26% slump in Vancouver real estate sales called a return to 'historically normal' levels

Real estate prices are no longer skyrocketing and sales are slumping in Metro Vancouver's red hot real estate market for the second straight month, statistics released Friday morning confirm.

The number of properties sold in August dropped nearly 26 per cent compared to the previous year, according to figures released by the Real Estate Board of Greater Vancouver.

But according to the industry association, the decline in sales represents a return to "typical levels" and it's too early to say if the recently introduced tax on foreign buyers is responsible for the slump.

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"The record-breaking sales we saw earlier this year were replaced by more historically normal activity throughout July and August," said president Dan Morrison.

From a historical perspective, last month's sales were 3.5 per cent below the 10-year sales average for the month, he noted in a statement.

"The steam has definitely come out of the market," he said. "The trend we are seeing for several months is we are getting back to a normal Vancouver market."

"A typical month in Vancouver we will see sales of 3,000 or 4,000 per month. This past spring we were seeing sales of over 5,000 per month and that is just off the charts,"

"I've been doing this for 25 years and I've never seen anything like this past spring."

Foreign buyers taxed

Morrison said that while the market has shown a downturn since last month's introduction of the 15 per cent tax on foreign buyers, it is too early to say what the long-term effect of the tax will be on the market.

The tax was introduced in August by the provincial government to cool foreign speculation that was being blamed for double-digital increases in property values.

"Sales have been trending downward in Metro Vancouver for a few months. The new foreign buyer tax appears to have added to this trend by reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers.

 "It'll take some months before we can really understand the impact of the new tax," he added. "We'll be interested to see the government's next round of foreign buyer data."

He noted that while Vancouver's sales are dropping, in Victoria where the tax is not applied, sales have spiked 19 per cent compared with August of last year. 

"That tells you that the buyers are looking at other options, and we fully expected that to happen."

Prices still creeping up

Morrison noted that despite the decline in sales, sellers in Vancouver are still considered to have the upper hand in the market because of the limited number of homes for sale.

"The sales-to-active listings ratio for August 2016 is 29.3 per cent. This is indicative of a seller's market."

And that means despite declining sales, prices have flattened out, but not fallen significantly in recent months.

"There are still more buyers in the market than there are sellers, surprisingly, so we are still seeing pressure on prices."

The benchmark price benchmark price for all residential properties in Metro Vancouver is currently $933,100, which is a 31.4 per cent increase compared with August 2015 and a 4.9 per cent increase over the past three months.

Digging into the details

The monthly report also provided the following breakdown of sales by property type:

• Sales of detached properties in August reached 715, a big drop 44.6 per cent from the 1,290 detached sales in August 2015.
• The benchmark price for detached properties rose 35.8 per cent from August 2015 to $1,577,300, representing a 4.2 per cent increase over the last three months.
• Sales of apartment properties hit 1,343 in August, a 10.1 per cent decline compared to the 1,494 in August 2015.
• The benchmark price of an apartment property increased 26.9 per cent from August last year to $514,300, representing a 6.1 per cent increase over the last three months.
• Attached property sales in August totaled 431, a drop of 25.4 per cent compared to the 578 in August 2015.
• The benchmark price of an attached home increased 31.1 per cent from August 2015 to $677,600, a 7.1 per cent increase over the last three months.

Areas covered by Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, New Westminster, Pitt Meadows, Maple Ridge and South Delta.