Vancouver’s detached market has continuously posted 27 year lows in sales throughout this year. If there was any silver lining for the detached housing market, it appears to have come in October. This October there were 145 single family home sales, slightly higher than the 142 posted in October 2016 after the market went into a free fall following the foreign buyers tax. So we no longer have a 27 year low in house sales. However, the recent bump is nothing to get too excited over. Other than 2016 and 2008, this was indeed the third worst October on record for Vancouver house sales.
Inventory also declined year over year by 4.7%, which was primarily a result of sellers taking their house off the market and trying to wait out current conditions. This is explains why new listings fell by 14%. While some sellers are trying to suppress new inventory from flooding the market home sales are so weak that it still leaves 11 months of supply for sale. This has paved the way for buyers to negotiate steep discounts.
We have now been in a weak detached housing market for over two years, as a result, price declines are becoming more noticeable and more significant. There is strong evidence from previous housing booms that volumes tend to lead prices by about two years, and for the most part that has been the case here in Vancouver. The official MLS benchmark index which smoothes out larger price fluctuations and is modelled to determine the price of a “typical home” now shows a 7.8% decline in prices from October 2017. This model tends to be a lagging indicator and by all accounts is under reporting the true decline in house prices.
As is the case in any housing market, there’s no perfect metric to measure the rise and fall of home prices. For example, while the MLS benchmark shows a 7.8% decline, the median sales price shows a 13% drop from last year and the average price has plummeted by 20%. Either way you slice it, house prices have taken a significant decline over the past year.
We are seeing more forced sales as a result of Vancouver’s vacancy tax and BC’s proposed speculation tax which is slated to begin starting January 2019. Remember, a house that is listed for sale but does not sell in the calendar year is still subject to Vancouver’s empty homes tax of 1% of the assessed value.