Six months after a red hot real estate market on the North Shore peaked at scorching highs, a dramatic cooling has sent sales into the deep freeze and prices are falling.
“We have a completely collapsed activity level,” said Realtor Brent Eilers of Remax Masters Realty in West Vancouver. “What the market’s done since Aug. 1 is dramatic.”
Expensive properties at the high end of the market in West Vancouver have seen some of the most dramatic shifts.
According to recently released statistics from the Real Estate Board of Greater Vancouver, West Vancouver sales of single-family homes between Aug. 1 and Oct. 31 of this year were down 72 per cent over the same time period in 2015, from 266 to 75 – the biggest drop in sales in the Lower Mainland. Only 22 single-family homes sold in West Vancouver in October – the same number as sold in September. In October last year, there were 116 sales of single-family homes in West Vancouver.
The pattern in North Vancouver was similar but less dramatic. Sales of single-family homes there between Aug. 1 and Oct. 31 this year were down 47 per cent from the same period last year.
Particularly at the high end of the real estate market, a new 15 per cent tax on deals involving foreign buyers, a luxury tax on properties worth more than $2 million and tightening of the rules around contract assignments, have had a significant impact, said Eilers. As an indication of that, there were 130 sales of West Vancouver properties worth more than $5 million between Jan. 1 and July 31 this year, he said, but only 10 sales of properties in that bracket since Aug. 1.
According to statistics released by the provincial government, foreign buyers were involved in only 1.3 per cent of real estate transactions in Metro Vancouver since Aug. 1. Before the tax was brought in, between June 10 and Aug. 1, foreign buyers were involved in 13.2 per cent of residential property deals in Metro Vancouver, compared to 3.6 per cent in the rest of the province.
Since the tax was imposed, “What we’re seeing is local buyers,” said North Vancouver Realtor Satnam Sidhu, a former president of the Canadian Real Estate Council.
“The builders have backed right off building lots,” he added.
The sales-to-listing ratios have also fallen significantly on the North Shore since this time last year, meaning far fewer homes are selling for each one on the market.
Prices are beginning to fall, said Eilers, who added those who want to sell their house now will likely get between 10 and 20 per cent less than they might have got at the earlier peak of the market. Many of the homes selling have “greatly reduced their price to get the home sold.”
“That’s a big shift in the mood of the market,” he said.
“Now the pressure’s on the seller. There are a lot of people who are overexposed financially.”
Those include builders who built houses on spec, those who own multiple properties including investment properties, people who bought new homes before they sold and baby boomers who were counting on the equity from their homes to finance their retirement.
“I’ve noticed a number of properties that closed six months ago that are back on the market at a lower price than what the people paid for them,” said Sidhu.
Both Realtors said it will likely not be until the first few months of 2017 that the market becomes clearer, as traditionally there is little activity in November and December.