BC returning to 'seller's market', report says

Rising sales and fewer listings have returned Canada to a "seller's market," with total B.C. home sales this year up nearly seven per cent compared to 2008, according to a Global Real Estate Trends report released Thursday by Scotia Economics.

"In terms of trends, sales in B.C. have been picking up since January," Adrienne Warren, senior economist at Scotia Economics, said in an interview. "And it's been increasing steadily since. For prices the low point was in April."

The report concluded that home sales in 2009 in B.C., compiled to the end of August on a seasonally adjusted annual rate, rose to 73,211 units sold compared to 68,923 in 2008.

However, the average price of a home sold in B.C. is slightly down, $433,017 compared to $454,599 last year, also on a seasonally adjusted annual rate.

In Vancouver, home sales are up, 31,151 compared to 25,149 sold in 2008, while the average price for a home sold in Vancouver has fallen to $531,790 in 2009 from $593,767 in 2008.

Across Canada, the report noted that new home construction has also increased, with the largest improvement in the four Western provinces, and with new home prices increasing in July for the first time since last September.

Warren said prices may be down in B.C., but that's not unexpected because they dropped sharply in 2008 and are just now recovering. "In B.C. and Vancouver, prices over the last several months have seen bigger increases than the national average trend. Overall, the B.C. economy is probably holding up a little better than what we're seeing nationally."

Warren also said that much of the sales pickup reflects people jumping back into the market. "A lot of people held back. That [market] could be satisfied by the end of the year."

Warren predicted that B.C. and Vancouver should see modestly higher or sustained prices in 2010 if there's a gradual prolonged recovery. She said resale markets should become more balanced next year as pent-up demand, from depressed levels, wanes and the number of listings increase. "It's a healthy level [of sales], not a boom level, but we're not looking for a big fallback in sales."

The report said that despite the rise in new construction, the inventory of unsold new homes across the country appears to have peaked, having edged down for a third consecutive month in August. It noted that there is some sign that pent-up demand is being satisfied, with existing home sales across the country also edging down marginally in August, after six months of steady growth.

Tsur Somerville, director of the centre for urban economics and real estate at Sauder School of Business at UBC, said in an interview that he's not surprised by the report's findings.

"You've got record sales numbers, but not a large number of new listings coming in," said Somerville. "That's tightened things up. If the listings were higher, you'd have less price pressure."

Somerville said he believes sales volumes will weaken a bit this fall, because the economic conditions are not conducive to high sales.

Somerville said he's also heard anecdotally that many buyers are now jumping into the market because they got very good pre-approved fixed mortgages in the late spring and are purchasing homes while those deals are still in effect. "The sense is that those kinds of deals aren't [now] entirely available."

Globally, the report notes that real estate markets are showing tentative but growing signs of stabilization, with firmer pricing evidence of growing confidence in the sustainability of the global economic recovery.

Warren said prices have increased in Canada, Australia and the United States, but are falling in other markets, including the U.K., France and
Spain, but at a slowing rate.

The report suggested that inflationary pressures will not be a factor for some time, keeping short-term interest rates at low levels.

(prepared by Brian Morton/Vancouver Sun)