A Growing Supply Of Listings Is Stabilizing The Market

Unit Sales Fall, New Listings Rise, Prices Increase Moderately... Could a 'Buyer's Market' Be On The Horizon?

Unit Sales Drop Off Significantly From Prior Year
The Real Estate Board of Greater Vancouver (REBGV) reported total sales of all types of residential real estate totalled 3,002 units in May 2008, off 30.7% from prior year sales of 4,331 units.

Number Of New Listings Rises Dramatically
The board reported new listings of detached, attached and apartment properties rose 20.2% to 7,390 in May 2008 vs. the 6,149 new units listed in May 2007.

President's Message
"With more property listings and a decline in the number of sales, prices are not increasing as rapidly, now down to single digits overall, which is good news from an affordability standpoint," said REBGV president, Dave Watt. "The housing market is at a balanced state, sellers have more competition and buyers have more selection to chose from."

Sales By Property Type
Sales of detached homes declined (33.4%) to 1,203 units from the 1,805 recorded in May 2007. The benchmark price, as calculated by the MLSLink Housing Price Index®, for detached homes rose 8.4% vs. May 2007 to $771,250.
Sales of apartment homes declined (30.5%) in May 2008 to 1,244 units vs. the 1,789 units sold in the same period in 2007. The benchmark price for apartment homes was up 8.7% from prior year period to $389,668.
Sales of attached homes declined (24.7%) to 555 units in May 2008 vs. the 737 units sold in May 2007. The benchmark price increased to $478,931 in May 2008, up 9% from prior year.

Days On Market (DOM)
Overall DOM was 34 days in May 2008 up one day from the 33 DOM reported in April 2008, and down 5 days from the 39 DOM reported in May 2007.

In North Vancouver DOM for all property types increased to 26 days in May 2008 vs. the 23 DOM reported in April 2008 and the 23 DOM reported in May 2007. In West Vancouver overall DOM dropped to 44 days in May 2008 from 53 DOM in April 2008 and the 57 DOM reported in May 2007.

This underscores the importance of pricing. Well-priced properties continue to sell quickly, while properties that are perceived by the marketplace to be overpriced, either sit or get caught up in a negative spiral of price reductions.

North Shore Details

North Vancouver May 2008
Detached home sales of 102 units off (28.7%) from prior year month. YTD sales of 450 units off (15.2%) from prior year period. YTD median price of a detached home is up +15.9% to $910,000.
Attached home sales of 44 units up +7.3% from prior year month. YTD sales of 165 units off (7.8%) from prior year period. YTD median price of an attached home is up +10.1% to $610,000.
Apartment home sales of 84 units off (29.4%) from prior year month. YTD sales of 407 units off (13.2%) from prior year period. YTD median price of an apartment home is up +12.8% to $369,900.

West Vancouver May 2008
Detached home sales of 61 units off (41.3%) from prior year month. YTD sales of 286 units off (12.5%) from prior year priod. YTD median price up +15% to $1,552,500.
Attached home sales of 8 units on par with prior year month. YTD sales of 31 units up +3 units from prior year priod. YTD median price is flat vs. prior year at $949,000.
Apartment home sales of 18 units off (37.9%) from prior year month. YTD sales of 76 units off (9.5%) from prior year period. YTD median price up +8.8% to $761,500.

What's Really Going Here? The Emotional Pendulum And Other Influencing Factors...
We are certain of a few things. The super-heated market of the past few years created an environment where sellers became convinced that property values would continue to enjoy double-digit increases forever, leading to an abundance of over-priced listings. Although difficult to quantify, speculators concentrated in the "pre-sale" condo marketplace, have driven condo values ever higher. If there's going to be a problem this is likely where it will manifest itself. Affordability has definitely suffered, especially for first-time buyers.

Many Americans that purchased property here in the days of the .75 "Loonie" are cashing out to pursue other opportunities. The public is inundated with negative media energy. We are bombarded with daily tales of despair and the ever-popular "nationalized and averaged" statistics. These reports usually quote US or eastern Canadian statistics to support a negative spin on an otherwise vibrant and buoyant BC economy (with some notable exceptions including forestry) and cast doubt over the most desirable real estate in Canada.

If "perception is reality" then it's easy to understand why so many would-be buyers have opted to sit on the fence for a spell, and so many would-be sellers are scrambling to list their properties, each thinking that something has fundamentally changed in our local real estate market.

The Reality Check
Let's review a few "positives" about our market for a change:

Days On Market (DOM) stats suggest that a well-priced property will sell as quickly or in some cases more quickly than it would have last year at the same time, in one of our strongest markets ever.

Mortgage interest rates remain very low by historical standards with the Bank Of Canada short-term lending rate predicted to drop by another 1.5 percentage points. This will likely benefit variable rate mortgages, but have little, if any, impact on 5-yr fixed terms.

New immigrants and investors from Asia, Europe and Iran are stepping in to pick up where the Americans left off. Retirees, remember that burgeoning Baby Boomer segment most of whom reside somewhat farther east of the Rockies still want to move to the best climate in Canada, and with a multi-trillion dollar generational wealth transfer hovering in the wings, the dream of enjoying a west coast lifestyle have never been more attainable for a large demographic.

The economy remains strong. Unemployment is low. BC is creating jobs. Workers are earning more and paying less in provincial income tax than any other region in the country. CMHC continues to forecast strong in-migration to the province, most of which will benefit the Lower Mainland.

Although Canada as a whole will suffer as a result of the slowdown (mild recession?) in the US, the western provinces will continue to outperform the national average. Most pundits believe that the BC real estate market is cooling but that we are headed for a moderate unit sales decline with continued, but moderating price increases.

Download a .PDF copy of TD Bank Financial Group Special Report Canada's Red Hot Real Estate Markets To Cool for a recent perspective.

At the end of the day, we are blessed to live in one of the most beautiful places on earth. We have a broad mix of property types to address varying lifestyle and affordability issues. The real estate market is balancing. Will it shift into a buyer's market? We don't have a crystal ball, but a balanced market is still good news for buyers and sellers alike. With less upward pressure on prices, there should be less panic buying and less speculation in our marketplace.

Maybe this will give everyone an opportunity to stop and smell the roses, and enjoy some of that fabled west coast lifestyle!

Planning a move? Give us a call for a Free, No Obligation market evaluation of your property, or to schedule a meeting to discuss your purchase options.

Anita Schmitt and Tom Davis REALTORS® - Royal LePage Northshore

Data Source MLS® Sales Statistics - June 3, 2008 and TD Economics Special Report April 10, 2008 
This communication is not intended to cause or induce breach of an existing agency agreement.