BC Real Estate Association fall forecast: Home prices dropping, sales numbers slowing down

VANCOUVER (NEWS1130) - Home prices are dropping, and sales numbers are slowing down, according to the fall forecast from the BC Real Estate Association.

Record high prices were expected to slow demand. But add to that shaky consumer confidence because of record high oil prices earlier in the year, and the bears roaming the stock market in recent weeks.

However, Cameron Muir with the BC Real Estate Association says prices in Vancouver, and the Fraser Valley will actually finish the year up, at about 3% over 2007.

Rollickin' real estate could mean a good ride for buyers

According to Somerville, Vancouver’s housing market will only stabilize if there is stability in global credit markets. One big risk, he said, is if banks stop lending money to one another, which could prevent business borrowers from making unsecured loans to meet company payrolls. However, the record recovery on Wall Street on Thanksgiving Day—when the Dow Jones Industrial Average rose by 936 points—left some observers thinking the worst of the credit crisis could be over. That was followed by a record 890-point gain in the Toronto Stock Exchange index on October 14, giving comfort to Canadian investors.

Pastrick said that he expects fewer housing starts in B.C. next year, which could address the imbalance between demand and supply. But this might take a few months to work its way through the system.

In the meantime, the region’s roller-coaster real-estate ride may continue. What that means for prices is anyone’s guess.

Slower growth expected for Metro Vancouver

In the housing market, starts for 2009 are expected to come in at 16,460 units for the region, down 30 per cent from 2007 when there were 23,416 starts.

Home sales are forecast to drop 33 per cent for 2008 but will climb back modestly by five per cent in 2009 and 11 per cent in 2010, according to the credit union analysis. Prices are down as well, declining by an estimated 16 per cent from a peak in February 2008 to the bottom of the trough in late 2009. Several years of level prices are expected to follow.

Hobden said a crucial economic indicator, the region's trade deficit, is going to improve. It's currently at $15.5 billion, fuelled by several years of strong consumer spending on products that are imported into the region. An expected weakening of the Canadian dollar will increase exports, while less spending by consumers will hurt imports, driving the deficit down to $14 billion by 2010.

With home prices falling, it's time to rethink real estate

For a lucky few, of course, Vancouver real estate has been a gold mine. Those who purchased a home after the last major downturn in 1990 and hung on through the frequent bumps and dips until today -- or rather until February this year -- hit the motherlode.

Depending on who's doing the math, the value of their investment has more than tripled. And house flippers who snapped up a teardown last year and cashed out near the peak have also made a killing.

The rest of us, lemmings who bought during the frenzy and bid up the price of dumpy asbestos-filled bungalows that are worth less than they were six months ago, rue the day we placed a call to a real estate agent.

A dwindling number of realtors cling to the fiction that we are in a "balanced" real estate market where, since no one has an advantage, everybody presumably gets a fair deal.