Worries about the economy, mortgage rates leave potential owners ‘sitting on the fence’
Derrick Penner
Sun
For-sale signs are sticking around longer as the number of real estate sales has fallen across the region. Prices are also down as worries about economic conditions make buyers think twice before signing deals. Photograph by: Ted Rhodes, Postmedia News, Vancouver Sun
Yvonne Viel had hoped to get in the low $700,000s for her south Vancouver home.
But in a July where home sales plummeted by almost half from last summer’s red-hot market, she was happy for a quick sale of her home at $675,000.
Pricing was key to the sale, which occurred within days of the home going on the market, she said. She said her realtor convinced her to list at $699,000, which brought three offers, including the one she accepted.
“I did the right thing for my situation,” Viel, a single 50-year-old in the personal management field, said in an interview.
In Metro Vancouver, excluding Surrey, 2,255 sales were registered through the Multiple Listing Service, a 45-per-cent decline from July 2009 and the third-lowest July in a decade.
In the Fraser Valley, July MLS sales were off 47 per cent with 1,101 transactions and the slowest July in a decade, according to real estate board president Deanna Horn.
The benchmark price for detached homes, an average for typical homes sold, dipped a negligible 0.2 per cent to $793,193 in the area of Metro Vancouver covered by the Real Estate Board of Greater Vancouver.
Fraser Valley Real Estate Board realtors saw the detached-home benchmark hit $510,470 in July, down 1.5 per cent from June.
But not everyone had a slow July.
Lorne Goldman, of Macdonald Realty Lorne Goldman, who sold Viel’s house, said July was a busy month for him with nine sales including a bidding war for one listing.
Other than noticing fewer offers from Mainland Chinese buyers entering the market, Goldman said the change is a shift from “a sellers’ market to a more balanced market.”
“I think it would be natural to assume that a sellers’ market can’t continue forever,” Goldman said.
Vancouver mortgage broker Chris LeMay said he’s noticed he’s doing more refinancing work for clients than home purchases right now, but he was taken aback by the overall decline in July sales.
“It’s a lot higher than I thought,” he said. LeMay‘s impression from talking to clients is that they’re growing uncertain about the economy.
“They’re not sure if [property] prices are going to come down and [mortgage] rates are going to go up and they’re a little bit scared,” LeMay said, “so they’re sitting on the fence.”
But Jake Moldowan, president of the Real Estate Board of Greater Vancouver, said there are still buyers in the market. About one-third of them are first-time buyers, which is important, he said. “That really starts the chain of events.”
Moldowan suggested comparing July of 2009, which was the record for July sales, with this July, is misleading.
The board saw 19,428 sales to the end of July, and Moldowan said it is on pace to see about 35,000 by the end of the year, which he characterized as a normal year.
“We’ll see what happens in the fall.”
Whether the market is correcting is difficult to determine given that housing inventories are also declining, Sauder School of Business professor Tsur Somerville said in an interview.
In Metro Vancouver, new listings were off almost 18 per cent from a year ago. In the Fraser Valley, new listings were down 27 per cent.
“[Listings] are starting to move in a direction where the resale market is a little more in balance,” Somerville, director of Sauder’s centre for urban economics and real estate, said in an interview.
And while July’s drop in sales “is really striking,” Somerville added that sales levels are still higher than low points of the late 1990s.
Both markets, however, still have higher levels of total inventory. In Metro Vancouver, the inventory of 16,431 homes is 33-per-cent higher than July 2009. In the Fraser Valley, the inventory of 10,852 listings is 14 per cent more than in the same month a year ago.
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