Vancouver and Seattle's housing markets mirrored each other when they both notched peak sales volume in 2005 and peak prices in 2007.
But since then, the two cities' fortunes have diverged.
Vancouver home sales and prices stayed strong and, despite a big dip during the depths of the economic downturn, returned to pre-recession levels.
However, since the MLS housing price index benchmark price for all residential properties in Metro Vancouver peaked in May at a revised price of $625,100, it has since slipped more than 3% to $606,100 in September, according to the Real Estate Board of Greater Vancouver (REBGV).
In contrast, the average price for all homes sold in Seattle has surged 13.6% to US$335,000 in September from US$295,000 in March.
"Single-family home prices bottomed in February at US$308,000," said Seattle-based Tim Ellis, a real-estate analyst at Redfin. "They went from a high of US$481,000 in July 2007 to US$308,000 in less than five years."
Ellis said most real-estate professionals expected Seattle to see a 5% to 10% correction in single-family home prices – rather than the long, slow 36% correction that preceded the current price surge.
He believes that the recent spike in prices has been driven by the drop in foreclosure sales, which tend to involve lower prices and were more numerous last year.
"Even if you factor out the sales of bank-owned homes, prices are definitely rising in the Seattle area," Ellis said. "Sales would be higher than they are, but inventory is in the gutter. There are very few homes to choose from."
Using data from individual realtors, Ellis said that about 66% of homes in Seattle now attract multiple offers before they're sold.
No comparable statistic is available in Vancouver, although inventory is at multi-year highs, fuelled by many new listings and few sales.
Vancouver's sales-to-listings ratio fell to a four-year low of 8% in September, down from 19% in March.
The term "buyers' market" applies when the sales-to-listings ratio is below 13%, REBGV president Eugen Klein explained to Business in Vancouver earlier this year.
Some blame slipping Vancouver home prices on the federal government's decision earlier this year to reduce the maximum amortization for a government-insured mortgage to 25 years from 30.
Ottawa also limited the equity that could be borrowed against a home to 80% of the property's value, down from 85%.
Less government regulation exists in Seattle, where Ellis estimated that 95% of Seattle homeowners have 30-year mortgages.
He added that buying homes with no down payment was common before the economic meltdown took place in 2008.
"Zero per cent is now a lot less common," he said. "There are some programs where you can get 0% down, but it's harder to find. Today, less than 5% of the sales in the Seattle area are 0% down [payment] loans."
