A sustained attack on buyer demand in Vancouver’s detached housing market has decimated sales and is leading to “unbelievable” price reductions. If government plans were to crush sales in the city’s premiere residential market it has been spectacularly successful, according to recent real estate data and frontline agents.
“Detached house sales on Vancouver’s west side are down 70 per cent in the first three months of this year as compared to 2016,” said Brent Eilers of Re/Max Masters Realty of West Vancouver, who has been active in the local real estate market since 1983.
West Vancouver detached sales, estimated at 59 so far this year, are now at the lowest level in 30 years, he added.
“As Don Meredith from Monday Night Football used to say ”turn out the lights, the party is over,” Eilers said.
The party ended early, he said, for high-end builders and investors, with sale prices for Vancouver detached houses priced at $5 million or more down 15 per cent to 18 per cent this year compared to 2017.
There were 2,517 home sales in March across the Metro Vancouver region, the Real Estate Board of Greater Vancouver reported. That’s nearly 30 per cent lower than the same month a year ago, and around half the number of transactions in the heady days of March 2016. It’s also 23 per cent below the 10-year average sales for the month.
In February, the B.C. government introduced Canada’s first foreign-home buyer tax, and added restrictions on assignment sales of Metro Vancouver residential real estate transactions.
In February 184 Vancouver westside detached houses were listed for sale on the MLS of the Real Estate Board of Greater Vancouver at $3 million or more.
Just 13 of them sold.
Overall, the benchmark price of a detached house on Vancouver’s westside last month was $3.4 million, down an average of 2 per cent – that is $68,000 – from three months earlier.
Eilers suggests that many of Vancouver detached houses are now selling for less than assessed value, set on the valuation date of July 1 2017.
He, and other agents, say the crunch will come this spring with the traditional flood of listing onto the market as the first-quarter statistics are released.
“It will be hard to hide what is really happening,” Eilers said.
Eilers said the federal government stress test and higher mortgage rates have frozen first-time buyers out of the market, while B.C.’s foreign buyer tax, school tax and speculation tax have driven away foreign buyers. “So, unlike in other downturns, we don’t have fresh money coming into the market.”
The B.C. school tax alone works out to an extra $2,000 for the first $1 million in value in excess of $3 million and $4,000 per million on assessed values of $4 million or more. If a foreign buyer were to purchase a $4 million Vancouver house this month, for instance, he or she would face a tax bite of at least $806,000; $120,000 more if the house was left vacant, due to the provincial speculation tax and Vancouver’s empty home tax.
“We saw less demand from buyers and fewer homes listed for sale in our region in the first quarter of the year,” said Phil Moore, the newly appointed REBGV president. “High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.”
Eilers provided examples of expensive Vancouver houses that have seen dramatic price reductions, including a South Granville house that was listed for $11.9 million October 2017 and sold in February for $9.9 million; and a Shaughnessy house, listed last fall for just under $12 million that sold last month for $8.4 million.
The lower end is also being affected, agents say.
“We are seeing unbelievable price drops,” said David Richardson, a veteran agent with Re/Max Crest Westside. He estimated some Kitsilano detached house sellers listing in the $2 to $3 million range have taken a 20 per cent to 25 per cent haircut on recent prices compared to two years ago.
Across Vancouver, it now takes an average of 50 days for a detached house to sell, more than twice as long as two years ago before the government intervention and higher taxes began. Some Vancouver detached house sellers, Eilers suggested, will be forced to bite the bullet.
“You cannot be down catastrophically in sales and not eventually have an affect on prices,” Eilers said.
This story has been edited to reflect new REBGV stats released after its original press date.