A sustained attack on buyer demand in Vancouver’s detached-housing market has decimated sales and is leading to some “unbelievable” price reductions.
If government plans were to crush sales in the city’s premier residential market they have been spectacularly successful, according to recent real estate data and front-line agents.
“Detached-house sales on Vancouver’s west side are down 70% in the first three months of this year as compared to 2016,” said Brent Eilers of Re/Max Masters Realty of West Vancouver, who has been active in the local real estate market since 1983.
He added that West Vancouver detached sales, estimated at 59 so far this year, are now at the lowest level in 30 years.
“As Frank Gifford from Monday Night Football used to say, ‘Turn out the lights, the party is over,’” Eilers said.
The party ended early, he said, for high-end builders and investors, with sale prices for Vancouver detached houses priced at $5 million or more down 15% to 18% this year compared with 2017.
As of February, before the province brought in its vacant home speculation tax, raised the foreign-buyer tax to 20% and increased the school tax on homes assessed at $3 million or more, detached house sales on Vancouver’s west side had already plunged to just 36 sales, down 60% from the same month in 2017.
This compares with 244 sales in February 2016, before the B.C. government introduced Canada’s first foreign-homebuyer tax and added restrictions on assignment sales of Metro Vancouver residential real estate transactions.
In February, 184 Vancouver west side detached houses were listed for sale on the Multiple Listing Service of the Real Estate Board of Greater Vancouver at $3 million or more. Just 13 of them sold.
Overall, the benchmark price of a detached house on Vancouver’s west side last month was $3.4 million, down an average of 2% ($68,000) from three months earlier.
Eilers suggests that many Vancouver detached houses are now selling for less than the assessed value set on the July 1, 2017, valuation date.
He and other agents say the crunch will come next month with the traditional flood of listing onto the market after spring break and first-quarter statistics are released.
“It will be hard to hide what is really happening.”
Eilers added that the federal government’s stress test and higher mortgage rates have frozen first-time buyers out of the market, while B.C.’s foreign-buyer tax, school tax and speculation tax have driven away foreign buyers. “So, unlike in other downturns, we don’t have fresh money coming into the market.”
The B.C. school tax alone works out to an extra $2,000 for the first $1 million in value in excess of $3 million and $4,000 per million on assessed values of $4 million or more. If a foreign buyer were to purchase a $4 million Vancouver house this month, for instance, he or she would face a tax bite of at least $806,000; $120,000 more if the house were left vacant due to the 2% provincial speculation tax and Vancouver’s 1% empty-home tax.
Eilers provided examples of expensive Vancouver houses that have seen dramatic price reductions, including a South Granville house that was listed for $11.9 million in October 2017 and sold in February for $9.9 million; and a Shaughnessy house, listed last fall for just under $12 million, that sold last month for $8.4 million.
The lower end is also being affected, agents say.
“We are seeing unbelievable price drops,” said David Richardson, a veteran agent with Re/Max Crest Realty. He estimated some Kitsilano detached-house sellers listing in the $2 million to $3 million range have taken a 20% to 25% haircut on recent prices compared with two years ago.
On Vancouver’s east side, detached-house sales last month were down 52% from the same month a year earlier and, at 50 sales, a shadow of the heady days of 2016 when 259 houses traded hands in February.
This February’s benchmark price for a Vancouver east-side house was $1.56 million, down about 1% from three months earlier. The trend, however, is away from higher-priced houses. Last month, only seven of the 74 Vancouver east-side houses listed at $2 million or more sold, and just three of the 31 listed at $2.5 million or more found a buyer in the month.
Across Vancouver, it now takes an average of 50 days for a detached house to sell, four times as long as two years ago, before the government intervention and higher taxes began. Some Vancouver detached-house sellers, Eilers suggested, will be forced to bite the bullet.
“You cannot be down catastrophically in sales and not eventually have an effect on prices.”
