Metro Vancouver residential real estate sales volume has been declining for months now.  Despite the turn from the record breaking months set earlier this year, sales prices overall have remained strong, but how long can this last?

The fall recovery didn't come.  According to the latest board figures, unit sales for September 2016 dropped over 30% from September 2015. In some parts Metro Vancouver, despite the already low levels of available inventory, sales were so low that the sales-to-active-listings ratio indicates a balanced market for the first time in almost 2 years.  Again, "experts" have been quick to point to the 15% foreign buyer tax as the cause of the market change, however, the cooling has been obvious for several months now.  Interestingly, high rents due to the historically low vacancy rates have actually generated some interest in sales, particularly in the attached market.  However, new licensing requirements in short term rentals, as well as proposed vacancy taxes, will also make this market less desirable alleviate this demand pressure.

Renewed interest in infrastructure and other commercial projects which previously had social and environmental issues suggest that despite reports, current economic output is more then just a concern.  The major banks are predicting no changes to the overnight rates - one predicting no changes until 2019.  In an effort dilute the extremely low cost of borrowing against properties in Metro Vancouver, after October 17, new mortgages of less then 20% down payment will be subject to a stress test before approval. For a number of buyers this will have a huge impact on their ability to borrow (Click here for details).

On the ground, another slow month at opens.  Here are the numbers:

• Sales totaled 2,253 in September 2016, a decrease of 32.6% year over year and a decrease of 9.5% from August.  9.6% BELOW the 10 year average.
• Supply was down 13.4% from September 2015, and up 10% from August.
• Sales-to-active listings ratio of 24.1%, down from 29.3% in August, and the high of 70% in March 2016.  
• STILL A SELLER'S MARKET, TRENDING TOWARDS BALANCED.

Despite the current strength of commercial property sales in Metro Vancouver, with overall poor economic growth, rental licensing and regulation, and increasing lending restrictions, we should continue to see lower sales volumes and an increase in inventory into next spring.  Prices should soften, but not the free fall most critics are saying.  Provincially, short term political and financial interests, as well as relative stability in the macro environment means there isn't anything immediately to tip the scales, at least not before next May.

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