Photo: Alex Costin/Flickr
The big sleep continued for Greater Vancouver real estate in March as the number of home sales in the region fell to the lowest level seen during that month in more than 30 years.
In all, a mere 1,727 residential properties changed hands on the resale market last month, down 31.4 percent from a year earlier, according to the Real Estate Board of Greater Vancouver.
The March tally hasn’t been that low since 1986.
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Detached home sales were down 26.7 percent on a year-over-year basis, while condo activity fell 35.3 percent and attached home transactions declined 27.1 percent.
While overall sales were up 16.4 percent from February, BMO Economics suggests that once adjusted for seasonal factors — March is supposed to be a busier month for home sales to begin with — activity continues to trend lower.
“Let’s just say that any relief on the mortgage rate front would be very welcome in this market,” writes BMO Senior Economist Robert Kavcic in a note.
That may be in the cards for the short-term if a recent British Columbia Real Estate Association forecast comes to pass.
In the meantime, home prices fell amid tapering demand in March. The benchmark price of a Metro Vancouver home, including all housing types, was $1,011,200, down 7.7 percent annually and 0.5 percent lower than February.
In the detached segment, the benchmark price plunged 10.5 percent year-over-year to $1,437,100. The benchmark condo prices slumped 5.9 percent, hitting $656,900 last month. Attached home pricing fell at roughly the same rate to $783,600.
REBGV favours the benchmark price to gauge real price trends. The benchmark doesn’t include top-tier or low-end properties, which can skew averages, and instead is calculated by looking at value fluctuations for typical homes, based on factors such as location, square footage, and the number of rooms in a dwelling.
“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced,” says Ashley Smith, REBGV’s president, in a statement.
“For three years, governments at all levels have imposed new taxes and borrowing requirements on to the housing market,” Smith continues.
From the city’s empty homes tax to the province’s foreign-homebuyer tax for Metro Vancouver — and subsequent increase — a number of measures have been implemented to address affordability issues in the Lower Mainland, with some questioning their effectiveness.
Much of the recent debate, however, has targeted tougher mortgage rules that the federal government brought forward in January 2018. Realtors in the province have largely blamed the decision to expand mortgage stress testing to uninsured mortgages for the collapse in home sales and prices.
The policy move means that even if a borrower has a 20-percent downpayment, they still have to qualify at a mortgage rate that is 200 basis points above their contract rate.
“What policymakers are failing to recognize is that demand-side measures don’t eliminate demand, they sideline potential home buyers in the short term. That demand is ultimately satisfied down the line because shelter needs don’t go away,” Smith states.
“Using public policy to delay local demand in the housing market just feeds disruptive cycles that have been so well-documented in our region.”