There’s been some concern out West about Calgary mortgages and Edmonton mortgages, as housing markets continue to increase and homes continue to be overvalued and interest rates are bound to soon start going up. But no market has caused more concern than that of Vancouver’s. Vancouver undoubtedly has had one of the most overvalued housing markets since the interest rates were dropped so low, and they haven’t stopped taking heat for it since. Now though, Vancouver’s housing sales dropped in April, and Vancouver is being called “a drag” on the rest of the country.
That was after the Canadian Real Estate Association released home sales data for April, which showed that home sales, for the country as a whole were up. But Vancouver’s market, which was down in home sales, pulled the stats for the rest of the country down. And Vancouver wasn’t the only one; Toronto’s home sales were also down. And, in Vancouver particularly, the slow down was due to a slight drop in prices.
Gregory Klump, CREA’s chief economist, released this statement along with the report, “Netting Vancouver out of the national average price calculation yields a 4.9 per cent year-on-year gain. Netting Toronto out of the national price calculation, while leaving Vancouver in, produces a 2.2 per cent year-on-year decline. Netting out both Vancouver and Toronto results in a 3.1 per cent increase in average price. On balance, this points to the modest growth amid balanced market conditions in much of the rest of Canada.”
The stats showed that home prices in Vancouver dropped by about 10 per cent in April of this year, compared with a 20 per cent increase last year. But this doesn’t mean that Vancouver’s homes are quickly becoming some of the most affordable homes in Canada either. Truthfully, prices here are still so high that they’re most likely out of most people’s reach. The MLS Home Price Index shows the average price on a Vancouver single-family home as being $865,400. Compare that with the $520,600 you’d be paying in Toronto; or the $419,900 that you could expect to pay in Calgary, and you can clearly see just how overvalued Vancouver’s market still is.
There are two reasons given for the slowdown in Vancouver last month. The first was that the amount of foreign buyers was down (good news for all those shouting for Ottawa to restrict their sales activity;) and because banks have been tightening up their lending practices throughout the entire country.
