“According to the Real Estate Board of Greater Vancouver (REBGV), home sales dropped 18.4 per cent in July, marking the lowest total in the region since 2000. In Coquitlam, the number of sales in July dropped 26 per cent from the previous year. …
“We’re seeing some areas that are quite flat and no changes, and some areas we still have pockets of activity,” said Sandra Wyant, president-elect of REBGV.
She suggested July is typically a slow month for real estate sales, noting buyers and real estate agents alike often tend to be on holidays. …
She said prices could start to come down as competition amongst sellers heats up.
However, Wyant said it often takes a while for sellers to make an adjustment in the marketplace.
“Right now it’s a fabulous time to jump into the market,” she said, adding there are many choices and no pressure to make a decision.
“But one financial expert believes Lower Mainland real estate has reached a turning point.
Andrey Pavlov, a professor of finance with Simon Fraser University, noted prices in Vancouver have rocketed past those in places like New York and San Francisco, and in the case of the Tri-Cities, are comparable to suburbs of those major cities.
He suggested the pace will not continue and predicts prices will likely drop in the Vancouver area.
Pavlov argued home prices rose dramatically in the Lower Mainland, not out of income or general economic growth, but rather debt accumulation.
With low interest rates and easy qualification terms, people have been taking on more and more debt.
“I think this engine of real estate price growth is now done,” Pavlov told The NOW in an e-mail.
“So I don’t see where the future support for real estate can come from.”
And he’s especially concerned for the condo market.
He explained that singlefamily properties would always hold their value to some extent because usable land in the Lower Mainland is limited.
But he contends condos have absolutely nothing that can support them. And in cases where the quality of a new development might be in question, he can see prices of condos in the suburbs dropping by half or more.
– from ‘Housing sales plummet, SFU professor believes price of some suburban condos could drop by half’, Jeremy Deutsch, Coquitlam Now, 10 Aug 2012 [hat-tip Gord and Alexcanuck]
Another article of interest because it involves named locals coming out publicly with bearish predictions.
We agree with Pavlov that the home price rises have been the result of a debt fuelled bubble, and that future support is tenuous.
As for the quantitative aspect of his prediction: we’d agree that “condos in the suburbs” will drop by more than 50%. However, so will condos in the city, and, contrary to Pavlov’s apparent suggestion, so will SFHs, in all areas.
During the speculative mania, it was argued that SFHs were something particularly special, and they received that much more speculative juice as a result. During the descent, that speculative component will be wrung out, and prices will return to those of the early 2000’s. For the vast majority of SFHs that means drops of greater than 50%.