Home prices on the way down?

June 5, 2010

Thee are signs that the metro Vancouver housing market is cooling off with more supply and lesser sales.

Metro Vancouver real estate markets edged off their peaks in May with lower sales, more listings and prices flattening out after a record setting rebound, according to figures from the

The Real Estate Board of Greater Vancouver reported on Friday, June 04, 2010 that May sales for Greater Vancouver was down 10% from a year ago.

There were 7,014 new listings added to the housing inventory in May, 48 per cent more than a year ago. May was the third month in a row more than 7,000 homes were added to the market, the board said, bringing total inventory to 17,492. This is 10% more homes than in the previous month making it a more relaxed place for house hunters.

And buyers appear to be bargaining harder as prices in a lot of areas edged down from recent highs.

“Realtors are telling us they’re working with buyers who are not feeling as rushed to make a decision as they did late last year and earlier [this] year,” board president Jake Molodowan said in a news release.

Is this the beginning of a decline in home prices? 

With more supply and reduced demand, the motivated home sellers are likely to be more flexible on their price negotiation, and an average 5% to 10% price can be expected to be taken off comparable homes sold the at the beginning of 2010.

A change in market sentiment will always result in the weaker players leaving the market first. But, for home sellers who are holding on to their prices, they could be left behind and continue to see the erosion of their home prices. It is still early stage where the supply and demand of homes are still healthy. The MOI for March and April MOI at 3.53 and 3.82 were climbing up steadily.

The MOI will need to shoot past 6 MOI and continue going higher before the housing market is thrown off balance into a Buyer Market. For now, the market is heading towards a more balance market, with price moderating and trending down slightly due to weaker home sellers wanting to sell.

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