More choice, lower prices: Why now may be a good time to buy real estate in Vancouver
But new CMHC report also notes Metro Vancouver housing market is still vulnerable
A new quarterly report on the Metro Vancouver housing market says there's a high degree of vulnerability in the market, but prices are down, and inventory is up, which means buyers will find some advantage.
According to the Canada Mortgage and Housing Corporation (CMHC), the region's soaring real estate prices have cooled since last June's highs — down about seven or eight per cent — while the rest of the economy has remained strong.
"This housing market assessment is an early warning system for vulnerabilities in the housing market," said Eric Bond, market analyst with CMHC. "The degree of imbalance between home prices and the local economy is narrower than it has been at any point in the last several years."
According to Bond, over the last two years, the inventory of homes for sale in Metro Vancouver has been about 400 units, but now, for multi-family units, there's closer to 1,100 active listings.
He said that's still very low, relative to the population, but it means there's more choice for buyers.
"In many ways this is an opportunity for them to explore more options, and also to take their time making a purchase and putting reasonable conditions on that offer," said Bond.
Still plenty of risk
But according to Josh Gordon, assistant professor at Simon Fraser University's school of public policy, buyers may want be careful.
Gordon said a lot of the risk in the market relates to how much money people have borrowed to afford the homes they already own — and lower prices now won't change that.
"You have a period of high prices that are not really closely aligned to people's purchasing power, and where people have borrowed a lot of money to get into the housing market," he said.
Gordon added that people who have paid high prices for their homes are vulnerable to the possibility of rising interest rates, rising unemployment, or some other macro-economic shock.
He said the frenzied bidding wars of the past few years are behind us, and buyers can now enjoy prices that are cooling off, but that doesn't mean now is the time to buy.
"Conditions have definitely improved for buyers, but that doesn't mean that buyers should not still be very cautious in this market," said Gordon.
"Prices have fallen and may continue to do so and so they should be aware of that possibility."
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