Greater Vancouver real estate is cooling almost as fast as the market heated up. Real Estate Board of Greater Vancouver (REBGV) data shows the price of a typical home fell in May. The drops were accompanied by falling home sales too. In fact, demand has fallen so fast that only a minor increase in supply returned the market to balanced. This should slow home price growth significantly in the coming months.
Greater Vancouver Real Estate Prices Fell Last Month
Greater Vancouver’s benchmark home price slipped for the greater area as well as the monthly. A typical composite home across the REBGV fell to $1,261,000 in May, down 0.3% ($3,800) from April. In the City, Vancouver East’s benchmark fell to $1,249,000, also down 0.3% ($3,800) over the same period. Not a typo, rounding made it land on that exact same number.
In Vancouver West, the price of a typical home fell to $1,375,500, down 0.6% ($8,300). It’s a substantial monthly drop for all three benchmarks. However, growth over the past year was so exuberant all 3 measures have retained major gains.
Do the numbers seem much smaller than you remember in April? That would be due to a methodology change, according to the board. “Under the new methodology, benchmark attribute data is derived from data collected from the previous five-year rolling period. Benchmark prices are also now based on current benchmark attributes instead of linking benchmark prices to historical benchmark attributes,” read the accompanying footnotes.
A methodology change to the benchmark price is worth noting this month. Modifying the composition resulted in significantly lower prices than last month. May’s benchmark price was much smaller for REBGV (-$113,400), Vancouver West (-$110,900), and Vancouver East (-$107,600). The change to methodology means the two are no longer comparable. It’s sure to throw some off when they see a $1.3 million benchmark fall to $1.2 million, but prices “only” made a small decline. Just remember not to use articles from April when setting your expectations.
The Median Sale Price Is Down 10s of Thousands
The median sale price is down significantly from peak for all segments. Detached homes reached a median sale price of $2.26 million in May, down 2.3% ($53,000) from the peak in April. Condos fell to $814,400, down 3.2% ($27,200) in the same period, having peaked the same way. As for attached homes, the median price fell to $1.21 million, down 6.6% ($85,700) from the peak back in February. Once again this isn’t adjusted for quality but it does indicate price weakness is present.
Greater Vancouver Home Sales Are Slowing Down Very Fast
Rapidly falling price growth makes more sense with the big drop in home sales. REBGV reported existing-home sales fell to 2,918 units in May, down 9.7% from April and 31.6% lower from May 2021. It’s unusually slow for the month, falling 13% lower than the 10-year average.
Greater Vancouver Real Estate Is In A Balanced Market Again
Good news for home buyers — inventory is returning to healthy levels. There were 6,377 homes listed for sale in May, an increase of 4% from April but 10.5% lower than last year. It might not sound like an inventory boom, but slower sales have reduced a lot of demand.
Falling sales and rising inventory balanced the sales to new listings ratio (SNLR). The SNLR fell to 45.8% in May, down from 62% in April. Since the ratio is between 40 and 60 percent, the market is considered balanced. It’s actually getting closer to a buyer’s market, where prices fall.
The SNLR tends to lead price movements by a few months, meaning the market is set to cool. At this level, price growth tends to fall to zero growth and coast — something Canada hasn’t seen in a while.
Higher interest rates broke the speculative mindset and prices are starting to fall. Just don’t forget and reference April’s numbers, since the methodology changed.