VANCOUVER (NEWS 1130) – Get ready to see a lot more condominiums for sale across Metro Vancouver. That’s the latest from the real estate analyst who correctly predicted two years ago that local housing prices would fall.
Dane Eitel’s new research suggests buyers will have more breathing room for at least two more years, even though overall sales rose in May.
“We’re firmly in the down trend,” Eitel says. “May, historically is one of the better sales months and this time, we see, basically a $150,000 price decrease based on the last five years of May prices. We’re going lower, longer. By middle of 2020, average sale prices should be right around $1.4 million for the detached market, signalling a 20 to 24 per cent [drop]. There’s some factors that could maybe cause the detached market to go even lower.”
After reviewing average sale prices, the founder and lead analyst of Eitel Insights says they have dropped more than $150,000.
“[This] basically creates an environment where the inventory can continue to build up, thus causing more competition for the sellers,” he says.
By the middle of next year, Eitel predicts the average cost of a detached home will be around $1.4 million and could drop as low as $1.2 million because the overall supply will soon be higher than the demand from buyers.
“You’re going to see the cannibalization of the condo market where there’s a flood of new, built properties available to move in today and they’re going to be at relatively attractive prices.”
Eitel also says developers will have to get more competitive.
“There’s going to be a flood of inventory that comes up that no one’s really anticipating, which is all those investors that bought five and six properties are just going to walk away, simply walk away from their 15 per cent deposit, 20 per cent deposit. There’s going to be an absolute ton of inventory available.”
He tells NEWS 1130 that’s why some developers are already offering pre-sale incentives like free wine for a year.
The Real Estate Board of Greater Vancouver is reporting nearly 15,000 homes were listed for sale in May and numbers haven’t been that high since September of 2014.
Despite sales climbing, overall buyer demand remains low with the total value of purchases in May dropping almost 23 per cent under the ten year average for the month.