The end of a sellers market.

A more detailed article today in the Vancouver sun about listings, sales and prices in Septembers real estate market in Vancouver. This article starts with the statement “The sellers’ market in Lower Mainland real estate is coming to a close.”

Cameron Muir of the CMHC makes the comment that “The asking price of many home sellers is getting to the point at which fewer and fewer buyers can pay”, but says that it this point (four months of sales decline) its not a signal of any kind of “significant market correction”.

However, Tsur Somerville, director of the centre for urban land economics and real estate at the University of B.C.’s Sauder School of Business, said the trend in sales is a sign the Lower Mainland market “is clearly putting the brakes on. But it’s too early to say how much.”

Somerville said real estate markets pass through a balanced period when they are rising from depression to overheated, and will also hit balance, or “equilibrium” on their way back.

“Since [the market] has been very overheated, it’s quite reasonable to go back to balance,” Somerville added. “The question is, are we going to stay there or keep going?”

Somerville wonders whether the psychology of buyers is shifting and more of them are focusing on negatives rather than positives, such as cost overruns for the 2010 Olympics. Somerville said buyers might also be looking at the poorly performing U.S. housing market and worrying how that might affect B.C. Whether it does or not is immaterial, he added, “because psychology matters.”

Anecdotaly, I’m finding that people around me no longer view real estate in the lower mainland as a ‘sure-bet’, In fact- I think I’ve heard expectations ranging from a dip to a crash from more than 10 different people in the last couple of weeks. Is this the end of the sellers market in Vancouver real estate? What will a transistion to a buyers market look like? Or will we find that sought for balance that saves us from a crash and enables more people to buy?

What are you hearing from people on the street?

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solipsist
solipsist
13 years ago

The cost per foot squared in Van. East is about $189/sq. ft. as I remember from a few days ago.

Anonymous
Anonymous
13 years ago

The cost of building a new 12 to 20 story condo is 200/sqft. How does that come close to the price of condo in GVRD? There are older condos that cost less, but NEW condos definitely cost a lot more than $200/sqft.I agree, cost of construction had been overinflated, just like cost of fibre optics and IT worker in the dot-com era.

ken
ken
13 years ago

the price of most existing real estate does not come close to the cost of building in VancouverYes, but the cost of building is also affected by supply and demand. If there werent as many tax-funded construction projects for the olympics would the cost of building be as high as it currently is? The cost of construction can drop depending on the price of materials, availability of labour as well as technological advances in building technology…and are you saying that it cost's more than half a million dollars to build the average bungalow? thats just not true.

Anonymous
Anonymous
13 years ago

Yes, buyers (demand)and sellers (supply) dictate pricing. Economics 101-Chapter 1 will tell you this. So if it is not a "Seller's Market" and it is becoming more a "Buyer's Market", then you will have downward pressure on pricing…However, you have to look at the real cost of building real estate (condos or single family) and you will find that the price of most existing real estate does not come close to the cost of building in Vancouver.

bc_cele
bc_cele
13 years ago

Chase,'balanced' is as fictional in Vancouver as a soft landing. The term 'balance' suggests that this is the market's normal state, and it will remain there the majority of the time. This may be true in other markets, but Vancouver has either been hot or crashing for decades.

chase
chase
13 years ago

Here's what I want to know: what is a 'balanced' price for real-estate in vancouver? How much per sq. foot is reasonable to pay in central vancouver?Prices have been all over the place, up and down in the past, so how do we determine what 'balance' means in terms of prices?

d_oush
d_oush
13 years ago

calling this the third best year is pollyanna-ish cheerleading? From the head real estate salesman in the province?ok, but what would you expect the head real-estate salesman to say if things slow down a bit? Its not like this tells the future. October could be the hottest market ever in the lower mainland, and we don't know until it happens.

dingus
dingus
13 years ago

ahm, d-oush, I think the point was that going from first to third best means things are SLOWER than last year? That this is a trend? And the trend is down? And calling this the third best year is pollyanna-ish cheerleading? From the head real estate salesman in the province?

d_oush
d_oush
13 years ago

Come on prognonymous- There's a big difference between the third best year and the 27th. You seem like someone who sees the negative in everything.as raconteur49 says, real estate is still selling strong and high-priced here, even if it takes a little longer to sell.

raconteur49
raconteur49
13 years ago

Definitely greed has toned down.My neighbors condo was listed at $375k in February, reduced to $350k in summer and again to $340K in September. Just sold for $335K, and that is still a whopping 22% above the current assessed value of $270K.

Anonymous
Anonymous
13 years ago

The RE market had been beyond insane over the last few years. It's about time for the correction. There have been numerous price reductions and increased inventory in my area (Bunraby, New West) so the end is here. The newspapers have been a bit slow but now a larger part of the population will be made aware of RE market decline. Bring it on!

prognonymous
prognonymous
13 years ago

Rick Valouche, president of the Real Estate Board of Greater Vancouver, added that it is hard to characterize the drop in sales as decline when the comparison is being drawn against Greater Vancouver's best year ever."We're on pace for the third-best year ever," he said.Third best ever! Maybe next year will be the Fourth best year ever, or maybe it will be the 27th best!

digi
digi
13 years ago

Isn't this what parts of the US looked like last year? Look at sacramento now:flippers in troubleUnfortunately for those people it looks like prices don't always go up.

jeck
jeck
13 years ago

What are you hearing from people on the street?I've heard a few people say 'Have you heard of assignments?' But I think I've heard a lot more 'they say the market is going to crash'..What I want to know is 'Who are they'?

Federico Perazzoni
Federico Perazzoni
13 years ago

Interesting….:-)