Price is king in the Fraser Valley real estate market, according to the FVREB's November numbers on sales, listings and prices.
"For three months in a row, we've seen a decrease in sales of detached homes $700,000 and up and greater demand for those $400,000 to half a million. Tighter credit conditions are having an impact on the market," says Scott Olson, president of the Fraser Valley Real Estate Board.
He's referring to the new rules for buyers whose down payment is 20 per cent or under. They're restricted to a 25-year amortization, which means they have to make bigger mortgage payments than if they could spread out the payments over 30 years. That makes it harder to get a mortgage because they first have to qualify at a rate that's several points above the mortgage rate they would actually pay.
MLS® Sales and Listings
After a robust October, home sales slumped by 14 per cent in the Fraser Valley in November. New listings fell by 32 per cent from October.
"This was a significant drop with last month ranking alongside November 2003 as the slowest for new listings in the last decade," says Olson.
"It means that sellers are adjusting to conditions that favour buyers; great selection, houses are on the market longer and prices are lowering. If sellers don't have to sell, they're taking their home off the market."
CMHC's senior housing analyst for the Lower Mainland, Robyn Lake, says that the breaking point for sellers in this region is 6 per cent below asking price. If sellers don't get offers in that range they'll let their listing expire rather than selling at a discount.
|Nov 2012/Oct 2012||Nov 2012/ Nov 2011|
The number of days to sell a home is up to 59 in November, five days up from the same month last year. Townhouses take 70 days to sell, from 52 days, and for condos it was 74 compared to 72.
Similar sales patterns are being seen in the area north of the Fraser, where sales are down even more than in the FVREB's territory.
Both the Greater Vancouver area and Toronto, which saw some of the hottest real estate markets in Canada, are now cooling off in response to the new mortgage rules.
MLS® Home Price Index & Benchmark Prices
Normally we don't pay much attention to average prices because they are so easily skewed by the sale of a few expensive properties. But this month they perfectly illustrate the FVREB's observation that whatever buyers are out there are looking for something affordable. Check out the recent plunge in average prices of detached houses.
The trend away from pricier homes was most obvious in the priciest area of the Fraser Valley, South Surrey White Rock. Average prices there fell 15.8 per cent from October for detached, 14 per cent for townhouses and 11.3 per cent for apartments. The price drops weren't as extreme for the other areas.
Meanwhile, MLS® benchmark prices, based on the price of a typical home for the area, saw little change:
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