Home sales in Vancouver declined 30% last month compared to a year earlier, and for homeowners wanting to access equity before it depletes, there’s a way to do it without being saddled by refinance rates.
“The collateral transfer is a great product that has come up in the last few years, and a number of lenders have access to them, where you can combine the balances you currently have on both a mortgage and secured line of credit, registered as one charge on title,” said D’Arcy Henneberry, president of MortgagePal.
“By doing that, as long as the client and property qualify, you can generally do that as an insurable collateral transfer, which allows you to provide the client with a lower interest rate than a refinance rate, and you can then use the product to provide a line of credit in second position to allow the client to access equity in their home without having to give them refinance interest rates.”
According to the Real Estate Board of Greater Vancouver, year-over-year home sales were down 35.1% in May and 37.7% in June. The sales-to-active listings ratio for July is 17.1%.
“I’ve noticed a trend that when a sales-to-active listings ratio is above 20%, we tend to see price growth, and when it’s below 12%, we see rapid price reduction if that level is sustained for a period of time,” said Henneberry. “Right now we’re at 17%, and it seems like we’re in the middle, but we are a declining sales-to-active listing ratio market, and as we continue to go down we can potentially see prices reduce and the market transition to a buyer’s market.”
Vancouver may very well have transitioned to a buyer’s market, although Henneberry prefers seeing sustained evidence before explicitly calling it one.
Xeva Mortgage broker Clayton Blaney believes that the single-family detached market is, without doubt, a buyer’s market.
“We’ve seen a decline in active sales and we’re seeing products sitting on the market longer,” he said. “A lot of listing prices haven’t moved, but people are taking offers below asking and they haven’t done that in quite some time.”
However, the city’s condo market remains robust.
“[Condo] sales have decreased significantly but we’ve still seen prices hold steady,” said Blaney. “Buyers and sellers are in a bit of a holding pattern right now, and I think the condo market in Vancouver is still as desirable as ever, as it is on an international scale. I don’t see prices coming down in the Vancouver proper condo market.”
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