Residential developers, marketing executives and real estate agents are bracing for a sustained downturn in the housing market, after sales in April – usually one of the most active months of the year – plunged by double-digits across Metro Vancouver.
Vancouver real estate lawyer Richard Bell, executive vice-chair and founder of Avesdo Inc., told a real estate seminar May 8 that the Vancouver new home market has seen an “incredible run over the past 10 to 15 years.” But, he added, “We all knew it would come to an end and the end is nigh.”
In April, just 43 per cent of pre-sale condos offered in Metro Vancouver sold, compared to 94 per cent in January, 83 per cent in February and 63 per cent in March, said Cameron McNeil, a partner in MLA Canada, the real estate marketing firm that hosted the Pre-Sale Pulse seminar at the BMO Theatre in Olympic Village.
In the resale sector, April sales of detached houses plunged 34 per cent through the Real Estate Board of Greater Vancouver, compared with a year earlier, while townhouse and condo sales were down 25 per cent and 24 per cent in the same period.
“I have been seeing more and more price reductions in the detached housing market,” said Tina Mak, a top-producing Vancouver agent with Coldwell Banker Wesburn Realty. Mak, known for her eight-figure land assemblies, said investors should not expect a quick return on investment if they had bought recently.
“All you can expect is capital gain. However, as long as the NDP is in power, I strongly believe the double-digits gain honeymoon is over. On top of that, there are many different new taxes, stricter rental rules,” Mak stated in a missive to clients this week.
“This would be the seventh cycle since I got into the business in 1992,” she said. “The fact is when the market swings back up again, the next peak is always higher than the previous peak.”
Meanwhile, she is “looking for U.S. investment opportunity for many of my investors.”
Like Mak, McNeil said the fundamentals remain in place for a strong Metro Vancouver housing market: an estimated 40,000 immigrants arriving annually, relatively low mortgage rates, low unemployment and a robust economy.
“Our industry, though, is driven by fear and perception, and fear and perception trumps fundamentals every time,” he said. McNeil said condo developers can expect slower sales over the next few months.
An estimated 11,000 new condos will start marketing this year in Metro Vancouver, McNeil said, but this “will barely scratch the surface” of the true demand. He added that, like the last downturn in 2008, people would likely be surprised at how quick the recovery will be.
“This is Vancouver,” agreed Bell. “It will come back.”