Low consumer confidence blamed as price decline continued in October
Derrick Penner
Sun
The decline of the Lower Mainland’s real estate market continued in October, with the fall in prices erasing any equity gains homeowners saw in the first part of 2008, the region’s real estate boards reported Monday.
Battered consumer confidence, despite B.C.’s better-than-average economic performance, kept buyers on the sidelines, with the Greater Vancouver region recording less than half the number of Multiple-Listing-Service sales and the Fraser Valley experiencing an almost 50-per-cent decline from October 2007 sales levels.
“It’s not like the market has disappeared and people aren’t buying,” Tsur Somerville, director of the centre for urban economics and real estate at the Sauder School of Business at the University of B.C., said in an interview.
However, sales have dropped sharply, in part because buyers are starting to wait out the decline in prices, he added.
“When markets are falling, people are always a little hesitant to lead [and make a purchase] because no one wants to say, ‘Gee, I paid too much,’ “ Somerville said.
“And that overlaps with what’s happening in the general economy, both here and globally, that’s not going to give people the confidence to make major purchases right now.”
In the Real Estate Board of Greater Vancouver’s region, the decline in sales and still-high inventory levels has seen the so-called benchmark price of a Greater Vancouver single-family home drop to $695,962 in October, a 9.8-per-cent descent from May. The benchmark, which reflects a typical property in that class, now rests 4.7-per-cent below the October 2007 benchmark price.
Greater Vancouver saw MLS sales of 1,364 units in October compared with 3,028 in the same month a year ago.
Single-family home sales across the region dropped to 493 units in October from 1,368 in October 2007. Condominium sales were also down substantially to 493 units from 1,133 in the same month a year ago.
Dave Watt, the Greater Vancouver board’s president, said sales are not keeping pace with B.C.’s current economic conditions with low unemployment and stable interest rates.
“That’s a direct result of a loss of consumer confidence in the overall market,” Watt said.
In the Fraser Valley, the detached house price hit $513,892 in October, down 6.5 per cent from May and 0.6 per cent below the average price of October 2007. MLS sales of 768 in the valley were 48 per cent below sales levels of the same month a year ago.
Kelvin Neufeld, president of the Fraser Valley board, said price declines are putting more properties within the financial reach of more consumers.
“In some areas of the Fraser Valley, the number of days on the market has doubled in the past year, putting more pressure on sellers to lower their asking prices,” Neufeld added.
Somerville said the factor that was different in October was a slight decrease in inventory. People are deciding not to list properties, or taking listings off the market.
In the Fraser Valley, new listings were down 11 per cent from the same month a year ago at 2,794 units. And total listings of 11,715, while still 42-per-cent higher than October 2007, represented a decline from September.
In Greater Vancouver, the total inventory of active listings, at 19,257, was down three per cent from September. New listings, however, increased a slight one per cent from the same month a year ago at 4,867 units.
That, Somerville added, combined with lower levels of new building taking place this year “are part of an overall supply response that will be necessary for the market to stabilize.”
© The Vancouver Sun 2008
