This story in the Vancouver Sun has some stats on the real estate sales figures for the lower mainland in August 2006. This is the fourth straight month of growing MLS listings. August saw a drop of 17.8 percent in sales overall, but the sale of single family homes were hit hardest with a drop of over 25%. Prices were still up in August, with the average single-family home price reaching $649,042, but with increasing inventory competing for fewer buyers there is a concern that property values are vulnerable to price drops as noted in a recent TD Bank bubble-watch report.
Helmut Pastrick, the chief economist for Credit Union Central B.C., expects that as long as the economy stays strong there won’t be any significant downturn:
Pastrick started sensing a slowdown in sales last fall related directly to the inching up of mortgage rates, which “hasn’t been . . . precipitous, but has been fairly steady.
“This is more an affordability-driven sales decline . . . but not enough [of a decline] to really trigger a significant downturn.”
Pastrick does foresee fewer first-time and low-equity buyers entering the market.
I wonder what will happen to prices if we were to remove demand from first-time and low-equity buyers? It looks like thats starting to happen now, the next year or so should be interesting.
Dave Rishel, president of the Fraser Valley Real Estate Board, said August sales were still at high levels, and the drop does not represent “quote, ‘the beginning of the bursting of the bubble.’ “
The increase in listings, Rishel added, should give buyers more selection and more time to rationally contemplate purchases.
“I think we are all in agreement that there will be adjustments in the market,” Rishel said. “We’d be fooling everybody to say that there will be a steady cycle all the way up to wherever. We all anticipate these slowdowns from time to time, but [overall] I don’t envision anything radical.”