Sales of single family homes dropped by half last month across several parts of Metro Vancouver, but it’s too early to call a long-term cooling trend, says one industry expert.
According to Nancy Beaton, the president of SnapStats, preliminary numbers indicate that sales of single family detached homes have dropped by 47 to 54 per cent in Vancouver, Richmond, Burnaby and Surrey.
These numbers compare July 2016, sales and sales in August, 2016. The August numbers exclude the last day of the month.
The average median sale price dropped three per cent across the four markets, following the B.C. Liberal government’s introduction of a 15 per cent tax on foreign buyers in late July, she notes.
Beaton says one of the most interesting insights from the data is for the first time in three years, the West Side of Vancouver is “officially a buyer’s market” for detached homes.
A tale of four cities
The SnapStats sales data comes just one day ahead of the Real Estate Board of Greater Vancouver’s full monthly sales report.
According to the data, on the West Side of Vancouver 57 homes sold by August 30, compared with 108 in July. The median price of detached homes sold in the desirable neighbourhood also fell from $3.52 million to $3.42 million.
The drop in West Side sale numbers is even more startling when compared to August 2015, which saw 149 homes sold on the city’s West Side.
In Richmond only 56 homes sold by Aug. 30, compared with 121 in July (and 178 in August of the previous year), while median prices went from $1.7 million in July to $1.69 million by the end of August.
And in Burnaby 42 homes were sold by Aug. 30, compared with 78 in July (and 123 in August 2015), while the median price dropped from $1.65 million in July to $1.52 million.
Surrey showed the smallest drop with 157 homes sold by Aug. 30, compared with 201 in July (and 317 in August 2015), while median prices remained unchanged at $850,000.
Too early to call a trend
Despite the sharp drop in sales, Beaton cautions it is still too early to conclude the new foreign buyer tax is driving a long-term trend.
She notes the red hot Vancouver market has not really experienced normal conditions for several years, but the market was already slowing down before the tax was introduced.
“August is typically when everyone is going on vacation, including Realtors, and this by no means indicates a trend,” she said.
“We would need a few months of data to see how the foreign buyers tax is impacting the market. I really think come January and February, it will really tell us where we are standing.”
“From a pure science perspective this is bit of a nightmare … we’d love to find out what the impact has been of the foreign buyer[s] tax, but it looks like things were slowing down before the tax came into place,” said Tom Davidoff, director of the UBC Centre for Urban Economics at the Sauder School of Business.
“This is a very unpredictable market,” said Davidoff, who advised people to take gains now, if they were planning on selling anyway.
“Consider getting out while the getting is still very, very good.”
Deals on hold
Beaton says if the tax has had any effect, it has been to hit the pause button on many deals.
“Everyone is waiting to see. Should I buy? Should I sell? It is a bit paralyzed now.”
She says while there is anecdotal evidence of sharper price drops at the top end of the market, she doubts the average home price will change much as a result of the 15 per cent tax on foreign buyers.
“I think on the very high-end product, you know the $10-million, $15-million, $20-million homes, we are seeing an impact. We are hearing the stories of prices reducing a million or two million.”
“I think this tax, for the average person, it’s not going to have much of an impact. The days of when an average family with a $50,000 income could buy a detached home in Vancouver are never going to be seen again.”
Condo, townhome sales not slowing
While the preliminary figures show the number of single family homes sold has dropped, the effect on sales of condos and townhomes was less dramatic.
In fact the number of condos and townhomes sold in Surrey actually climbed to 315 by Aug. 30, compared with 306 in July.