Is a lack of foreign buyers to blame for plummeting home prices?
January real estate numbers show further softening of the Metro Vancouver real estate market, and nowhere is that effect more dramatic than on Vancouver's West Side.
One realtor says a lack of foreign buyers is why homeowners who bought in the pricey part of the town a few years ago are now selling for huge losses.
"The West Side housing market…became very reliant of foreign capital flowing in," said Andrew Hasman, the realtor for an owner who finally managed to sell their 1920s character home after more than a year on the market.
"All of those buyers have kind of hit the sidelines and without those buyers, prices can only go one way and that's down."
The property in question was first listed for $2.7 million. It then dropped to $2.4 million and then $2.2 million.
Hasman said the home finally sold a couple of weeks ago for less than $2 million—$612,000 less than the owner paid for it 20 months ago.
A different home located nearby is currently listed at $2.5 million. In June 2016, it sold for $4 million.
Prices dropping across the region
Last month, a detached fixer-upper in East Vancouver was listed for just shy of $1 million, a price that has been unheard of in the city for years.
While devaluing has been the most dramatic on the West Side, the trend extends right across Metro Vancouver, with most detached homes selling for well under their assessed value.
Townhome and condo prices have fallen too. In January, asking prices across the region were down an average of 7.2 per cent from last summer. The number of sales was also down 39.3 per cent from January 2017 with just over 1,100 homes sold in Metro Vancouver last month—a 10-year-low for the region.
How low sales lead to lower prices
And one expert says those two trends are closely connected.
"Eventually, if the house doesn't sell, they're going to have to cut prices," said UBC economist Tom Davidoff. "So, typically when homes are slow to sell this month—that does predict falling prices next month."
While the downward trend is good news for those looking to get into the market, it was a tough lesson for Hasman's client.
"The seller is not happy, but it's just the reality and for whatever reason, they had to sell," he said.
According to the real estate board of Metro Vancouver, the benchmark price for detached homes pulled back 9.1 per cent from January 2018 and is now at less than $1.5 million.
The benchmark price for condos fell by 1.7 per cent to $658,600. That number is just over the $1 million mark for all residential property types combined.
With reports for CTV Vancouver's Shannon Paterson and The Canadian Press