April brought no joy for the real estate sector as the housing market recession in the Lower Mainland deepened.
Multiple Listing Service home sales in the combined Metro Vancouver and Abbotsford-Mission area reached 3,158 units, marking a 25.5% decline from a year ago and the lowest same-month sales since 2000.
While a slight improvement from the near 30% drop in March, the sales flow continued to deteriorate with monthly activity at the slowest pace since the 2008-09 financial crisis.
Declining home sales continue to boost inventory. While many sellers are opting to sit out the housing downturn, existing listings are languishing and new listings are adding to supply. There were more than 21,500 active listings in April, marking a gain of 43% from a year ago. The trend is the highest since late 2014 with the ballooning of apartment and townhome inventory. Sales-to-active-listings ratios are plumbing the depths of levels seen in 2008-09. While conditions in the multi-family sector are slightly better and consistent with a buyer’s market, they are rapidly retreating. Apartment and townhome inventories will continue to rise as new home completions lead to new listings of investor-held units.
Average and benchmark price levels were steady but declined more than 1% from March after adjusting for seasonal effects. The latter has been trending lower since April 2018 and sits about 7.5% below its peak of $953,700. Similar patterns in median and average prices show this is no longer just a luxury-market correction, but more broadly based. We expect the benchmark price to decline another 5%, marking a peak-to-trough decline of about 12% despite solid growth in the local economy and population.
B.C. economic growth moderated in 2018, according to Statistics Canada estimates. Industry gross domestic product rose 2.4%, which was third highest among provinces and compared with a 2% national gain. This slowed from 2017’s robust pace of 4% but marked a ninth consecutive annual expansion.
Gains were led by goods--related production, which grew by 3.3% highlighted by strong expansion in the oil and gas sector. Non-residential building construction rose 13%, lifted in large part by health-care-related expansions and office construction. Residential building construction rose 3.7%, reflecting high levels of units under construction and relatively firm housing starts during the year.
Services-sector growth slid to 2.2%, marking the smallest gain since 2012. Retail trade slowed sharply to 1.1% following a 6.4% gain in 2017. Professional, scientific and technical services expanded 1.7% after a 3% gain in 2017. •
Bryan Yu is deputy chief economist at Central 1 Credit Union.