The 2018 – “poison-cocktail” of new federal mortgage stress test rules, effectively reducing a buyer’s purchase power as well as various measures of the local B.C. government such as the raise of the foreign-buyer tax and the new vacancy tax now made an impact.
Sales of houses in the Vancouver region fell to a 24-year low and prices are off 8.5 per cent over the past year according to the Real Estate Board of Greater Vancouver. The benchmark price for detached homes, condos and townhouses dropped month over month for the 11th consecutive time while the average number of days on the market for detached houses in Greater Vancouver rose to 52 days, compared with 37 days in the same month of 2018.
This cooling-off of the Vancouver’s market also led to a lower risk assessment for the national housing sector. Canada Mortgage and Housing Corporation (CMHC) reduced its risk rating to “moderate” from “high,” the first change since 2016 and also its assessment of price overvaluation in Vancouver to “moderate” from “high”.
Greater Vancouver’s real estate market undergoes significant changes. After several price surges from 2009 to 2017 alongside massive capital inflows mostly from foreigners but also local buyers, some of them with the intention to only quickly flip properties, it now seems that speculators have largely exited the market with prices continuing to fall in recent months. These are good signals for a healthier housing market which can offer affordable housing for a larger part of the population going forward. Still, thousands of long-time homeowners aren’t in any rush to sell, including baby boomers who have seen their children grow up and move away (“the empty-nester”). But for owners who need to sell, the buyer’s market is a reality. It waits to be seen if and to what extent the downward trend continues.