Home sales tumble in BC's biggest markets

A year ago, B.C.'s real estate markets were rising to a peak in sales. In July, they dramatically fell off it.

Sharp drops in sales in B.C.'s biggest markets led the province to a 42-percent decline in July sales through the Multiple Listing Service compared with the same month a year ago, the B.C. Real Estate Association reported Thursday.

"What we've seen is that the province was buoyed up by Vancouver, Victoria and to some extent the Fraser Valley earlier in the year as those markets were very strong indeed," Cameron Muir, the association's chief economist, said in an interview.

"Now of course, those markets have shifted back toward being more in favour of buyers, so they've brought the entire province into that category."

Muir said a considerable part of 2009's real estate rebound represented "advance buying" by consumers who expected to buy in future years, but were drawn in by lower prices and record-low mortgage rates.

Now, tighter lending requirements for first-time buyers, higher prices and the expectation that mortgage rates will rise are dampening demand.

Thursday's news on resale markets follows Tuesday's Canada Mortgage and Housing report on new-home starts, which showed a slower pace of construction. Both phenomena have implications for B.C.'s "housing-led" economic rebound.

"In terms of the [economic] growth aspect, we expect residential investment to be a positive, at least through 2010 overall, though the growth is slowing," Bryan Yu, economist with Central 1 Credit Union, said in an interview.

Yu said the economic impact of home resales, which comes more from the "multiplier effects" spending homebuyers do to spruce up homes, is smaller than for the new-home sector.

With resales on the decline, Yu expects 2010's overall sales to be lower than 2009's.

In July, sales declined in Metro Vancouver by 45 per cent from a year ago and the Fraser Valley's sales fell 48 per cent. Five other regional real estate boards, including Victoria and Kelowna's Okanagan Mainline, reported sales declines of 30 per cent or more.

The average home price in B.C. hit $491,832, up six per cent from a year ago, but down 1.6 per cent from June.

Real estate association chief economist Cameron Muir said total inventories of homes were 21 per cent higher in July than at the start of 2010, which created "the most favourable supply conditions for homebuyers in more than a year."

(prepared by Derrick Penner/Vancouver Sun)