Real-estate sales plummeted in the Lower Mainland last month with sales falling 20 per cent in Greater Vancouver and 25 per cent in the Fraser Valley.

It was the fourth straight month of decline in the housing market. While the average price increased, there were declines in sales in most areas.

Detached-home sales fell by 20.2 per cent in Greater Vancouver, while in the Fraser Valley they dropped by 25 per cent.

According to Multiple Listings Service data, apartment sales fell 17.4 per cent and attached property sales fell 10.9 per cent in Greater Vancouver compared to a year ago.

In the Fraser Valley, sales of residential properties were down 15 per cent overall.

Representatives from both the Fraser Valley and Greater Vancouver real-estate boards said despite the declines, sales remain strong compared to a record pace set last year.

Real-estate sales continue to be one of the key drivers in the provincial economy, according to Real Estate Board of Greater Vancouver president Andrew Peck.

Sales volume has “trickled down” every month for the last four months, said Fraser Valley Real Estate Board president Moss Moloney on Friday.

“But the price of real estate hasn’t dropped,” he said. “It’s a better opportunity now for buyers, and sellers are still getting good dollars for their listings.”

Sally Broadbent, both a seller and a buyer, dropped out of the market in the spring, when buying was too frenzied.

The East Vancouver resident said she looked in April and May when the market was at its peak.

“The prices were really high and nothing we were interested in was coming on the market,” Broadbent said Friday.

“We started looking again in October and the difference was huge. We had more time. There was not the same urgency to buy or lose out.”

Broadbent said if she had sold her East Vancouver home in April, she probably would have received $20,000 more than the eventual selling price she got in October. In North Vancouver, where the family is moving, the house purchased came down by $10,000 from its asking price.

Lorne Goldman, the Broadbent family’s realtor, said Friday the current market remains strong.

“The spring conditions were unsustainable,” Goldman said of the frantic buying sprees earlier this year when property sales shattered records. “In one case, I had 17 offers on one listing. That level of activity cannot continue.”

In Fraser Valley, which includes Surrey, White Rock and North Delta, unit sales went from 769 sold in November 2003 to 612 sold last month, a 25-per-cent drop.

Average prices for single family homes in the Fraser Valley, at $351,996, were up 10.1 per cent over the year, and declined two per cent from October.

In Greater Vancouver, a typical detached home was $489,430, down from the three month average of $498,903, but up 8.9 per cent from the year before.

Independent mortgage broker Linda Wickstrom said housing prices aren’t dropping, but reflect a more realistic portrait of what buyers and sellers can afford.

“It’s more back to the level of a real market and that makes everyone much more comfortable,” she said Friday.

Five-year fixed mortgage rates remain steady at 4.84 per cent, similar to the rates buyers could get earlier this year for the same term.

Market analyst Robyn Adamche, with Canada Mortgage Housing Corporation, said buyers are no longer in the market just because interest rates are near historic lows.

“While mortgage is still a factor, they are starting to creep up. It remains an important driver, but it’s not the only driver now,” she said.

Since the beginning of the year, Adamche said the economy improved, more people moved to B.C. and the employment picture stabilized.

“That’s all contributing to a more stable growth in the market based on basic fundamentals. We’re seeing a much more sustainable growth.”

CMHC considers a market to be balanced when 18 to 22 per cent of all listings are sold in a month.

While exact numbers are not made public, Adamche said the ratio in October, the last month calculated, was near the high end of a balanced market.

In contrast, when the market was at its most frenzied in March, that ratio was 54 per cent.

For the end of the year, CMHC calculates total sales will be down one per cent overall from the historic 13-per-cent increase in 2003.

Prices will increase on average for this year by 17 per cent for detached homes in Greater Vancouver and 15 per cent for apartments and townhouses, Adamche said.

© The Vancouver Sun 2004

Source: Credit Union Central of B.C. VANCOUVER SUN

B.C.’s hot housing market has cooled more quickly than expected, which should hold sales, housing starts and the Lower Mainland’s average prices below 2004’s torrid highs throughout 2005, Credit Union Central of B.C. said Thursday.

