VANCOUVER -- Metro Vancouver real estate prices have dropped back from their record highs over the past two months as properties listed for sale continue to outpace sales in July, the Real Estate Board of Greater Vancouver reported Tuesday.
The so-called benchmark price for all property types in Metro, excluding Surrey, hit $556,605 in July, down 2.1 per cent from May.
"We're seeing more price reductions in properties listed on the market, which is a levelling impact on the housing price increases experienced at the end of last year and into the first quarter of 2008," Dave Watt, president of the Real Estate Board of Greater Vancouver, said in a news release.
The Vancouver board counted 2,174 property sales in July, a 44-per-cent decline from the same month in 2007.
New listings added to inventory, however, increased 24 per cent to 6,104 in July, an increase of 24 per cent.
Fraser Valley markets, which include Surrey, also experienced month-to-month price reductions with Surrey posting the biggest decline in average house price.
Surrey's average detached-home sale, at $520,232, was down six per cent from June.
Sales across the Fraser Valley in July were down 35 per cent to 1,284 compared with the same month a year ago, and new listings rose 20 per cent to 3,742 compared with July 2007 bringing the region to a record high inventory of 12,299 units.
"It's a situation of supply and demand," Kelvin Neufeld, president of the Fraser Valley Real Estate Board, said in a news release. "Buyers are now in the driver's seat in the Fraser Valley and were starting to see that reflected in home prices."
VANCOUVER -- Metro Vancouver real estate prices have dropped back from their record highs over the past two months as properties listed for sale continue to outpace sales in July, the Real Estate Board of Greater Vancouver reported Tuesday.
The so-called benchmark price for all property types in Metro, excluding Surrey, hit $556,605 in July, down 2.1 per cent from May.
"We're seeing more price reductions in properties listed on the market, which is a levelling impact on the housing price increases experienced at the end of last year and into the first quarter of 2008," Dave Watt, president of the Real Estate Board of Greater Vancouver, said in a news release.
The Vancouver board counted 2,174 property sales in July, a 44-per-cent decline from the same month in 2007.
New listings added to inventory, however, increased 24 per cent to 6,104 in July, an increase of 24 per cent.
Fraser Valley markets, which include Surrey, also experienced month-to-month price reductions with Surrey posting the biggest decline in average house price.
Surrey's average detached-home sale, at $520,232, was down six per cent from June.
Sales across the Fraser Valley in July were down 35 per cent to 1,284 compared with the same month a year ago, and new listings rose 20 per cent to 3,742 compared with July 2007 bringing the region to a record high inventory of 12,299 units.
"It's a situation of supply and demand," Kelvin Neufeld, president of the Fraser Valley Real Estate Board, said in a news release. "Buyers are now in the driver's seat in the Fraser Valley and were starting to see that reflected in home prices."
Reflections here of U.S. woes
Bill McCarthy, Burnaby Now
Published: Wednesday, August 06, 2008
Will Canada face a mortgage and debt crisis similar to what is currently underway in
the United States?
Or will we somehow magically avoid the pain that is now being felt by hundreds of
thousands of American homeowners and has also destroyed several real estate and
finance businesses, shaking the confidence of American business?
To answer these questions, one must first understand what has and has not happened in
the United States and what the similarities and differences are between real estate
south of the border and in our country, specifically Greater Vancouver.
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Font:****What you may read in the paper or hear on the radio or TV about what is going
on in the U.S. housing and financial markets is not being exaggerated.
While the press generally only play up the headline, the bulk of material and analysis
available for review confirm that many of the once disciplined American consumers
overextended themselves, and greed, incompetence, and outright idiocy led to far too
many people being extended credit they did not warrant or had absolutely no chance of
repaying.
The U.S. mortgage market consists of $12 trillion in loans.
Up to 2.5 million American homes could be hit with foreclosures this year, according
to the U.S. Treasury Secretary, Henry Paulson.
When the senior government official for this file states this, the gravity of the
situation is revealed.
In June, 1 in 501 U.S. households received a foreclosure filing, up 53 per cent from
the previous year.
To date, more than 400 U.S. real estate and finance businesses have been indicted for
mortgage fraud.
Last year, 53,000 separate cases of mortgage fraud were filed.
The key component of these corrupt transactions is the so-called \'NINJA\' clients (no
income, no job, no assets).
When you travel throughout the United States, like I do, you see first-hand what
happens when both relatively intelligent and foolish people stop thinking for
themselves and overextend themselves.
There is a real mess to be cleaned up in the U.S., and there will be long-lasting
consequences for what has occurred.
Can this occur in Canada?
If you listen to the real estate and financial industries in this country, they will
state that it is unlikely that such a fate will fall on Canada.
However, if you read their own statistics and analysis, what is apparent is much of
their statements are self-serving because, if there is a significant crash or
downturn, they are largely responsible for it and have a vested interest in weathering
these uncertain times.
Among the main reasons I have for concern is that, while Canadians are highly taxed,
and, in most cases, their wages have not increased significantly over the past 20
years on a percentage basis, they have placed more debt on themselves than any
previous generation in this country\'s history.
You have heard the expression \'cash is king,\' and this is true for household expenses
as well as for businesses.
How are individuals and families to meet their housing costs and other annual expenses?
The housing affordability index sees far too many Canadians paying 50 to 70 per cent
of their pre-tax income towards their housing costs.
This is unsustainable.
The Canadian government went to the extraordinary effort of limiting mortgage
amortization to 35 years and ending the zero per cent down payment.
This in itself is an admission by the government that allowing Canadians to sidestep
the traditional 33 per cent down and 25-year amortization has been a disaster in the
making.
Until this policy change, fully 80 per cent of the most recent mortgages chosen by
Canadians were in excess of 25 years, with half of these being 35 to 40 years. What
happens when interest rates eventually move up?
Finally, the U.S. housing crisis is focused primarily on detached homes on a
traditional family lot.
The average housing price in the United States is in the $218,000-to-$250,000 range.
Americans can deduct mortgage interest from their taxes.
Their tax rates are, on average, 20 to 30 per cent lower than Canadians\'.
Unquestionably, a large portion of the U.S. housing market will suffer greatly.
Also, as a consequence, many real-estate-related businesses will fail, and many
individuals will rightfully find themselves behind bars.
In Canada, our housing boom has been primarily condominium-driven.
Our average price for a detached home is in the $350,000-range. In Greater Vancouver,
you can add $200,000 to $300,000 on to the national sales average.
This is a key point when considering real estate in Canada. You have to carefully
consider the province and the sub-market when doing your analysis.
No market is subject to a greater possible correction than the Lower Mainland.
The condominium market is already overbuilt, with much product still coming onstream.
There is already an over supply in the amount of residential product for the consumer.
With many of the more recent condominium purchasers doing so for speculative or
investment purposes, the issues they face are whether or not they can meet their
expenses by way of qualified renters, of which there is a limited supply, or if they
can sell their unit when the number of prospective purchasers is being reduced
significantly due to tighter credit restrictions and there is an over supply of
product to consider.
Finally, consider the recent leaky condo report commissioned by and held by the
Homeowner\'s Protection Agency, which indicates that the number of leaky condos is far
in excess of what was previously projected and that the cost to remediate is also
significantly higher than previous projections.
As a result, many leaky condos have not been repaired. Why was this report not made
public when it was completed last year?
How many units built in this most recent period will face a similar fate?
For these and other reasons, expect many Canadians to suffer as a result of what has
transpired in our once stable and predictable real estate markets.
William P. J. McCarthy is president and CEO of W. P. J. McCarthy & Co. Ltd., a Burnaby
firm specializing in property management and development.
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