VANCOUVER â€” Home sales across the Vancouver area were down dramatically in February compared with last year's record-breaking pace, while prices across the region remained more stable.
The Real Estate Board of Greater Vancouver says a limited supply of listings and an unusually snowy start to the year affected the market.
It says residential sales totalled 2,425 in February, an almost 42-per-cent plunge from February 2016. But sales in February were up about 59 per cent from January.
The board says the number of properties that changed hands was 7.7 per cent below the 10-year sales average for February.
There were 3,666 new listings in February, a nearly 37-per-cent drop from the same month last year and an 11-per-cent decrease from January.
The board says this is the lowest number of new listings registered in February since 2003.
"If you go to the store and there's no bread on the shelf, you don't buy it," said board president Dan Morrison. "The inventory is so low that there's just not enough product to meet the buyers' demand."
Morrison said for months people have taken a "wait and see" approach to the market, which had already started to cool off before the British Columbia government introduced a tax on foreign buyers in Metro Vancouver in August.
But he said there are already signs that confidence in the market is returning. The sales-to-active listings ratio in February was 31.9 per cent, a 10 percentage point increase from January. That number indicates what the pressure is on prices, he said, noting that downward pressure happens when the ratio dips below 12 per cent and upward pressure occurs above 20 per cent.
The stories are different in the upper end and the lower end of the market, however.
The board says the benchmark price for detached properties was about $1.47 million, down 6.5 per cent over the previous six months.
The benchmark price for condominiums was $526,300, a 2.3-per-cent jump over the previous six months. Morrison said demand for condominiums was "huge," but it was unclear how much of an effect government policies were having.
The provincial government has introduced an initiative that gives first-time buyers a maximum $37,500 loan toward a down payment on a property that costs up to $750,000.
Ottawa, however, has tightened rules on mortgages, requiring a stress test aimed at ensuring buyers can still afford payments if interest rates were to rise.
Adil Dinani, a real estate adviser with Royal LePage, said the shrinking gap between detached prices and condominium prices creates more ability to move up in the market.
An owner selling their two-bedroom condominium in Burnaby for $650,000 can now approach a single-family home that used to be $1.3 million but is now $1.1 million, he said.
"I think people need to be prudent in the market and not over-extend, but look at that opportunity that is there," he said.
Dinani said it appeared the correction has run its course, noting the 6.5-per-cent drop in detached prices was much lower than what some analysts had predicted. Prices were unchanged from January.
Business Prof. Tom Davidoff of the University of British Columbia was reluctant to make a prediction but said significant further corrections shouldn't be ruled out.
"These prices are very rich relative to what you see anywhere else or anything we've seen historically," he said.
He added that foreign buyers were affected by not only the 15-per-cent tax but also new restrictions in China on removing money from the country.
"Certainly, I don't think we're done with the downward pressures. They still exist."
The Real Estate Board of Greater Vancouver covers a large portion of Metro Vancouver, including Vancouver, the North Shore, Burnaby, New Westminster, Richmond, Coquitlam and Port Moody.
The Fraser Valley Real Estate Board, which covers the growing cities of Surrey, White Rock and Langley, says the market returned to more typical levels in February after a record-breaking 2016.
The board processed 1,396 sales last month, a decrease of 41.5 per cent compared with February last year, and a 43-per-cent increase compared with 976 sales in January.
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Laura Kane, The Canadian Press