May’s sales numbers in Metro Vancouver are definitely an improvement over April’s. Last month’s sales volume was 22.9% below the 10-year May average while April’s sales were 43.1% below the April 10-year average.
The sales-to-active listings ratios have improved as well. 14.2% for detached homes, 20% for townhomes and 21.2% for apartments. Generally speaking, it is believed that there is downward price pressure when the ratio is below 12% and upward price pressure when the ratio is above 20% for several months. So, on the service these numbers look healthy.
However, this has not stopped the benchmark prices from coming down. In May the benchmark price dropped 0.5% for detached homes, 0.5% for apartments and 0.6% for townhomes.
Where does the market go from here?
Last month the real estate news was dominated by the reports that shed light into the massive laundromat that Canada has become to global dirty money. Incredible stuff! People bringing in bags of money to casinos and car dealerships. About 35 to 40 billion dollars are laundered each year! It is hard to determine the actual effect on real estate prices. One report said just in 2018, it increased prices by 5%. Carole James mentioned that it has hiked prices by 20% in certain parts of Vancouver. However, Alberta consistently launder more money than BC. They are closer to 10 billion a year, while BC is closer to 6 billion. So how come their real estate prices are not through the roof?
What we do know is that we now have political will to do something about it. This will be another factor that contributes to the slowing real estate market. The market place is responding by cancelling development projects. About 20% of the residential housing units that were submitted to the City of Vancouver in 2016 has been abandoned by developers. The total number of homes currently listed is 30% higher than May 2018. I guess the developers do not want to compete with the resales.
The pace of decline has slowed but whether this is the bottom nobody knows.
If you want to do some research to prepare for that bottom, there is an interesting site. Money Sense has put together data from 35 cities and 1,726 neighbourhoods in Canada to help you decide where you should buy. Click here. (https://www.moneysense.ca/spend/real-estate/where-to-buy-real-estate-2019/)
