After seeing steadily rising housing prices in Vancouver and Toronto over the past decade, buyers may finally be in for some relief; but not just yet.
Home sales in both Vancouver and Toronto are hurting, according to the latest statistics from the Real Estate Board of Greater Vancouver and the Greater Toronto Realtors Association.
A drop in prices almost always follows a drop in sales, but the adjustment usually takes four to six months. Judging by the recent slowdown in sales in the two cities, November could well be a promising time to go house hunting.
Promising, however, does not mean cheap. The average price for a detached home in Vancouver is now nearly a $1-million. That's not the average for a nice place on the West Side near the water. That's the norm for any house with a patch of grass in the city limits.
In comparison, Toronto is downright affordable. Eight hundred thousand will get you in the ballpark of a detached home within the '416' area code.
In both cities, the prices have recently only ever gone up. Vancouver's detached benchmark is up 35 per cent over three years. Toronto's has climbed 10 per cent in the past year alone.
Analysts have long anticipated a cooling, a change in pace that had shown few signs of ever arising. Until now, that is. Housing sales in Vancouver in June fell off 17 per cent from May and nearly 28 per cent from a year ago June. That has yet to impact home prices, but if conventional wisdom holds, housing in that city should go from completely unaffordable to only partly unaffordable by the late fall.
Put in real dollars, analysts are anticipating the $961,000 norm in Vancouver to drop to $816,850.
In Toronto, the decline in sales has been much slower, with activity dropping only 13 per cent in June from a year ago. Despite the difference in numbers, real estate experts anticipate a similar sized correction in this market, meaning the $803,671 benchmark price for a detached home today could fall to $683,121.
Speculative stuff, to be sure, as is the explanations provided for the slowdowns. Finance Minister Jim Flaherty's changes to mortgage insurance, which were unveiled in June, are believed to be behind some softening in the market. The amendments shorten the maximum length of insured mortgages.
The feeling in Vancouver is that overseas investors have lost some of their interest in real estate in that city. The Asian market has traditionally been a driving force in rising housing values.