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Vancouver Home Sales Crash 23% In One Month As Prices Tumble
09-03-2016, 11:30 AM,
Vancouver Home Sales Crash 23% In One Month As Prices Tumble
Vancouver Home Sales Crash 23% In One Month As Prices Tumble

<p>Last week, following the <a href="">recent dramatic decline </a>to slam the Vancouver housing market after a 15% luxury real estate sales tax aimed at foreign purchasers, ground the local market to a halt, we reported that China's angry consul general to Vancouver <a href="">lashed out at the local government</a> for finally bursting a housing bubble which doubled Vancouver real estate prices in the past decade. </p>
<p>"Why a 15 percent tax? Why now? Why this rate? What’s the purpose? Will it work?" Liu Fei, China’s infuriated consul general in Vancouver, said in an interview with Bloomberg. "The issue is how to help young people afford housing," she added. "I’m not sure even a 50 percent tax would solve the problem."</p>
<p>Arguing that the tax would halt the influx of hot Chinese money into Vancouver - which many have claimed is the reason for Vancouver's stratospheric housing prices - Liu said that "this is a big country with a small population. It needs immigration to grow the economy." The implication was that absent a hospitable housing market where Chinese hot money launderers can park their cash, it is Canada that would suffer.</p>
<p>Whether or not the conflicted Chinese consul is correct, remains to be seen, but for now one thing is undisputed: the Vancouver market is being roiled as the latest numbers from the <a href="">Real Estate Board of Greater Vancouver confirmed</a>. In August, the board reported that Vancouver home sales fell 26% from a year earlier, while prices slid as the 15% tax crimped demand. Compared to July, sales tumbled by 23% to 2,489 transactions. Detached properties were hit hardest as sales dropped 45% from a year<br />
earlier. Transactions of attached homes such as town-houses dipped 25%<br />
and apartment sales were down 10 percent.</p>
<p><a href=""><img src="" width="500" height="265" /></a></p>
<p>Meanwhile, the average price of detached Vancouver properties crashed, dropping 17% on the month, and 0.6% on the year, to C$1.47 million ($1.13 million) in August, the lowest price since September 2015. </p>
<p><a href=""><img src="" width="500" height="390" /></a></p>
<p>Dan Morrison, president of the real estate board, <a href="">said in the press release </a>that Friday’s data show the tax “appears to have added” to a slowing trend that started several months ago by “reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers." </p>
<p>“It’ll take some months before we can really understand the impact of the new tax. We'll be interested to see the government's next round of foreign buyer data", Morrison said adding that there’s an “imbalance between supply and demand in most communities", with the supply clearly overwhelming demand.</p>
<p>Needless to say, the realtor's group opposed the tax after it was announced as it also applied to pending transactions, leaving many buyers shouldering an unexpected tax and sellers with scuttled deals. He said in the statement the board is seeing fewer detached home sales, particularly in the highest price points. </p>
<p>As sales slow and prices cool, new listings of properties increased only slightly from last year, rising 0.3 percent. “<strong>What we’ve seen in August is mostly buyers going on the sidelines, either being forced onto the sidelines because they were cut by the sales tax and decided not to proceed with sales, or folks out there saying ‘let’s see how the dust settles,’” </strong>Robert Hogue, senior economist at Royal Bank of Canada, told Bloomberg. “So far we haven’t seen necessarily a flood of properties being listed on the market." </p>
<p>One look at the chart above, however, and what is so far only a trickle will become a flood shortly as local sellers "on the sidelines" realize just how big the drop now is.</p>
<p>Meanwhile, the bursting of the housing bubble is bad news for the local government: as the city cools, governments of all levels are deriving the biggest share of their revenue from housing and related activities, about 17%, in about two decades, according to a National Bank of Canada report this month.</p>
<p>Worse, the August swoon is just the beginning: the city is still the least affordable in the country. As reported previously, roughly 90% of a typical family’s income goes to service a mortgage and pay property taxes and utility bills in Vancouver, double the national average, according to a Royal Bank of Canada second-quarter report. The benchmark price of all housing types, a custom measure used by the real estate board which excludes some properties, showed the price of a home on that measure increased 31 percent from a year earlier in August to C$933,100.</p>
<p>If the Vancouver bubble has indeed burst, keep an eye on the blue line in the chart above whose rate of fall is only set to accelerate.</p>

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