Total Metro Vancouver homes sales were down across all property types.
The Real Estate Board of Greater Vancouver (REBGV) reported that the regional residential home sales totalled 1,608 for Novermber were 42.5% lower than November 2017.
The total sales for the month were 34.7 per cent below the 10-year November sales average and it was the lowest sales for the month since 2008. Read the full report here.
The total number of homes listed for sale on the MLS® system in Metro Vancouver at 12,307 was a 40.7% increase compared to November 2017 (8,747), and a 5.2 per cent decrease compared to October 2018 (12,984).
The sales-to-active listings ratio for all property types, was 13.1%, with single family detached at 8.9% (Buyer market since June), 14.7% for townhomes, and 17.6% for apartments.
Generally, when the sales to actives ration is under 12%, pricing pressure favours home buyers, and when the ratio is above 20%, pricing pressure favours sellers. The market is in balance between 12% and 20% sales to actives ratio.
Average Days On Market
The longer the average days on market, the more pricing pressure on sellers and the weaker they can hold on to their selling prices. The increasing number of days from 30 to 40 weakens sellers bargaining power. If the number of days increases further from 40 to 50 days or higher, the market gets from bad to worse for home sellers.
Home Prices Are Rolling Over
Home prices had declined between 4% to 7% over the last six months depending on property type. The possibility for further price decline is real, as home prices had gone up too high and too fast the past few years. According to Mr. Dane Eitelan, an analyst at Eitel Economics, Vancouver's detached home price was predicted to drop 23% from its 2017 peak (over a period of 2 to 3 years) to bottom out in 2020 or 2021.
Higher interest rates and tightened lending standards had dampened home sales, as many buyers became more cautious and held off their decisions to buy.
High Housing Price Problem
Home buyers from outside Canada have a major impact on house prices in the major Canadian cities like Toronto and Vancouver. These are outliers, or "marginal buyer" - Buyers who are paying huge premiums over the "consensus price" based on previous sales of comparable homes.
Europeans are interested in purchasing real estate in Toronto, because it's close to New York and it's a relatively easy hop across the Atlantic. In Vancouver, these marginal buyers, mostly from mainland China were fueling the rise in home prices the past 10 years. Cash from overseas by these marginal buyers were pushing up home sales and prices. Most of these buyers are rich and successful businessmen in their home countries. They continue to maintain their businesses and homes overseas, while their spouses and/or sometimes just their children are studying in Canada.
Local Home Buyers' Dilemma
Many local home buyers' "fear of missing out", left them with no choice but to join the bidding war during the hot housing market, when homes were selling within days with multiple offers.They just couldn't wait for home prices to come down as the continuous rise in home prices the past 10 years prompted them to enter the market as "they don't want to be left out not buying their homes before home prices go up further".
Canadian household debt is growing so fast, we’re in uncharted, and dangerous territory. The household debt-to-income ratio by the second quarter of 2018 was reported to have reached 169.1%. Most home owners would not have the financial means to deal with a reduction in their household incomes or any unexpected high financial obligations.
Beside higher interest risk, a drop in home prices in Vancouver could put many home owners who bought their homes during the past 3 years into serious financial troubles.