Home sales down, prices to remain flat

Residential home sales were down substantially in May from the same month a year ago, with Victoria and Metro Vancouver showing the sharpest drop, according to a survey released Monday by the B.C. Real Estate Association (BCREA).

Despite that, Victoria and Metro Vancouver have also seen some of the highest price increases over the 12-month period, although that trend is not expected to last.

"We've seen a moderation in demand since the beginning of the year," BCREA chief economist Cameron Muir said in an interview. "Home sales in the fourth quarter [of 2009] were trending on record levels and that wasn't sustainable because a lot of the demand was pent up during the recession. [Metro Vancouver, Victoria and the Fraser Valley] experienced the sharpest rebound last year. As a result we've seen moderation in sales, more so in those markets. Sales have moderated, inventory has risen [and] there are tighter credit conditions. Now, conditions are tilting toward the buyer and my expectation is that prices will remain flat for the remainder of the year."

Muir also said there were 54,362 listings in May, up 26 per cent from January on a seasonally adjusted basis. "Moderating market conditions in Vancouver, the Fraser Valley and Victoria are reducing the number of multiple offers as a greater selection of homes for sale lessens competition amongst home buyers."

According to the survey, B.C. sales declined 3.9 per cent to 7,950 units in May compared to the same month in 2009. On a seasonally adjusted basis, sales declined 11 per cent in May from April 2010, while the average price climbed seven per cent to $498,294 in May compared to the same month a year earlier.

Transactions dropped 10.3 per cent in Metro Vancouver from May 2009's 3,569 to this May's 3,202. Victoria saw sales drop 19.6 per cent over the same period from 836 to 672. In the Fraser Valley, sales dropped 0.8 per cent to 1,403 from 1,415.

The sharpest sales increases were in Northern Lights, or northeastern B.C. (up 90.9 per cent, from 22 to 42), B.C. Northern, or north and central B.C. (up 28.7 per cent from 349 to 449), while the Okanagan Mainline, or northern Okanagan, dropped 2.5 per cent from 558 to 554.

However, the average price rose 13.4 per cent from May 2009 to May 2010 in Metro Vancouver to $662,000 - the highest percentage increase in B.C., except for Northern Light's 21.9 per cent ($192,000).

Victoria prices rose 8.9 per cent to $525,000.

(prepared by Brian Morton/Vancouver Sun)