Updated: Wed Jan. 07 2009 07:49:19

The Canadian Press

A seven-year real estate bubble has burst in the greater Vancouver housing market.

Sales of homes in 2008 dropped by over 35 per cent, compared to 2007 sales of more than 38,000 homes.

Dave Watt, president of the Greater Vancouver Real Estate Board, says the last half of 2008 showed a consistent drop in prices.

At one point the market was so overheated that buyers would enter into bidding wars for properties and forgo inspections just to undercut other potential purchasers.

Prices have dropped almost 11 per cent between December 2007 and the end of 2008, and Watt says the perception is that prices are still falling so it's hard to identify the bottom of the market.

The cost of a single-family detached home in December 2001 was almost $360,000 and grew to about $650,000 by last December.

Comments are now closed for this story

Chris
I don't know what people are waiting for... if you are waiting for the bottom to drop out of this market think again, it won't happen. This isn't Regina people. This is Vancouver - one of the most sought after places to live in the world. (except when it snows)

Brett (Vancouver)
So says Chris the struggling real estate agent.

Ricky
Chris, problem is consumers' confidence is at all time low. so if one is worried about their job, do you think they will purchase a property that they think is over inflated? Not to mention affordability. Average income here in BC is not even at 6 digits and they will go into a mortgage worth atleast 300,000. Makes them think twice.

JD
"What are you people waiting for???" If many are like me, how about making sure they are not going to be laid-off their job, or perhaps they are waiting for their nest-egg in the market to make some sort of come back -- any sort of a come back.
Or perhaps they are waiting for the "other shoe to drop" in the US economy. Just wait until the Detroit three file of Chapter 11 at the end of the government bailout money (LoL, bailout money, what a joke), then there will be deals galore to be had I am sure. Anyone who makes any sort of large purchase, i.e. over $100 in the next six months, will be paying far more than they have to.

Joel in Kamloops
Vancouver is hideously overpriced. So are all the surrounding areas. You can live in the Lower Mainland if you want... I never would, but I don't like smog, traffic and over paying for most things. That's just me though.

Sell_Hi_Buy_Lo
Perception is reality, and the current housing market is perceived to be falling. Why buy now when you can buy lower a few months later? Buyers are in a wait-and-see mode, and I can't blame them, with the economy becoming weaker by the day, and unemployment rising by the day. Vancouver had the most expensive housing prices in all of Canada, and it takes longer than six months for the market to correct itself.

Charles Rent
I'd like to see more detail about this because 'Greater Vancouver' is a pretty big place, encompassing a variety of Real Estate 'products'. Which areas are selling slower; what kind of home/condo/other is showing what specific degree of decline?

On the 'bottom dropping out' (as unlikely), I'd agree except that I'm old enough to remember historic & harsh circumstances that make the current conditions within the GVRD look like a minor blip on the screen. As I'm a home-owner, however... I hope you're right! :)

omz
Wow Chris, you don't remember the last time the markets went wild with greater than 100% growth in just a few years. Then the meltdown of the 80s.

Worldwide recession anyone? Oh yeah, it's some how different here.

Charlie
Chris, the city grew faster than planners could handle. Look at all the infrastructure & social problems we've developed, not to mention the cost-of-living.

There are still reasons to live here, but the days of one-sided bliss are LONG gone. Living here now comes at the price of HEAVY trade-off for those with the stomach to endure the ride.

Only tough, cold fighters need apply for the job of living here in today's reality. I'm still up for that game, but a lot aren't.

Lesly
It is time that prices started dropping. I believe that everyone should be able to afford decent housing. It is the most basic of necessities. Prices will keep falling...hang in there and put some money away for a down payment when it hits bottom. Canada is just 'starting' to feel the after effects of the Wall Street and Banking meltdown. Vote with your dollars...don't start buying until home prices are acceptable.

Patrick
It is true that Vancouver is a beautiful city, that is why I live here. Unfortunately, there are many beautiful cities around the world that are watching their property prices plummet. Vancouver is not immune and prices will move back towards the long term average rate of growth. Take the average price in 2001 and adjust for inflation. Then add 0.4 per cent per year which is the slope of the long-term curve. This will yield the long term average price. Another good rule of thumb is that the market is balanced when the cost to buy is equal to the price to rent after adjusting for all costs (ie. mortgage, maintenance, opportunity cost, etc)... at least, that's what they taught us in economics at Queen's.
It has been a great ride up, but I am glad we cashed out at the top. I bet all of my neighbors with "For Sale-Price Reduced" signs on their lawns wish they had too.

