A recent article in Forbes stated that, since 2002, the price of a single detached home in Vancouver has gone up from an average of $400K in 2002 to $1.75 million. That’s a whopping 337% increase in fifteen years. Why then is it that in September, stories were coming out saying that prices in Vancouver have fallen for the second month in a row, off 36.6 % from the year prior?
Supply and demand
A report by The Greater Vancouver Real Estate Board puts the blame on the classic law of supply and demand. As demand drops among buyers due to steep real estate prices, the supply grows and the prices decline. Indeed, the report states 38.2% more properties were listed for sale in September 2018 compared to the same time in 2017, with the 13,084 homes for sale figure also up over 10% from the month previous.
A market correction
To some, this downward trend was inevitable. A Vancouver Sun report quotes realtors speculating that just as foreign investment led to a large and fast spike of home prices, the new reality will lead to a major decline, although they stop short of proclaiming that the market will ever be considered truly affordable.
A buyer’s market?
While prices for detached homes remain steep, for the first time, buyers have a more extensive selection of homes to choose from. The result? No more multiple offers on homes and no more waived conditions on sales, with prospective buyers more likely to get a thorough home inspection performed now that they’re under less pressure to buy.
Not really a slump?
Still, the city’s prices, while down, are still high. In fact, townhouses and condo prices have been relatively steady, with single detached home prices being the hardest hit. Likewise, some don’t expect the slump to last. Real Estate market analyst Dane Eitel of Eitel Insights was among those who predicted the housing bubble for detached homes bursting in 2018, but by the same token, he expects the market to rebound within three years. In an interview with Western Investor, he predicts the turnaround will be fast and dramatic, and that by 2023 we’ll once again be seeing record highs, making this a smart time for those who can take advantage of low prices to buy.
Meanwhile, the B.C. Real Estate Association expects the slump to be even more short-lived and predicts the recovery is already underway, with them blaming prices on the shock of the recent mortgage stress test legislation.