August sales down, inventory up.

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.”

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bc_cele
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bc_cele

Housing markets implode like a building. No first-time buyers means that noone is there to buy the starter homes. This means this people can't move up to the next level, and like a building things come crashing down. Ultimately, it will be the high end that suffers the most in terms of absolute dollars lost. It's amazing that these so-called "professionals" just don't seem to understand this. This is why you have to laugh when you here "buy now, or you'll be priced out forever". This is simply impossible. It makes me want to sent these morons back to grade two so they can learn some basic math.

ken
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ken

Yes, the 'buy now or get priced out forever' thing is stupid, but I can see how even smart people can fall for it – In the short term it can feel like thats what is happening. When you see prices rise over two years beyond an already elevated level you start to wonder if there is any sense to it, maybe prices will keep going up. This same process works in reverse too though – when prices start dropping why jump in early? If your rent is much cheaper than buying why not wait to see how far down prices go. I guess this is why every chart of the housing market shows big peaks and valleys.

Anonymous
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Anonymous

A think a lot of the professionals out there seem to tell where we are headed by looking out the rear view mirror. Hmmm. Reduced demand, increasing supply….but still no dramatic price changes. Yeah, that sounds believable.