Selling fewer luxury homes leads to real estate decline
Fewer houses being sold in the most expensive districts of the city contributed to a 31.7% decrease in the dollar value of home sales last month in the greater Vancouver area.
Figures from the Canadian Real Estate Association show sales of $1.21 billion in Vancouver during November. That compares to $1.77 billion in November 2011.
Cameron Muir, chief economist for the British Columbia Real Estate Association, said home sales have been declining in Vancouver all year. The average benchmark home price in Vancouver was $596,000 in November, a 1.7 % drop from the same month last year.
Last year’s figures must be taken “with a grain of salt,” Muir said because the prices were inflated by a large number of luxury homes for sale in West Vancouver, Richmond and Vancouver’s West End.
“We saw quite an escalation in prices, more the result of seeing more single-detached homes selling in the tony markets in town,” Muir said.
“That proportion has reverted back to more historic norms. Average prices are down just as a result of that change.”
Province wide, the dollar volume of homes sold in November dropped 24.6 % compared to last year at the same time.
The federal government’s decision to reduce the maximum amortization period for a government-insured mortgage to 25 years from 30 years also affected home sales, Muir said.
That could add up to $160 on the monthly payment of a $350,000 house, he said.
“That no doubt has squeezed some potential buyers out of the market,” Muir said.
The Vancouver market will probably remain flat in the foreseeable future, but Muir said potential buyers shouldn’t expect a sudden drop in prices.
“We could see some modest downward pressure ... but not enough to suggest if you hold off now you are going to buy into the market at an incredible bargain in six months from now,” he said.