Prices plunging: Houses selling well below asking, some under $1M
Listing prices for detached homes appear to be falling as Vancouver's real estate market faces what an expert calls "significant headwinds."
Data released Friday showed that those looking to buy a single family detached home in the city last month forked over about $1.5 million in Metro Vancouver, but recent listings suggest that the benchmark is falling.
CTV News found a number of East Vancouver homes priced under then $1 million mark during a search of MLS listings on Monday, including one that sold for $560,000 below the initial asking price.
That home, located in Renfrew Heights, was initially listed at $1.36 million in August, but sold for $800,000 in mid-November.
Sutton West Coast realtor David Hutchinson has been tracking plunging prices and found several detached homes listed below $1 million, some of which had been recently renovated.
"If you want to sell, you have to be priced sharply, and you see a lot of price drops," Hutchinson told CTV.
And even with price drops, he added, he's seen many sale prices lower than what sellers are asking for. He said he knew of one home in the west side of the city that was initially priced at $3.9 million, but when it didn't sell, the owners reduced the price. They kept reducing it in small increments, but eventually they couldn't wait any longer, and had to drop the price by nearly $1 million.
Another home on West 8th in Kitsilano was listed for $2.5 million, but could only fetch $1.6 million.
"There's not this crazy deluge of offers coming in like before, when you could price it below the market value and wait for all the offers to come in. That's not happening anymore," Hutchinson said.
"Buyers are being a little more picky now and you didn't see that before."
Tom Davidoff, associate professor at UBC's Sauder School of Business, said he's noticed a similar trend.
"Sales have been slow and we're starting to see prices tick down," he said.
"I think we can say the market is facing very significant headwinds. We have the foreign buyers tax hitting an important part of the market. We've got new qualification rules for mortgages coming down for lower-end buyers."
The changing market puts sellers in a tough position: holding on to their property in hopes of an upswing in prices in the spring, or selling it off so they don't risk prices dropping even further.
Hutchinson called the changing market a "window of opportunity" for those looking to buy.
"There's not a lot of selection, but there are some cracks in the market. There are some good deals right now," he said.
But Davidoff said Vancouver's market is hard to predict, and its future seems uncertain, especially with interest rates rising south of the border.
"Should mortgage rates in Canada follow suit, and some of them are – TD and RBC have raised interest rates – If those rates rise, that's another headwind against the housing market that could push prices down in the new year," he said.
While the most recent data from the Real Estate Board of Greater Vancouver shows benchmark prices were down from October, numbers are still higher than they were last November.
The latest report, issued Friday, said the benchmark price of single-family detached homes sold across the Lower Mainland was $1.2 million last month. In Metro Vancouver the benchmark was $1.5 million for detached homes, which represents a 2.2 per cent decline from last month, but a 23 per cent increase from November 2015.
The benchmark for all types of residential properties sold in Metro Vancouver was also down from October at $908,300. That number is 20.5 per cent higher than the benchmark in November 2015. The full report is available on the REBGV website.
"The long run for Vancouver is this is going to be an expensive place where rich people live," Davidoff said.
"Rents have been rising dramatically except at the very highest end over the last year. I don't think Vancouver is heading for super affordability. Probably people who buy today, 20 to 30 years down the road are going to be just fine."
With a report from CTV Vancouver's Penny Daflos