The average price chart for Vancouver real estate tells the story. Since 1977, periods in each of the past three decades there have been dips in the market. The chart also illustrates that real estate has consistently been an appreciating investment over time. The degree of increase depends on the type of unit bought and its location.
In 2003, we see that a buyer of a detached home on Vancouver’s Westside, or in West Vancouver, would have an investment that has doubled in value since then. A buyer of a home in Vancouver Eastside has seen their home appreciate 83 per cent. In Coquitlam that same house would be up 80 per cent. Squamish has had ta 33 per cent price increase for a detached home since 2003, and Pitt Meadows a 49.5 per cent increase.
Vancouver Condominium buyers have fared even better over the past five years. Port Coquitlam condominiums increased 116 per cent, Vancouver East condominiums increased 110 per cent, New Westminster103.5 per cent, and Richmond and Port Moody 101 per cent.
August 2007 sales began to slow and in March 2008prices began to soften. Last month 1,568 homes changed hands in the Greater Vancouver area, a decline of 53.5 per cent from 3,384 sales in August 2007. At the same time, prices began dropping which, in turn, began having a leveling impact on house price appreciation.
Andrew Ramlo, an Urban Futures Economist, says its based on consumer confidence being at a 7 year low. The consumer is re-evaluating their budget, based on higher food and energy costs. ” There is a tendency to put off that buying decision until prices stop falling.” “
“During a changing market, home buyers are more apt to take a ‘wait and see’ approach.” This hesitance is having an impact on the local economy. A decline in home sales and prices results in fewer housing starts and construction employment, says Helmut Pastrick, Chief Economist at Central. “This adds up to less demand for a whole range of products and services – from furniture sales to lawyers and notaries.”
What’s next?
Will the situation improve, continue to pause or lead to a housing recession? Most economists are not forecasting lengthy declines, though almost every major country is revising their economic forecasts downward. “Overshadowing our growth is the slowdown in the U.S.,” Ramlo says. However, the underlying economic fundamentals remain strong in the province. “Our economy is robust, our employment rate is stable, and we expect continued growth in immigration.”
Pastrick expects home prices will likely continue to decline for the rest of 2008 and through 2009 in most of the Lower Mainland. “An important statistic will be the supply of homes for sale. When this number begins to shrink, the bottom is near.”
Muir thinks that what will get the market going is a supply adjustment. “This means fewer listings coming on and remaining, a process that will play out and is now underway.”
In August, the Board saw active listings decline 6.2 per cent from the previous month.
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