Credit Union Central chief economist Helmut Pastrick said with October property sales in the Lower Mainland down 30 per cent from the March peak, he believes the market is going through an adjustment, but not an outright correction.

“The amount of new [housing] supply that’s coming on: new listings, newly constructed product, probably hasn’t surged as much,” Pastrick said.

“It’s more of a decline in those monthly sales numbers that are responsible for the market downshift.”

Pastrick adjusted his expectation for total property sales in the province down to 96,000 from the 102,600 estimate he made in June.

He is also projecting that 2005 sales will reach 94,800 and that 2005 housing starts will hit 31,600, which is slightly below the 32,400 units expected to be built in 2004.

Pastrick has also estimated that the average price for a house in B.C. will creep up to $289,700 in 2005 from $286,200, although he expects Vancouver’s average 2005 price to slip to $370,000 from $375,000 and the Fraser Valley’s average to slide to $285,000 from $290,000.

B.C.’s real estate market will still perform well, he added.

It will just “be more of a sideways market, if you will.”

Tsur Somerville, director of the centre for urban economics and real estate at the University of B.C.’s Sauder School of Business, said the dampening of the market also reflects growing uncertainty in the economy.

He said economic stories in recent weeks have been more negative than positive.

The rising dollar has made it more expensive for American investors to pour money into buying condominiums in downtown Vancouver.

The dollar, which dropped 0.75 of a cent to 83.73 cents US Thursday, also hurts B.C.’s export industries such as forestry, mining and tourism.

“When we’re talking about commodities, forestry and tourism, that’s a big piece [of the economy],” Somerville said.

“Growth in the underlying economy is not as strong as people have forecast it to be and that has implications for real estate,” he said.

“When you enter a period of uncertainty, you’re going to see fewer transactions and fewer starts.”

However, Gordon Maroney, president of the B.C. Real Estate Association, said he still believes underlying confidence in the province’s real estate market is strong.

He said the market decline that started after its May peak was predictable.

In 2004 rising consumer confidence met falling mortgage rates while there was still pent-up demand for housing following several years when the real estate industry was in the doldrums.

“So we had a huge surge of purchasers who wanted to buy starting last July to the end of May this year,” Maroney said.

“We’ve said for months…that the market could not continue.”

Carol Frketich, regional economist for Canada Mortgage and Housing, said the high dollar and uncertainty over exports will dampen growth, but only by a matter of degree.

She said that instead of seeing 20-per-cent growth in housing starts, as there was in 2004, she expects to see two-per-cent growth.

And the factors that drove the real estate boom — low mortgage rates, rising employment, consumer confidence and in-migration — will continue into 2005.

“I’m saying the fundamentals are still there for growth,” Frketich said.

Pastrick said he expects housing starts to dip slightly in 2005 because so many condominium projects were started in 2004 to beat increased development charges by the City of Vancouver.

“That borrowed from the future,” he said.

Pastrick said the affordability of B.C. housing did decline in 2004, but not to a level that can be associated with previous market turnarounds.

He also does not believe that the current softening of the market raises concerns that housing prices have become a bubble about to pop.

Pastrick points to the level of real estate speculation — flipping properties after owning them less than six months. He said data showed that in October only four per cent of sales were properties held less than six months.

That compares with 10 per cent in 1989 — 1990 and 20 per cent in 1980 –1981.

In his housing forecast, Pastrick predicted the rental vacancy rate will decline due to the slowdown in the real estate sales market. Renters will simply stay put.

He added that net migration to the province will also add to rental demand.

In his forecast, Pastrick noted that markets such as Kamloops, the Kootenays, Powell River and South Okanagan have not seen sales fall over the last six months.

Still, he predicts all markets except the Okanagan, South Okanagan, the northeast and Chilliwack to show slight declines.

Pastrick said if 2005 provincial economic growth exceeds his estimate of three per cent and the Bank of Canada cuts its key lending rate — which will hold mortgage rates down — he concedes real estate sales could rocket up again.

Pastrick said a rise in mortgage rates from April to June triggered the sales decline.

