May housing sales across Greater Â鶹´«Ã½Ó³»fell for the second straight month and asking prices are being cut as month-to-month benchmark prices have dipped for the first time in at least two years.
Total May housing sales reached 2,918, down 31.6 per cent from May of 2021 and down 9.7 per cent from April of this year, reports the Real Estate Board of Greater Â鶹´«Ã½Ó³»(REBGV).
April sales were down 25 per cent from March 2022, which had set a monthly transactions record.
While the board’s benchmark composite price index shows a modest 0.3 per cent drop from April, the raw average price of a Greater Â鶹´«Ã½Ó³»home in May was down $65,000 from the peak high in February, to $1,279,785, according to data provided by Dexter Associates, a veteran Â鶹´«Ã½Ó³»real estate agency.
The median sold price in Greater Â鶹´«Ã½Ó³»for May stands at $922,000, down 12 per cent from the February peak, and falling below the $1 million level for the third month in a row.
“With interest rates rising, home buyers are taking more time to make their decisions in today’s housing market,” said Daniel John, REBGV Chair. “Home buyers have been operating in a frenzied environment for much of the past two years.”
John described the current market as “calming” but that may not reflect the attitude of some home sellers, especially in the suburbs.
“There is panic in the market,” said Kevin Skipworth, a partner and managing broker at Dexter Associates, “But there shouldn’t be.”
Skipworth noted that after other sudden sales and prices slides – in 2008, 2016 and 2018 – the Metro Â鶹´«Ã½Ó³»market recovered quickly.
“There will always be troughs and peaks, that’s what markets do,” he said.
Still the slump in May sales was before the latest increase in the Bank of Canada rate on June 1, which raised the bellwether overnight lending rate 50 basis points to 1.5 per cent, the highest since pre-pandemic days.
Also, the mandatory mortgage stress test increased on June 1 to 5.25 per cent, or 2 per cent above the posted five-year mortgage rate, whichever is higher.
Some sellers are cutting asking prices in a more competitive market that saw the number of homes listed for sale shoot up 13.8 per cent from a month earlier to 10,010 units in May.
In Richmond, where the May benchmark price of a detached house fell 0.4 per cent from April, there have been several price reductions in the first week of June, according to REW.ca, the giant Glacier Media real estate portal, which provided some examples.
A three-bedroom house at 3831 Royalmore Avenue, Richmond was listed at $1,798,000 on May 26. On June 2 the asking price was reduced to $1,599,900. A Richmond condominium apartment at 4111 Bayview Street also saw a week-to-week priced reduction of $200,000 to $1,299,800.
According to House Sigma, a real estate portal that tracked Metro Â鶹´«Ã½Ó³»median detached house price changes from the February peak, prices in New Westminster, Port Moody, Maple Ridge and Surrey were all at least 14 per cent lower as of May. City of Â鶹´«Ã½Ó³»median detached house prices, in comparison, are only 0.4 per cent below February, at $2.49 million.
Hao Li, a broker with House Sigma, said many potential home buyers inked a pre-approved mortgage before the Bank of Canada began raising rates in February. Those 60- to 90-day approvals are running out, he said.
“We’re now starting to see the full effect of rising interest rates on buyers and sellers’ habits,” said Li. “Double-digit dips in detached home averages in areas like Surrey and Maple Ridge highlight the pullback that’s happening in B.C.’s market.”
