B.C. home sales sag in May: report

Greater Victoria figures drop nearly 20 per cent

British Columbia real estate sales are slowing down and inventory is rising as interest rates inch up and credit rules tighten.

The number of sales province-wide dropped four per cent to 7,950 in May compared to the same month in 2009, Cameron Muir, chief economist for the B.C. Real Estate Association, said yesterday.

On a seasonally adjusted basis, sales declined 11 per cent in May from April. Even so, the average home price rose seven per cent to $498,294 last month compared to May 2009.

Muir is not surprised to see the slide. High levels of sales in Victoria, Vancouver and the Fraser Valley at the start of this year were “unlikely to be sustained,” Muir said.

“We’ve seen that moderate now as a result of that pent-up demand being already expended in the marketplace. We’ve seen higher mortgage interest rates, as well as tighter credit conditions for low-equity home buyers — all of those having an impact on overall housing demand.”

In May, the number of home sales in the capital region dropped nearly 20 per cent to 672, compared with 836 in the same month in 2009. Active listings rose 24 per cent during the same period to 3,672 and the increasing number of For Sale signs significantly bumped up the sales-to-listings percentage. That number slipped from 28 per cent of listed homes sold during May 2009 down to 18 per cent this past May.

The slower pace of sales, coupled with an increase in the number of properties on the market, has “quelled upward pressure on home prices,” Muir said.

Greater Victoria’s average price for all types of housing was $524,831 in May, up by 8.9 per cent from $482,119 in the same month last year.

In May, there were 54,362 residential listings in the province, up by 26 per cent from January, on a seasonally adjusted basis.

There may also be some “consumer fatigue” in the marketplace because sales activity in the past six months of 2009 was at a frenetic pace, Muir said.

“We may have seen some buyers get into the market late last year as a result of very low mortgage interest rates, maybe advancing their schedule of purchase,” said Muir.

B.C. housing sales may be in a short-term lull, Muir said.

“My expectation going forward is that sales will likely stabilize or even increase slightly in the coming months,” he said. This will happen as interest rates rise gradually. That rate increase is being counterbalanced by improving economic conditions bringing job growth and lower unemployment rates and higher wages. “Those things certainly underpin housing demand,” said Muir.

So far this year, the dollar value of home sales climbed 50 per cent to $17.5 billion, compared with the same months in 2009, he said. Also, the number of sales rose 31 per cent to 34,619 in those months, and the average home price increased to $505,468 in the first five months of the year.

Source: Times Colonist