June boom for Lower Mainland real estate markets

July 5, 2009

Below is an article posted by Derrick Penner, Vancouver Sun – July 3, 2009:

Last year’s slide in prices, current low interest rates contribute to uptick in sales

Lower Mainland real estate markets saw big gains in June sales with the Metro Vancouver real estate board posting its second busiest and the Fraser Valley its fourth most active June on record.It was a factor of the slide in real estate prices last year and current low interest rates that were enough to offset the negative influences of higher unemployment and a contracting economy, regional economist Carol Frketich of Canada Mortgage and Housing Corp. said in an interview.

The Metro Vancouver area covered by the Real Estate Board of Greater Vancouver recorded 4,259 sales through the Multiple Listing Service in June, a 76-per-cent increase from the same month a year ago.

Read the whole article here…

The big question is  “can the market be sustained?”

Based on past few years sales activities, sales volume diminished after spring, and bottomed out in January the following year. If the second half 2009 follows preceding years, sales may dropped the next few months. Home prices are likely to maintained at present level due to lack of sufficient new listings to replenish homes that were sold.

The months of inventory for the Richmond market as reported for May 2009 at around  3.68 months favoured home sellers. The strong June sale as reported above further confirmed pricing pressure moving home prices higher.Until we see the months of inventory return to 6 months or more, home prices can be sustained or may move higher if buying interest remains strong.

It will be interesting to see how the real estate market will fare the next few months. If there is no substantive recovery in the economy, the prospect for recovery in the housing market is questionable.

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