Weak July Sales: A Prelude To Home Price Decline?
With another month of lower than expected home sales, there is little doubt Vancouver is now a buyers’ market. Total home sales for the month registered 2,098 units compared to 2,362 units the month before. Compared to the previous year sale of 2,571 units in July, the drop in home sales was 18% fewer homes sold through the Multiple listing service.
However, prices continue to hold, with the board saying the composite benchmark price for all residential properties in Greater Vancouver rose 0.6% to $616,000 from a year ago but dropped 0.7% from June.
Lower listings posted for the month
New listings hit 4,082 in July, the lowest number of new listings for any month in 2012 and a 5.8% drop from July 2011. It was also a 14.5% decline from June. The lower listings for the month could be attributed to home sellers sensing that the market already flooded with listings, decided to hold back and wait out for a more favourable market.
Despite that drop, there was still 18,081 active listings in the month, which is an 18.8% increase from a year ago and a 2.2% increase from June.
“With a sales-to-actives-listing ratio of 11.6%, conditions have favoured buyers in our marketplace in recent months,” said Mr. Klein. “That means buyers have more selection to choose from and more time to make a decision. For sellers, it’s important to price properties competitively.”
By property class, detached home sales dropped 28.4% in July from a year ago. The benchmark price for detached properties increased 1.4% from July 2011 to $950,200 but dropped 1.2% from a month ago.You can view the full July housing report from the Real Estate Board of Vancouver here.
Apartment properties sales were down 10.9% in July from a year ago. The benchmark price of an apartment property was unchanged from the $374,300 a year ago and down 0.5% from June.
Signs of a price correction are evident
Home prices are heading for a decline as supply piles up and the sale pace slows. Generally, there is a time lapse for the full pricing pressure to be felt with lower sales and over supply of homes. The 2 most important factors for the lack of sales are due to a huge drop in buyers from mainland China, and the government imposed regulations especially rules requiring financial institutions to confirm borrowers ability to debt service their loans.