Condo sales in several cities in Metro Vancouver have dropped to a 10-year low, according to realtor Steve Saretsky.
The decline has something to do with how single-family homes are faring in the market, Saretsky explains in his Vancity Condo Guide.
“A weakening detached market which has pushed prices noticeably lower has finally trickled down into the condo market,” Saretsky wrote.
The realtor noted that the strength of the detached home market is an important factor in condo sales.
According to Saretsky, most first-time buyers rely on help from their homeowner parents to make the down payment for a condo.
Citing a key figure from Will Dunning, chief economist of the Mortgage Professionals Canada, Saretsky stated that between 2015 and 2018, first-time buyers “sourced $4 of every $10 of their down payment from the bank of mom”.
“The reality is, mom and dad have lost some equity over the past year or so, at least on paper,” Saretsky wrote. “This makes it more difficult to refinance and/or tap home equity lines of credit which are frequently used to help with the down payment for first time buyers.”
According to the Real Estate Board of Greater Vancouver, condo sales in areas it covers decreased by 46.3 percent in November this year compared to the same month last year.
The REBGV also reported that detached home sales last month declined 38.6 per cent.
“The benchmark price for detached homes is $1,500,100,” according to the board. “This represents a 6.5 per cent decrease from November 2017 and a 1.6 per cent decrease compared to October 2018.”
In his Vancity Condo Guide, Saretsky wrote that accessing home equity lines of credit “may get even more difficult moving forward”.
Saretsky noted that the federal Office of the Superintendent of Financial Institutions has “put pressure on the banks to reign in and begin stress testing home equity lines of credit”.
According to the realtor, these lines of credit “now represent 17.5% of total real estate secured consumer loans at the big six banks”.
Saretsky also wrote that condo inventory has increased 72 percent year-over-year.
“The large jump allowed inventory to accumulate to its highest total for the month of November since 2014,” according to Saretsky.
In its latest report, the REBGV noted that the benchmark price of an apartment property was $667,800 in November this year.
The board noted that this figure represents a 2.3 per cent increase from the same month last year, , and a 2.3 per cent decrease compared to October 2018.
In a recent housing forecast, the B.C Real Estate Association predicted that overall residential sales in the province will fall 23 percent this year compared to 2017.
The association is projecting that the market will bounce back in 2019, with sales anticipated to increase 12 percent to 89,500 units.
According to the BCREA, the 10-year average for residential sales in the province is 84,800 units.More