Home sales in Vancouver last month fell to lowest level since January

VANCOUVER – Vancouver’s booming housing market, one of the hottest in North America, may be showing signs of cooling after home sales fell last month to their lowest level since January.

A total of 3,226 residential properties were sold in July, down 26.7 per cent from June and an 18.9 per cent drop from July 2015, the city’s real estate board reported Wednesday.

Dan Morrison, president of the Real Estate Board of Greater Vancouver, said the summer months are generally slower, and that last summer was particularly busy.

“It’s really just a return to more historical average levels,” said Morrison. “July last year was really the exception, and we’re still returning to what we’d expect to see in July.”

Total sales peaked at an all-time high of 5,173 in March — 56 per cent above the 10-year average. July sales, in contrast, were 6.5 per cent above the average.

“I think we’re back to a normal cycle,” said realtor David Campbell. “The spring market has been very, very busy, and I think it’s just a simple case where a lot of people were able to buy what they wanted to buy.”

The decline in sales didn’t dampen prices, with the benchmark price climbing 1.4 per cent in July from a month earlier to $930,400 for Metro Vancouver. That also represents a 32.6 per cent spike compared to the same month last year.

Cameron Muir, chief economist at the B.C. Real Estate Association, said he expects prices to plateau in the coming months.

“Demand’s kind of falling back to longer term averages, and we’re seeing a record number of homes that are under construction today, so with that supply the housing stock is going to expand, and that’s at least going to trend the market towards more balanced conditions by the end of this year,” said Muir.

“Our estimate is that by the time we get into the beginning of 2017, we’re likely going to see much less upward pressure on pricing in the Metro Vancouver region.”

Economist Sal Guatieri at the Bank of Montreal said in a research note that the year-over-year drop in July was the first in three years, and he doesn’t see the slowdown in sales coming to a halt.

“While the pullback merely returned sales to more normal levels, it’s unlikely to stop there,” Guatieri said. “Sales were cooling even before the province slapped a hefty transfer tax on foreign buyers.”

The figures capture the last month in which foreign property buyers were not subject to a 15 per cent tax implemented Tuesday by the B.C. government.

A rush to file before the new tax went into effect helped lead to a record 15,000 property transfer applications last Thursday and Friday, temporarily crashing the electronic filing system, said a spokeswoman for the Land Title and Survey Authority of B.C.

Last week, Canada’s national housing agency warned that Vancouver’s housing market shows strong evidence of problematic conditions, including overvaluation and overheating, as supply fails to keep up with demand.

— By Ian Bickis in Calgary

Follow @ibickis on Twitter.

Note to readers: This is a corrected story. A previous version said the benchmark price for Greater Vancouver climbed 1.9 per cent in July.