British Columbia Real Estate
Association, July 17, 2008 - A market shift = a shift in
expectations. Market conditions have shifted. After five
years of blockbuster activity and double-digit price growth,
market conditions have slowed, and now favour buyers in
many areas of the province.
Residential sales have declined 22
per cent in the first six months of this year, while available
resale inventory has grown by 54 per cent to 57,000 active
listings in June. In the Greater Vancouver board area, where
longer-term data is available, inventory is at the highest
level since 1998.
Home price appreciation observed from
2004 to 2007 is less attainable in today's market, and sellers'
expectations for such gains should be tempered. More generally,
in a market favouring buyers, prices generally increase
at or below the level of inflation. While the average residential
home price in BC increased at a healthy 6 per cent per year
since 1981, large gains are often followed by periods of
price stagnation. Over-optimistic pricing by sellers will
only inhibit the timely sale of properties, adding to inventory
levels.
Buyers have more homes to choose from
now than in previous years, resulting in greater freedom
to compare the attributes and prices of similar properties
in the market before making purchase decisions.
Despite current buyers'
market conditions fuelled by housing affordability constraints
and economic uncertainty, the economic and demographic backdrop
in support of housing demand remains strong in BC. BC's unemployment
rate remains near record lows, while the labour force participation
rate hovers near historical highs. Meanwhile, the province
remains a favoured destination for new migrants, reflected
in the third-highest population growth among provinces during
the first quarter of 2008. However, challenges continue in
the forestry sector, and eroded consumer confidence may also
be playing a role in a pull back of consumer spending.
