Globe and Mail – Wednesday, Jul. 07, 2010 – by Steve Ladurantaye
Vancouver’s housing market slowed considerably in June, with 30 per cent fewer sales than a year ago. Still, the 2,972 sales made it the second-busiest June on record for the West Coast city. The sharp drop is further evidence that the real estate market is beginning to cool after its sharp post-recession runup after a similar drop in May.
Observers have been projecting a slower market, though not one that will come crashing down, in the face of higher mortgage rates and tighter mortgage rules. National numbers are released by the Canadian Real Estate Association in the middle of the month, but individual real estate boards around the country often release their sales data earlier. In May, buyers backed away from Canada’s housing market, driving sales lower in what is traditionally the busiest month of the year for the country’s real estate agents. Sales fell to 8.5 per cent to 40,393 units in May compared with April. Sales remain elevated by historical markers, but are 15 per lower than last fall’s peak.
The housing market has been key to Canada’s economic recovery, as low interest rates and pent-up demand drove buyers into the market after months of stagnation in 2008. But with interest rates likely heading higher in the second half of the year, many buyers who would have preferred to buy in the fall or early winter chose to buy sooner.
Tougher mortgage rules imposed by the federal government in mid-April also prompted buyers to act sooner. Meanwhile, tens of thousands of homeowners have seen the rampant demand and listed their houses for sale to take advantage of high prices.
The Real Estate Board of Greater Vancouver reported yesterday that home sales fell 30.2 per cent in June from the inflated levels of a year earlier, and 5.8 per cent from May. New property listings rose 1.2 per cent from May and 32 per cent from a year earlier.
“The number of new listings coming on the market is not as dramatic as we saw over the previous three months and demand remains at a healthy level for this traditionally quieter time of year,” said Jake Moldowan, the president of the Real Estate Board of Greater Vancouver.
The Calgary Real Estate Board, meanwhile, reported sales of single family homes fell 16 per cent in June from May and 42 per cent from June of 2009, while condo sales fell 14 per cent from a month earlier and 40 per cent from a year earlier. Notable is that sales of high-end properties worth $1-million or more are rising, the group said.
“We are seeing continued moderation in Calgary’s home sales in the face of higher mortgage rates, increased inventory levels and a decreasing number of fist-time home buyers entering the market,” said board president Diane Scott.