BC home sales saw an annual decline in February and — like much of the rest of the country — stricter mortgage regulations appear to be to blame for the drop.
Last month, a total of 6,206 homes changed hands in the province, down 5.7 per cent from February 2017, according to the latest data from the British Columbia Real Estate Association (BCREA), published today.
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With the introduction of a new mortgage stress test on January 1, BCREA Chief Economist Cameron Muir says more stringent mortgage qualification rules are dampening housing demand across the province.
“If we look at February compared to December, sales were down about 26 per cent on a seasonally adjusted basis,” Muir tells BuzzBuzzNews.
Muir attributes the drop in sales to unusually strong activity in December before the new rules came into effect. And because eroding affordability has been easing demand, and reduced purchasing power for many households.
The province continues to face tight supply, with 22,633 active listings in February, a 5.5 per cent drop from a year ago.
Limited supply was met with strong demand last month, resulting in an increase in home prices, says Muir. The average price of a home in BC was $748,327 in February, up 8.8 per cent from the previous year.
“Most regions in the southern half of the province are at or near 10-year lows in terms of supply and that has been quite persistent. As a result we’re continuing to see upward pressure on prices, as homebuyers compete with one another for the available product in the marketplace,” says Muir.
In Greater Vancouver, the average price of a home was $1,063,494 in February, a 6.8 per cent increase from $995,583 a year ago.
Muir says Greater Vancouver’s market remains in sellers’ territory with a sales-to-active listings ratio of 26.6 per cent, compared to 30 per cent in February 2017.
“The detached market is more or less in balance, whereas when we get into the multi-family market — whether it be townhouses or apartments — they are firmly in sellers’ market territory,” says Muir.
“We see prices climbing at rates of 25 per cent to 30 per cent year-over-year growth in the apartment market in Metro Vancouver region,” he adds.
Last month, the Fraser Valley region saw the largest annual gain in price growth out of all regions recorded. The average price of a home was $761,446, a nearly 23 per cent increase from $619,792 in February 2017.
According to Muir, the region is in strong sellers’ territory with a sales-to-active listings ratio of roughly 41 per cent.
“Even in the face of some more tepid demand, we’re continuing to see prices rise as there simply isn’t enough product out there to satiate demand,” says the economist.