BC November Residential Sales

November Home Sales Continue at Torrid Pace

Vancouver, BC – December 9, 2009. The British Columbia Real Estate Association (BCREA) reports that Multiple Listing Service® (MLS®) residential sales in the province climbed 165 per cent to 7,182 units in November compared to the same month last year. Last month posted the highest number of MLS® residential sales for the month of November since 2005, when 7,721 units changed hands. Triple-digit gains in province-wide unit sales reflect a low number of unit sales in November 2008.

“BC home sales remained at an elevated level in November,” said Cameron Muir, BCREA Chief Economist. “Low mortgage interest rates, pent-up demand and strong consumer confidence continue to be key drivers in the market.”

The torrid pace of home sales in the Fraser Valley, Vancouver and Victoria has propelled the provincial total to near record levels. However, consumer demand in these markets is expected to moderate in the new year as pent-up demand is largely expended and higher home prices erode affordability.

Year-to-date, MLS® residential sales dollar volume increased 21 per cent to $36.8 billion over the same period last year. A total of 79,325 units were sold in the first eleven months of 2009, up 19 per cent from 2008, while the average MLS® price increased 2 per cent to $463,555.

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Metro Vancouver Housing Trend

Housing trend since 1977

From 1997 to 2001

Greater Vancouver's last bull market started towards the end of 1984. and lasted until the end of 1994. Home sales dropped yearly, along with home prices and reached a bottom around 1998. View the price chart here.

From 2001 to 2007

When buying interest returned to the market in 2001, you will notice that there was not enough supply of homes to keep pace with demand. New home construction was pushed to the limit, as strong demand for housing continued un-abetted until the end of 2007. From 2001 to 2007, home prices more than double in values.

The correction in 2008

The credit crunch in 2007 and early 2008 caused a major pull back in buying interest, resulting in home prices declining 15%. The panic of 2008 was quickly replaced by market optimism, when interest rates were slashed from 4.5% in Nov, 2007 all the way to 0.25% in Apr 2009.

Will home prices collapse?

There are great concerns in the market place that home prices are too high. There are major concerns on higher interest rates, pending HST which will affect the housing market and the weak Canadian economy in the midst of a world wide recession.

The metro Vancouver housing may be at the cross road. Market confidence is the key. Home prices are hinging on what happens after the winter Olympics, interest rates, HST implementation and the economy.

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The Canadian Real Estate Debate Goes On

Canadian Columnists Linda Leatherdale on 2008-05-04 posted on Canoe Money a timely article on the Canadian Housing Market - "Opening door on market"

"Some feverishly argue there's no way Canada's real estate market will crash and burn like the U.S. market, where one prominent analyst warns that the meltdown is more fast and furious than during the Great Depression".

"Others say, get real: Canada's largest trading partner is the United States, and if this one-time economic superstar is in a recession, we're going down, too".

Read the full article here.

The Royal Bank of Scotland recently released an advisory to its clients to braise for a "global stock and credit crash" over the next 3 months. The UK housing market may not recover until 2015. The housing market and debts problems in the US and UK, record high energy and food prices could eventually drag Canada into a housing down turn as we experienced in 1995 to 2001. Except, this time the problem could be very much worse than what we experienced previously.

Greater Vancouver Housing Market

The Saunder School of Business's housing chart for Greater Vancouver below shown that it took 8 years for the housing market to recover to it's 1981 peak at around $240,000. The housing downturn from 1995's peak at $420,000 took almost 9 years to recover. Using the charts presented here up to 2007, and plotting the trend lines for nominal and real prices, $540,000 seemed to be about the "right" price level where the Vancouver housing price should be. This represents a 30% to 35% price differential below the current Vancouver nominal and real housing prices.

Click here to read the blog.

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