Mortgage rates have dipped again and he expects November real estate sales figures will show the market has “firmed up.”

“If not [November], then December and January,” he added.

© The Vancouver Sun 2004

B.C.’s hyperactive housing market will start to chill out next year but it will only be temporary, Credit Union Central of B.C. says in its latest housing survey being released today.

Helmut Pastrick, Central’s chief economist, says market activity in B.C. will stay robust but at a slightly lower level and under weaker market conditions than this year.

However, Pastrick stops short of saying the current market cycle has peaked.

“Based on the available evidence, and more importantly on the expected performance of key sales drivers, this is likely not the long-awaited market-cycle peak.”

But he does say the “shift during the past few months from a seller’s market to a balanced market is substantial.”

“Prices have slowed considerably and have declined in some instances as a result of recent weaker sales. In 2005, average sales prices will post only a small gain,” said Pastrick.

After the large price increases that have been going on since 2000, more potential purchasers are holding off with the deterioration in affordability, he says.

“Housing sales are predicted to firm during the course of 2005. However, it is unlikely the market will see a return to the tight conditions that existed in the early-2003 to early-2004 period,” he added.

Sales next year are expected to fall slowly to 94,800 from this year’s 98,000 but prices will still edge up to an average provincial price of $289,700 compared with $286,200 this year.

Slightly lower housing starts next year are forecast as multiple-unit housing starts decline after a strong run-up in 2004. Total starts are projected to reach 31,600 compared with this year’s 32,400.

Single-family starts will rise to 15,500 compared with this year’s 14,300 with multiple-starts declining to 16,100 from 18,100.

The renovation sector, however, is expected to stay extremely strong with spending rising to $4.1 billion next year from this year’s $3.8 billion.

There is good news for renters.

Soft rental-markets conditions are expected to prevail next year with rental increases staying below the level of inflation.

Regional housing-market conditions vary with most of the expected sales, price and starts adjustments occurring in the Lower Mainland area.

Interior housing markets have shown more strength in 2004 and that is projected to extend into 2005.

© The Vancouver Province 2004

Source: Statistics Canada

British Columbians poured $2.6 billion into residential real estate investment in the third quarter of 2004, Statistics Canada reported Wednesday.

The figure is a 25-per-cent increase from the same period in 2003.

In its release Statistics Canada said the substantial increase was due largely to heavy demand for new housing, though experts point to increasing housing costs as another driver.

“I would say [Statistics Canada’s findings] are consistent with what we’re seeing in new home construction,” said Carol Frketich, regional economist for Canada Mortgage and Housing.

“In British Columbia, we have had the same low mortgage rates, [as the rest of the country] and a lot of employment growth.”

Peter Simpson, CEO of the Greater Vancouver Home Builder’s Association, said Statistics Canada’s finding that investment in construction is up 25 per cent almost mirrors the picture of Lower Mainland housing starts.

“For the year to date, we’re up 22 per cent,” Simpson said.

“That puts us at 16,350 starts for the first 10 months [of 2004].”

He added interest rates have a lot of room to rise before they dampen demand for housing. Prices, however, are a more immediate concern to home builders.

Simpson noted that the prices for land, building materials and municipal development charges have all increased, which have all helped to push the average price of a Lower Mainland house to $300,000.

“That’s nothing to celebrate in my view,” Simpson said. “That’s just another impact on affordability thresholds.”

However, Simpson noted that consumer confidence is high and builders continue to find innovative ways to produce lower-cost options to meet demand.

Frketich said her outlook for 2005 is that B.C. will see housing starts increase over the 2004 figures due to continued employment gains and rising migration. But she doesn’t expect the same rate of growth.

Nationally, Statistics Canada said residential construction investment was up 14.5 per cent in the third quarter to $20.2 billion, bringing the total for January to September to $52.2 billion.

While British Columbia, at $600 million, showed the second-biggest dollar gain to Ontario‘s $800 million, its rate of growth was third compared with Prince Edward Island, which saw 25.7 per cent growth, and Northwest Territories, which saw 30 per cent growth.

© The Vancouver Sun 2004