6.1-per-cent increase in 2014, after the number of sales fell 11.8 per cent in 2012. In Metro Vancouver, the number of sales in Vancouver fell nearly 23 per cent in 2012, but the BCREA expects they will pick up over the next two years.

“I think 2013 is going to be a transition year into 2014 and 2015 when we are finally going to see the global economy start to post more regular performance,” said Cameron Muir, BCREA chief economist.

The economic fundamentals in B.C., such as low interest rates and growth in both employment and immigration, predict a much higher level of sales than are now occurring, Muir said.

“Tighter credit conditions introduced last year have had some impact, but a much larger impact is consumer psychology, where we’ve seen many consumers deciding to take a wait-and-see attitude in 2012. I think many of them will enter into the market in 2013.”

The forecast calls for 75,830 units to be sold in 2014 in B.C., while the five-year average is 74,600 and the 10-year average is 86,800 units, BCREA said.

“Sales, particularly in the fourth quarter of 2012 have certainly moderated, and Vancouver sales are likely going to be low again in January,” Muir said. “This forecast represents stronger activity happening in the second half of 2013.”

The average residential price is forecast to drop one per cent in the province to $510,000 in 2013, and edge up 0.6 per cent in 2014 to $513,500, BCREA said. In Vancouver, the forecast calls for average prices to drop 3.3 per cent in 2013 and a further 0.6 per cent in 2014.

“I don’t expect to see prices going anywhere fast, any time soon,” Muir said. “I expect to see prices remain quite flat over the next few years, and they would even likely decline in real terms if you put inflation into the picture.”

Most forecasts are inaccurate because conditions change over time, said Tsur Somerville, director of the centre for urban economics and real estate, Sauder School of Business at the University of B.C. “In general, BCREA is going to tend to be more optimistic than perhaps one of the banks might be.”

Somerville expects Metro Vancouver’s real estate market to remain slow for a while.

“Prices are more likely to decline over the next year than they are to to go up. I would be surprised if the declines are anything other than very moderate,” Somerville said.

Muir said average wages have been growing about two per cent each year, so condominiums and townhouses are becoming relatively more affordable.

“The benchmark price of condos and townhomes has been quite flat for the past three years, and if you discount that for inflation or wage growth, in a very real sense, real prices for apartments and townhouses are down about six per cent over (the) last three years.”

Muir expects an increase in immigration and solid employment will keep the market stable.

“We’re seeing part-time jobs being rolled over into full-time jobs, which points to a more solid underpinning for the economy and the housing market,” Muir said, adding that as the U.S. and the global economies recover, Canada will benefit.

Housing starts in the province will fall 3.5 per cent to 26,500 units in 2013, and go up 1.5 per cent to 26,900 units in 2014, the forecast said. The transition from the harmonized sales tax to the provincial sales tax may add a short-term boost to new homes sales this spring, the forecast said.

Source: Tracy Sherlock, Vancouver Sun