Farrokh
I totally agree with Chris. I am sure with the stimulation packages decided by both Federal and Provincial Governments specifically for infrastructure projects, what is called the housing market slow down would be ceased.
Those types of infrastructure projects such as schools that will not need long time feasibility study and concept review periods, will create employment may in the second quarter. With low mortgage rate at least for two years down the road, market returns to normal but of course in a healthy situation. Immigrants including skilled and semi-skilled workers can have jobs in infrastructure projects, and more arriving immigrants add demand to housing market. As demand rise, prices will bounce back, and particularly if not new buildings are started right now, that may result even in an inflationary market again.
If it happens, meanwhile the consumer confidence still is low, interest rates and mortgage rates both will go up, and such situation would be much worst than what we expect now.
Thus, this is the duty of government to talk to major financial institutions such as TD Bank, RBC Royal Bank, BMO and so on, and pursue them to exactly follow the Libor rate, and ease credits.
People after having heard bad news, now mentally need good news to guarantee that they are walking on a solid ground.

ski_bum
Check this out for awhile ..

http://www.rent2010.net

Bruce Trainor
I used to work in Vancouver and live in the Lower Mainland, now it's Vancouver Island. Given a choice today, I would prefer Regina to anywhere in the Lower Mainland. I suspect lots of people agree with me.

ron in victoria
Seems the government jumped on the house price increases big time. Last year, some new rules -- air space required on siding added another $10,000 to an average home. A self-installed septic cost $2,000 now and must be installed by a registered professional -going rate is about $20,000. BC hydro hook-up to new house was $650 - now owners must pay for transformers installed or triplex line from next transformer cost exceedes $3,500 and the $650 to boot. This is a short list of changes. do you realy think prices will go down much????

B
I agree with Lesly. We should all hold on to our money until prices in the Lower Mainland are more reasonable. Let's be realistic - half a million dollars and up for a tear-down in East Van is hardly reasonable. Sellers need to think realistically about thier asking prices. I think Vancouver will be a happier place when the people born here can afford to buy here.

Ken
That is right the real market has not reached the bottom of it's cycle yet but it will, so you better sharpen your pencil if your selling or renting, but the bottom will come and you do not have be in Regina, just here in Vancouver a over supply of properties and the first to be hit are the slumlords in this Metro Vanouver, next the upscale units, your not in Hong Kong buddy where land is at a premium, you can drive from end to other in 20 minutes. And keep away from developers like Pinnacle International and Concord Pacific - they back out of promises.

Ken
I forgot to mention that the average income for a Real Estate agent in Canada is still $13,000 per year, my god you can make more than by visiting the casino and being lucky only 50% of the time.

Bob Dog.
I'm new here. What was so appalling about Vancouver in 1998 that justified the prices being only half what they are now. It must have been quite the dump back then?

Linda, Surrey
The real estate fat cats are having a bit of a come down. Gee. So Sad, too bad.

Dan in New Westminster
Joel describes it well, real estate in the GVRD is hideously over-priced. If I was a agent, I would be embarrassed to be peddling some of these houses for 2-3 times what they are really worth. And what they are "worth" is what the average person, working an average job can afford as their one and only house and still have a bit of money left over to get some enjoyment out of life.

Dave. Pender Island.
It is all about affordability.
Based on average incomes, the prices have to come down another 5 to 10 %.
People said it could not happen in 1981, and it did. prices came down almost 40 %. and that was`with high interest rates..

Erin
I don't know if waiting for the housing market to hit the bottom is a safe plan either. It's not like there is a guarantee that once you buy when it's hit bottom that it will go up again right away, you will most likely have to wait over a year to see any increase and a lot can happen in a year. When the housing market hits rock bottom it's also a sign that the economy (jobs, new infastructure etc.) are in trouble too so the only people that could afford to buy even then are ones who are well off with serious job security.

It's also a little bit scary to think how quickly housing prices went from being the highest ever to dropping so low in 1 year only. Same goes for gas prices. A lot can happen in a year, good and bad! This isn't 1982 and things happen a lot quicker now with everyone having access to the internet and people are becoming more globally aware and want instant gratification now. People don't have the patience to wait 10 years for economic stability, they want it now. It will be interesting to see what 2009 brings....

Russell North Van
If you think a huge correction isn't coming think again. It doesn't take a genius to figure out that a huge portion of the last few years real estate sales have been purchased with 10% down or less. So if the market rolls back 20%, and a few people get the old pink slip due to the present economic down turn. The writing is on the wall. This market is not foreclosure proof.If your neighbor goes belly up and the bank sells his previously million dollar home for 30% bellow asking this has a huge affect on your property this is exactly what is happening in the U.S.. This is not to mention the massive losses people have taken in their RRSP contributions, which is a large source of many first time buyers down payment.So what you have is both the entry level market and the more equity rich market both taking a hit. The other point some people fail to realize is that this is a global crises based on the fear of the collapse of the worlds leading currency and economy. If your rich neighbors down south are broke so are you. Canadians like to see themselves as more fiscally responsible but how much more. How many of your friends have large amounts of savings. If you think your home equity is going to carry you through just because you live in Vancouver Canada, think again! Oh ya your neighbors in Alberta are broke as well. Have a happy new year!