Provincial real estate sales drop by a third in 2008

British Columbia consumers started re-examining their priorities and pulling back on major purchases last March, just as home prices peaked at record highs and gasoline prices rose to more than $1.30 a litre.

"I think [high gasoline prices were] the tipping point for many consumers," Cameron Muir, chief economist with the B.C. Real Estate Association, said Monday.

That meant a growing number of potential buyers pulled out of the housing market as the year unfolded with more bad economic news coming from the United States and around the world.

The result: B.C.'s real estate markets ended 2008 with sales off one-third from the previous year, and dropping to their lowest level since 2000.

Across the province, the BCREA counted 68,923 Multiple Listing Service recorded sales. In 2000, the total was 54,179.

The average home price during 2008 rose to $454,599, though, up 3.5 per cent from 2007.

However, that average captures strong price gains still being made at the start of the year, but which evaporated as 2008 rolled on.

Muir said the peak average price in March was $483,291, which fell 11 per cent to $429,210 in December. That $429,210 average is six per cent lower than the average price in December 2007.

Muir said consumers pulled back from home purchases more drastically than he expected considering the size of B.C.'s population and its relatively strong employment picture compared with other provinces.

Muir added that he expects B.C.'s economy to weaken further and unemployment to rise in 2009, but he doesn't believe real estate sales will continue to fall.

In December, British Columbia recorded 2,456 sales across the province, an almost 50-per-cent decrease from the same month a year ago.

That follows 2,707 sales in November, a 62-per-cent decline from the same month a year ago and the lowest since 1981.

Extrapolating fourth-quarter 2008 sales figures across 2009 would translate into a year with only 45,000 home sales.

Carol Frketich, regional economist for Canada Mortgage and Housing Corp., said the outlook for 2009 will hinge on just how well B.C.'s labour market holds up, and how much of an impact cuts to the Bank of Canada's key lending rate have on mortgage rates.

"Certainly the slowdown in sales wasn't unexpected," Frketich said. "CMHC had forecast a decline in activity before it started, but the decline was certainly larger than most of us anticipated."

(prepared by Derrick Penner/Vancouver Sun)