Real estate sales in January eased off the frenetic pace markets saw in December across British Columbia, the B.C. Real Estate Association reported Thursday.
While the overall provincial market in January represented a sea change from the doldrums of early 2009, demand appears to be lessening.
“We saw a dramatic rebound in sales since last January, and that pace of sales that we saw in December, and during the last quarter, was unlikely to be sustained through 2010,” Cameron Muir, the association’s chief economist said in an interview.
January’s sales, recorded through the Multiple Listing Service, hit 4,619 units, some 118-per-cent more than the same month a year ago, but down about 16 per cent from December.
That slowing from December’s hectic pace, Muir said, happened because many home hunters have bought, which lessens the “pent up demand.” Other potential buyers, however, have been squeezed out by the rebound in home prices, which have begun to again approach pre-downturn highs.
With sales still elevated, the provincial average price hit $491,571 in January, up 19 per cent from the same month a year ago.
“Mortgage rates are still low,” Muir said, so on the basis of monthly payments, “housing is still more affordable than it was at the previous peak in the first quarter of 2008.”
However, with less pent-up demand and with home sellers expected to list homes in larger numbers during the coming months, Muir said “we are likely to see much less upward pressure” on prices during the rest of the year.
Carol Frketich, regional economist for Canada Mortgage and Housing Corp., said January’s easing in sales compared with December “is right in line with CMHC’s forecast.”
The high level of sales through the end of 2009, which was driven largely by the rapid decline of mortgage rates to record low levels that made monthly home payments more affordable, were expected to cool as conditions changed.
“What we’re seeing now is sales moving lower from high levels back to levels that are more consistent with economic fundamentals,” said Frketich, with those economic conditions being a slow recovery from the recession of late 2008 and early 2009.
While unemployment is still higher than it was at the peak, Frketich said the employment market is a “lagging indicator” of economic improvement. Companies do not start hiring again until they are sure business is improving.
And Frketich said other economic conditions, such as retail sales, have shown that the economy is beginning to improve.
Meanwhile, the higher levels of home sales have prompted developers to start work on more new homes, and builders are being rewarded with slight rises in prices.
Statistics Canada released its survey on new home prices Thursday, which showed that Metro Vancouver’s new home prices in December increased 0.7 per cent from November. However, prices had still not caught up with where they were in December 2008, remaining 2.2 per cent below that mark.
Nationally, new-home prices were up 0.4 per cent in December compared with November.