Greater Vancouver home listings fall as report notes “sellers are not desperate”
On August 1 this year, a listing for a Vancouver home asking $5,495,000 expired.
The 5869 Montgomery Street property had been on offer for almost seven months since January 14, 2022.
Just over a week after the listing expired, the same seven-bedroom and seven-bath residence returned on August 9, 2022 for the same price.
Tracking by real-estate platform Zealty.ca indicates that this Vancouver real estate has been on and off the market since 2019, and it is now on its fifth listing so far.
There are a lot of reasons why a number of homes don’t sell.
For example, longtime Vancouver realtor David Hutchinson noted that some sellers simply don’t like prices offered by potential buyers.
They would rather “hold out”.
“If they can afford to wait, and they like where they're living, then, of course, there's nothing wrong with waiting,” Hutchinson told the Straight.
“I often tell sellers, especially those who are elderly, retired, or on fixed income, if you can wait six months to sell your home, and it gets you an extra $50,000, isn't that a good deal? Where else can you get $50,000 for doing nothing?
“And, in some cases, with big-ticket properties it can be more than $50,000. It can be $500,000. It all depends what position you're in at the time,” Hutchinson said.
In other cases, Hutchinson noted that a number of sellers “just probe the market to check the value of their home for reasons they don't disclose”.
“Sometimes their price expectation is above their asking price, and they're not prepared to take a particular number they feel is not worth it for them to give up the home,” the Sutton Group-West Coast Realty agent observed.
Sellers holding out could partially explain why home prices in Greater Vancouver haven’t plunged deeply amid declining sales numbers.
Another factor is that some property owners are also pulling out of the market.
An August 16, 2022 report by Dexter Realty noted that after peaking at 10,839 home listings at the end of June, inventory has dropped for the second straight month.
As of mid-August, the total number of homes for sale in Greater Vancouver sat at 10,470 after finishing July with 10,734.
The report by the Vancouver-based realty company stated that the “trend is for fewer homes being listed”.
“Sellers are not desperate and like buyers, are playing the waiting game. And with fewer sellers coming to market, the pressure on prices to decrease becomes less,” Dexter Realty partner and managing broker Kevin Skipworth wrote.
Skipworth also noted that the current sales-to-listings ratio in Greater Vancouver is 49 percent, the highest since the April 2022 level of 52 percent.
“Think of inflation, too few goods available being chased by a greater number of buyers. What does that do to prices? Keep in mind though, we are still seeing a low point for sales, so price increases are not the result of this, but it certainly keeps prices from declining to any great degree,” the Dexter Realty executive noted.
Skipworth continued that some sellers will accept less than they would have gotten three to six months ago.
However, others are “content to wait or not be on the market, which is where the lower listings numbers are coming from”.
On a national level, the Canadian Real Estate Association (CREA) had reported about “one new puzzle” it observed from the July 2022 market activity.
It’s that July sales and listings declined at the same level of 5.3 percent month-over-month from June 2022.
CREA senior Shaun Cathcart noted in an August 15, 2022 media release that this happened in many parts of the country.
“It’s only one month of data at this point but it suggests that some sellers are also playing the waiting game, and that is with an overall inventory of homes for sale that is still historically low,” Cathcart said.
In Greater Vancouver, the real-estate board had reported that there were 3,960 detached, attached and apartment properties newly listed for sale in July 2022.
The number of new listings last month marked a 9.5 percent decrease from the 4,377 homes listed in July 2021, and a 24.7 percent decline from June 2022 when 5,256 homes were listed.
Meanwhile, the composite benchmark home price in Greater Vancouver fell month-over-month in July 2022 by 2.3 percent compared to June, but posted an annual increase of 10.3 percent increase over July 2021.
A June 9, 2022 report by the Bank of Canada noted that a retreat of investors from the real-estate market due to elevated interest rates could “amplify house price cycles”.
The BoC defines investors as “existing mortgage holders who obtain an additional mortgage to purchase a property”.
The central bank noted that investors accounted for over 22 percent of mortgaged purchases in the fourth quarter of 2021.
That number represents an increase from 19 percent in 2019.
“When prices are stable or declining or mortgage carrying costs are rising, holding real estate as an investment becomes less attractive. The incentive to sell may be greater for investors who risk falling into a negative equity position on one or more properties, also known as being ‘underwater’,” the BoC stated in the report.
As well, “A sudden reversal of the influx of housing investors seen during the pandemic could amplify downward pressure on prices.”
Sutton Group-West Coast Realty’s Hutchinson noted that the ongoing slowdown in the market poses problems for determined sellers.
“If there are no inquiries or phone calls on a property shortly after being listed, it's time for a new strategy, and that new strategy usually involves price,” Hutchinson said.
Hutchinson explained: “There a few ways to do that. One is a price adjustment. Another is to terminate the listing and put it back on at the new price. And lastly, you could just wait for the listing to expire finally at the current price, and put it back on at the new price.”
The Vancouver realtor added: “Whatever way you choose, you're chasing the market down, and that's not the position you want to be in.”