Vancouver Home Sales are Cratering

It’s the new year, and new stats are here to alarm us. We’ve gotten used to the new year’s housing stats saying that metro Vancouver and its lucky homeowners remain on the gravy train with double-digit increases in home prices and sales. This year, it’s a little different.

In 2018, Metro Vancouver saw 24,619 home sales. This marks the fewest sales in the region since 2000, according to the Real Estate Board of Greater Vancouver. The sales are down a full 31.6% from the year before. The worst month was December, in which sales were down 46.8% from December 2017. So it’s getting worse.

The benchmark price of all homes in the region is also down. It’s at $1,032,400, 2.7% less than last year. The hardest hit were detached single family homes, which declined 7.8% in value from last year.

So what’s the reason for this downturn? Is it the new taxes from the NDP that are designed to discourage house flipping and speculation? Is it everyone sensing a downturn and trying to cash out all at once?

The taxes may be a factor, but the cashing out theory doesn’t hold up. Home listings are actually down from the previous two years, at 53,614 for 2018. That’s a 6.9 decrease from 2016. So it’s not a flooded market that’s causing sluggish sales.

Could it be the start of a long-overdue market correction brought on by effective restrictions on market-distorting factors like foreign speculators and money launderers? That’s certainly the hope of the NDP and those that voted them in to bring that very thing to pass.

And owners of luxury homes will certainly give them credit – or blame – for bringing their home values down. Attorney General David Eby’s much-maligned luxury property tax on homes valued at over $3 million has caused such outrage in those nicer neighborhoods that the residents are organizing a recall campaign this year. Their home values have seen double-digit drops, and when you hit the wallets of the rich and well connected, you’ll see some blowback. 

But our co-founder, Daniel Greenhalgh, thinks any attempt from government to tame the market through taxes is doomed to fail.

“There are just too many factors that you can’t foresee when you throw new taxes into the mix. And with this new government, it’s not just one or two new taxes, it’s a whole slew of them. It’s clearly an overcorrection, and I think it’s going to cause chaos in our economy very soon.”

Greenhalgh also cautions against predictions of a housing market collapse. “It’s about land value here, and that’s never going to go away. We may see a dip of 2 or 3% in overall home values, but I think that’s as dire as it will get.”