Morgan Rice

Resale Market Becomes

More Balanced

MLS®

are forecast to moderate in the

second half of 2010 and remain flat

through 2011. While an improving

local economy and job market, along

with steady population growth, will

support home ownership demand,

higher mortgage rates will dampen

demand starting in the second half

of this year. In addition, much of the

pent-up demand that built up during

2008, has been satisfied. In 2009,

many first time home buyers made

the move to home ownership, taking

advantage of record low mortgage

rates and prices that had fallen from

their previous peak levels. While first

quarter home sales this year were

well above the low levels of the first

quarter 2009, the pace of sales has

slowed compared to last fall. This

trend will continue, resulting in a three

per cent decline in annual sales both

this year and next.

At the same time that the pace of

sales is expected to flatten, there will

be more homes for sale. The steady

increase in home prices during the

past year has motivated potential

sellers to list their homes. The

number of new listings added to the

market trended higher in the first

quarter of 2010. However, strong

sales have kept the total stock of

active listings on the market well

below previous peak levels reached in

late 2008.

A combination of moderating sales

and an increase in the number of

listings will mean more balanced

market conditions in Vancouver for

the remainder of this year and into

2011. Expect to see fewer multiple

offers on properties listed for sale.

Buyers will have a larger selection

of homes to choose from and more

time to make their home purchase

decision. With more homes on the

market, there will also be less upward

pressure on prices going forward.

As the resale market adjusts to

more balanced supply and demand

conditions, the pace of price growth

will slow. However, there is often a

lag between when conditions become

more balanced and when prices

react. As a result of high prices and

robust sales in the early part of 2010,

the annual average MLS® price will

increase 11 per cent, with the most

of the increase accounted for by the

first half of the year. Balanced market

conditions will result in home prices

rising a more modest three per cent

in 2011.

Price growth during the past year

has varied by home type. As of

March 2010, apartment condo and

townhouse prices were two and three

per cent above their previous peak

levels, respectively. However, single

detached home prices were seven per

cent above their previous peak level,

pushing the total price up nine per

cent over the previous peak. Single

detached home sales have shifted to

the higher price ranges. For example,

in 2009, 48 per cent of homes sold

were priced above $700,000, while

in the first quarter of 2010, 62 per

cent of the total sales were above this

threshold. Apartment condominium

sales saw a smaller shift to higher

price ranges, with the proportion sold

at the upper end of the market (above

$400,000) increasing from 32 per cent

last year to 38 per cent of total sales

in the first quarter of this year.