Brokers in the once-hot real estate market of Vancouver are now experiencing the chilling effects of the new mortgage rules and buyers sitting it out, hoping for already falling home prices to plunge even lower.
“Not a few brokers will have to deal with a pretty slow market that will likely last for a couple of years,” Michael Sjerven, broker with Verico Vivid Mortgage in Vancouver, told MortgageBrokerNews.ca. “I think the best we can do is rely on our client list and focus on refis and renewals.”
Home prices and resale activity in Vancouver took a sharp dive in July compared to the same period last year, according to CREA.
While sales across the country were up 3.3 per cent from a year ago, the association reported that Vancouver prices were down more than 12 per cent year-over-year and sales. A total of 2,135 homes changed hands in Vancouver last month, representing an 18.3-per-cent drop for a total of 2,614 sales in July 2011, CREA also reported.
Sjerven sees the situation as a combination of several factors.
“Yes, the new mortgage rules are beginning to bite. But also some owners have postponed selling because of the low prices, while many buyers are also holding off on the decision to buy because they are hoping home prices will drop further,” he said.
The brokers are also indirectly hit by an apparent pullback in Chinese investors. The knock-on effect is fewer Vancouverites are selling and so fewer are buying.
Dollar volume of residential sales for July, at $1.42-billion, was down 28.4 per cent from $1.99-billion in July 2011, according to CREA’s latest report.
Total residential sales volume for Vancouver stood at $12.82-billion for the first seven months of this year, that’s down 26.1 per cent from $17.34-billion for the same period in 2011.
The bigger drops in dollar volumes are owed in part to falling home prices: The average price of a home in Greater Vancouver in July was $667,462 - down 12.4 per cent from $761,673 in July 2011.
“The slowdown in activity is more evident in Vancouver that in other places because our market was simply extra hot before the slump,” said Sjerven.