Average home prices drop

Falling sales and declining prices in British Columbia's high-priced Vancouver, Kelowna and Fraser Valley markets helped cut the national average home price by 6.2 per cent in September compared with the same month a year ago, the Canadian Real Estate Association reported Wednesday.

The average Canadian Multiple Listing Service-recorded home price this September was $315,461, compared with $336,321 in September 2007.

"Price declines in some of Canada's more expensive housing markets will outweigh further price gains in other markets and continue pulling the national average price lower over the rest of the year and into 2009," Gregory Klump, chief economist for the Canadian Real Estate Association, said in a news release.

Across B.C., the average MLS home price in September was down 7.4 per cent to $412,149 compared with the same month a year ago, the B.C. Real Estate Association also reported Wednesday.

Provincewide sales of 5,107 in September, the B.C. association said, were one-third lower than September 2007.

"We've seen weakness [in B.C.'s market] for a number of months now," Cameron Muir, B.C. Real Estate Association chief economist said in an interview.

"And when we look at consumer confidence, which is very low in the province, that means households are less likely to make major purchases."

Home prices peaked in most markets during the spring of 2008, Muir said, and he expects prices to decline further until "consumers become a bit more confident."

Muir said gyrations in world financial markets and the uncertainty that has instilled in consumers hasn't helped ease any worries.

While economic growth in B.C. has slowed, Muir said it hasn't slowed to the point that there have been large-scale job losses that would put homeowners under the financial stress that would force them to sell.

And for now, the demand from buyers has fallen faster than the supply of property listings, though Muir expects the inventory of unsold homes to decline as sellers take them off the market to wait for better conditions.

Among B.C.'s 13 real estate boards, which represent the province's licensed realtors, the Greater Vancouver board saw its average home price of $535,598 slip eight per cent below the September 2007 MLS average price. Sales of 1,620 units were 43 per cent below September 2007 levels.

The Fraser Valley's $413,837 September MLS average was 3.4 per cent below that of September 2007. Sales of 924 units were 27 per cent below those of the same month a year ago.

Klump said the supply-demand balance has shifted in other markets to more neutral territory, most notably in Edmonton and Calgary, "where a sharp drop in new listings and rising sales activity has firmed up the resale housing market considerably since the beginning of the year."

Across Canada, listings in the third quarter of 2008 fell by a seasonally adjusted 3.3 per cent from the record level set in the spring quarter, indicating housing markets have become more balanced, it said.

This caused the balance of sales-to-new-listings in the market for resale homes to tighten on a quarter-over-quarter basis for the first time since the beginning of 2007.

Nationally, home sales also edged up in September from August, though the Canadian Real Estate Association said the influx of buyers could be related to the elimination of mortgage-insurance availability for buyers with less than a five-per-cent down payment and 40-year amortizations, which took effect Wednesday.

In the meantime, housing starts across B.C. remain at elevated levels compared with 2007, though the rate of starts has slowed.

Canada Mortgage and Housing, in its latest reports, said contractors started work on 15,663 new units of housing over the first three quarters of 2008, a five-per-cent increase from 2007, thanks to a large number of multiple-unit housing projects.

Other construction activity, however, has eased. Statistics Canada on Wednesday reported that non-residential construction in B.C. posted the biggest decline among provinces in the third quarter because big projects that were started in 2006 and 2007 are now nearing completion.

"Current non-residential investment is strong, but trending down after exceptionally high levels in early 2007," Keith Sashaw, president of the Vancouver Regional Construction Association said in a statement. "Spending declines are expected during the credit squeeze and the economic slowdown underway."

Across the province, spending on non-residential construction declined marginally from the second quarter to $1.36 billion. However, that represented a 7.3-per-cent drop from the same quarter a year ago.

In Metro Vancouver, non-residential construction was up from the second quarter to $803 million, but that was almost eight per cent below construction levels in the same quarter of 2007.

(prepared by Derrick Penner/Vancouver Sun)


HOUSING COSTS DOWN

Real estate prices in September slipped in most markets. Below are some examples, compared with the same month a year ago.

- B.C: $412,149 -7.4%
- GREATER VANCOUVER: $535,598 -8%
- FRASER VALLEY: $413,837 -3.4%
- VICTORIA: $477,421 -0.4%
- OKANAGAN MAINLINE: $392,179 -10%
- NORTHERN LIGHTS: $197,477 +13%

(Source: B.C. Real Estate Association)