Single-family home price declines in Vancouver: Trend or timing?
Published Wednesday, July 6, 2016 3:36PM PDT
Last Updated Wednesday, July 6, 2016 6:57PM PDT
House hunters in East Vancouver were just greeted by a strange but highly unusual sight: six-figure price reductions on several homes.
At least two older single-family homes in the Fraser corridor saw reductions of $100,000 in the past two weeks. The price of a three-story fixer-upper on East 18th Avenue near Kingsway dropped a whopping $449,000 -- nearly a full quarter of the asking price -- after sitting stagnant for several weeks of open houses with no offers.
Although summer normally sees somewhat of a slowdown once school-aged kids are out on holidays, real estate agents and experts say there's anecdotal evidence to suggest the overheated market may be slightly cooling.
Ian Tang of Oakwyn Realty says whereas four months ago it was common to see 15 offers over asking on a single-family home, now it's more common to see two or three.
That could be attributed to pricing strategies used by sellers in the red-hot market: "Strategically before you'd list low and hope to get multiple offers and get way above asking. Now people are more inclined to list at the price they're hoping to get and if they get anything above that than great," Tang told CTV Vancouver.
"It changes the marketplace entirely because you're not getting those crazy multiple offers."
Dan Morrison, president of the Real Estate Board of Metro Vancouver, says inventory has crept up slowly over the past four months. Since March, more homes have been listed for sale in the Vancouver area than in any other four-month period this decade.
The news is encouraging for home buyers in a market where it's becoming common practice to submit unconditional offers and forgo a home inspection to avoid losing out on a sale.
Morrison says that extra housing stock isn't rising fast enough to make a huge impact on the market, price wise, however.
Families with children often hold off selling their homes until the fall, he says, adding that it is still very much a seller's market, even though the sales-to-active-listing ratio is at its lowest measure since February.
"But in a crazy market like this kind, most of the rules are out, so we really don't know yet if it's a correction or if it's just seasonal," he says of the price drops for homes.
Morrison said it will take until at least September to analyze if the figures suggest a larger trend.
UBC economist Tom Davidoff agrees, saying several more months of data is needed before reaching any conclusions.
The Sauder School of Business expert says it's unusual to see places taking more than one open house to sell, and that the market could be "finding itself" after a rapid acceleration that saw prices spike more than 30 per cent in a single year.
"When you start to see inventory rising and homes taking longer to sell that gives you an inkling that you're at the top of a cycle instead of on your way up," he said.