It looks like the Vancouver housing market’s collapse is as wide as it is deep.
While the market’s slowdown is perhaps most apparent in the detached-home segment, it’s even struggling to sell a starter home in Canada’s priciest city for real estate.
Realtor Steve Saretsky notes that studio condo sales decreased 27 percent on a year-over-year basis in June. On a per square foot basis, the average studio condo price took a 6.9 percent hit.
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“Similar to the detached market, the majority of the weakness in the condo market is at the higher end of the spectrum. In other words, the more expensive the condo the more challenging it is to sell,” writes Saretsky in a blog post.
“This should not be mistaken for assuming entry level condos have not been impacted. One bedroom and studio units have witnessed sales fall and prices drop as well,” he continues.
Small units in high-rise buildings are often the only option for first-time homebuyers looking to wade into the property market, so the weakness in the lower price points suggest a widespread correction.
Overall, Greater Vancouver condo sales plunged 23.9 percent in June compared to the same month last year. The last time June sales activity was so sluggish was in 2002, Saretsky notes.
“This is particularly concerning given this doesn’t account for the increase in population growth and new condo stock during that period,” he adds.
Contractors continue to complete work on new condo projects that were launched in recent years, and the unsold units in these buildings are bolstering supply at a time of dwindling demand — a recipe for further price declines in the near-term.
However, more and more projects are getting shelved as some developers would rather wait for signs of market recovery than begin selling in a more challenging environment.
Earlier in the spring, MLA Advisory, the research brand of real estate marketing firm MLA Canada, estimated that 17 condo projects had sales launches delayed this year.
“This shortage in our housing stock will greatly impact affordability in the years to come,” the MLA report from May says.