David Ebner and Lori McLeod, Globe And Mail, Toronto, Ontario – October 29, 2008 – VANCOUVER — Canada's most expensive housing market is hitting a significant slump, with home sales numbers falling and prices declining, the British Columbia Real Estate Association said Wednesday.

“The bull market in housing is over in British Columbia, and it's been over for several months,” said Cameron Muir, the group's chief economist.

The association, in a forecast published Wednesday, said prices could average $453,000 in B.C. this year. But for 2009, prices are predicted to slump 9 per cent to an average of $413,000 – with much of the decline taking place before the end of this year.

The market peaked in the spring, the forecast said. Over the summer, cracks began to show. Consumer confidence wavered. People would go to open houses but wouldn't buy. Sales fell almost 50 per cent in July, compared with a year earlier, and fell more than 50 per cent in August. Prices weakened. And then the credit crisis hit – and B.C. and Vancouver prices kept falling.

Other forecasts are more dire. Last week, Credit 1 Credit Union estimated average B.C. housing prices at $385,000 in 2009 and in 2010 at $366,000 – down about 20 per cent from this year's peak.

In 2002 and 2003, when the B.C. boom started to take off, the average price of a home in B.C. was roughly $250,000.

The B.C. market, like others in North America, was powered by low mortgage interest rates. However, the region also had numerous other factors at work, including explosive demand following an economic slump from the mid-1990s through the early 2000s, the desirability of the province as a place to reside, and the influx of foreign money and speculators.

The slump could make the city and the province more affordable for other Canadians who have considered moving to B.C., and for businesses that see an advantage in locating in the region. Civic business leaders for years have said a major challenge in attracting new businesses is the lack of affordable housing.

The current situation also quells the mantra that accompanies all booms – “This time it's different” – said Paul Boenisch, a real estate agent at Prudential Sussex Realty in North Vancouver.

“I heard people say, ‘There's no more land left to build. We're a global destination now in the world.' We have to keep in mind that five years ago, before home prices doubled, we were still the same city,” Mr. Boenisch said.

Outside Vancouver, B.C.'s market was beyond hot as oil money rolled in from Alberta, with energy executives and engineers buying up lakefront property in the Okanagan in the province's interior. Prices in such areas could see large declines.

In the resort of Whistler north of Vancouver, the market has been mixed for several years since the boom sparked by the low Canadian dollar petered out around 2002.

Today, particularly since the credit crisis erupted, the market in Whistler is subdued, said Ron Mitchell, an agent and owner of Sutton West Coast Realty Whistler.

“The last three weeks have been quiet – there's no question,” said Mr. Mitchell, who added that the winter is likely going to be slow because residents in and around Vancouver used to use home equity loans on their principle residences to secure resort property.

With Vancouver prices down, this option is gone.

The soaring supply of homes, accompanied by weak demand, is driving down the prices.

In Vancouver, it was similar to the frothiest moments in Toronto's real estate boom this decade, when bidding wars would see homes sold for tens of thousands of dollars more than the asking price.

No longer: The B.C. Real Estate Association predicted sales will be down about 30 per cent this year in Vancouver and around B.C.

Mr. Boenisch's experience is even more severe, saying sales are already down as much as 50 per cent.

“When you have 80 per cent more inventory with half the amount of buyers, this is a dramatically different market,” Mr. Boenisch said.

Last week, the Canadian Real Estate Association said that housing prices in September fell 6.2 per cent from a year earlier in 25 major markets across the country, though analysts noted the size of the decline could largely be blamed on B.C. rather than a nationwide meltdown.

Due to recent experience, the B.C. housing market has been considered something that only goes up, never down. However, there have been two long slumps in the past several decades.

After a steep rise in the late 1970s, prices fell from 1981 to 1986. From there they took off again, peaking in 1995, when they fell through 1999 and were stuck in neutral for three more years, according to research from the Sauder School of Business at the University of British Columbia