BC Business
There’s got to be a morning after, they say. Now that Metro Vancouver’s real estate binge is apparently over, we're all wondering what the morning after will look like. The latest figures from the Real Estate Board of Greater Vancouver show that sales volumes are down 18.4 percent compared to July of last year. At the same time, regional figures show that this most recent July, at 31.2 percent below the 10-year July sales average, has been the worst in 12 years.
Vancouver real estate | BCBusinessWill Vancouver experience a price crash following the pricey buying binge that’s engulfed the region in the last few years?
The latest figures from the Real Estate Board of Greater Vancouver show that sales volumes are down 18.4 percent compared to July of last year. At the same time, regional figures show that this most recent July, at 31.2 percent below the 10-year July sales average, has been the worst in 12 years.
Obviously, when sales slow, prices fall, but that hasn’t happened yet. Benchmark prices have barely moved — up .06 percent — which may appear to be good news, but isn’t. Flat prices after a period of continuous price increases doesn’t bode well.
So, has the long rumoured crash come? I’m sure the board and anyone involved in real estate would say no, but then they may have a vested interest.
They did agree, however, that the biggest driver of the market in recent years has apparently disappeared. That would be the real estate investor/speculator who has been blamed for the recent round of price hikes that included monthly increases as high as $100,000 a month in Richmond.
“The investor class has sort of moved away,” said board president Eugen Klein.
Good riddance. It was the speculators and investors, most of whom were foreign although nobody wanted to admit that, who were pumping up the prices like a bunch of drunken sailors who just hit port.
They have apparently sailed on, injecting some sanity back into this market in their wake. For instance, Klein added that “interest” among first-time buyers hasn’t changed very much, although he didn’t say what that interest level was.
I’m betting as prices spiraled ever higher, interest among this group spiraled ever lower, and so it’s barely changing doesn’t exactly count as good news. However, the board did give it a mighty effort.
Obviously, one month doesn’t make for a more realistic and healthy real estate market, which we haven’t seen amidst the fever of the last few years. But it’s a beginning.
But it will take another couple of months to see if the real estate board’s worst nightmare — a price crash — is underway.
Frankly, that would be healthy too. Although some would be hurt — they always are in these up and down scenarios — the region as a whole might benefit from this morning after. These kind of binges are fun for a while, but eventually there’s a price to pay. They distort economics to the breaking point in that they drive away new residents and new businesses.
A stable real estate market will help the overall economy much more than a real estate frenzy.