Home sales slowing down on Lower Mainland: analyst

The slowdown in Lower Mainland home sales showed no indications of reversing in January, with a real estate economist pointing to high interest rates as the primary factor.

On a one-month basis, January was incredibly slow, with sales down 55 per cent from the same month last year.

But given the Bank of Canada’s campaign of interest rate hikes, Andrew Lis, the director of economics and data analytics with the Real Estate Board of Greater Vancouver, says he isn’t surprised.

“Normally, under a scenario like that what happens is because the sales are slow, the inventory side of the market starts to pile up. So you have a lot of homes leftover for sale at the end of the month that don’t sell. Well, what’s happening this time around is that’s not really happening,” he said.

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As for whether or not prices will drop in any significant way, Lis suggests that would require an increase in the homes listed for sale, something that hasn’t happened yet.

“You have the Bank of Canada come out with such an aggressive tightening cycle. And you had you know, government policies and various types kind of coming into the market trying to slow things down, the inflation picture, the potential for recession, all of these factors coming into play. You know, it’s not really a huge surprise why the market looks the way it does today to us,” he said.

“The thing with falling prices is that you really require a really big buildup of inventory and it’s just not happening. So it puts a floor under prices to some degree.”

To contextualize that low inventory, Lis says in the 1990s, there would be 18,000 listings in a given month. He says now there are about 8,000 listings despite the region’s population growing by more than a million.