Just when you thought Vancouver detached home sales had bottomed they once again outdid themselves. Detached sales slipped 14% year-over-year in March, recording the fewest sales on record with data for the city of Vancouver going back to 1992. It’s hard to imagine sales falling any further from here, what is more likely is they continue to remain sluggish for a prolong period of time but increase slightly as prices decline and buyers on the sidelines can be enticed back into the market with lower prices.
What is interesting is that despite the obvious weakness in home sales, new listings remain low, dropping 15% year-over-year and total inventory dropping 9.6% from last March. However, there is still plenty to pick through as months of inventory remains elevated at 12 months. This is well above balanced conditions which is considered between 4-6 months of supply.
As a result, there remains downwards pressure on home prices, particularly at the higher end where Chinese capital flows have hit the brakes. This has pushed the official MLS home price index negative by double digits year-over-year and marks the steepest decline in a decade.
It is important to note that home prices at the higher end have fallen as much as 35% from peak valuations a few years ago. However, price declines are much more muted at the lower end of the spectrum. For example, an entry level detached house with a basement suite on the East Side of Vancouver has fallen much less, around 15-20%.