07/03/2019 14:10 EDT

Vancouver's Benchmark House Price Drops Back Below $1 Million

It may not be affordable, but at least it's moving in the right direction.

HamidEbrahimi via Getty Images
Sunrise over a residential area in north Burnaby, B.C., near Vancouver.

Good news, would-be homebuyers in Vancouver: Things have just gotten a little easier for you.

Not easy, mind you. But easier.

The latest data from the Real Estate Board of Greater Vancouver (REBGV) shows the benchmark house price in the city has fallen below the $1-million mark for the first time since 2017. At $998,700, the June benchmark price is down 9.6 per cent over the past year.

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That price includes both condos and detached homes. Detached homes themselves clocked in at $1.424 million, down 10.9 per cent in a year. Condos came in at $654,700, down 8.9 per cent in a year.

Sales continued their downward trajectory, with the number of homes changing hands down by 14.4 per cent from a year earlier. The little bit of momentum seen this spring disappeared entirely; sales were down 21.3 per cent in June, compared to May, and are still well below their long-run average.

“We’re continuing to see an expectation gap between home buyers and sellers in Metro Vancouver,” REBGV president Ashley Smith said in a statement. “Sellers are often trying to get yesterday’s values for their homes while buyers are taking a cautious, wait-and-see approach.”

Combined with wages that are growing strongly in the Vancouver region, the decrease in house prices means the market can expect to see significant affordability improvements in the months ahead.

According to the latest edition of the Royal Bank of Canada’s housing affordability report, the situation in Vancouver is still “dreadful,” but moving in the right direction.

The cost of carrying an average home would eat up an absurd 82 per cent of an average household income in the first quarter of this year. But that’s down from 86.9 per cent six months earlier, RBC’s data shows.

Developers on the sidelines

The bank’s economists credited government policies such as the mortgage stress test for improving affordability.

“Policy-engineered market downturns have succeeded at reversing some of the earlier massive affordability losses in Vancouver and stabilizing the situation in Toronto—though neither market is close to levels that ordinary Canadian households can afford,” they wrote.

With the market in a prolonged slowdown, Vancouver’s developers are pulling back on new home construction. New data from MLA Canada, obtained by real estate blog Better Dwelling, suggests new home sales in Vancouver dropped 90 per cent in June, compared to a year earlier. The supply of new homes is shrinking rapidly too, down nearly 66 per cent in a year.

“Developers are responding to softening sales by cancelling or delaying projects. Presumably they’re waiting for demand to return, or (until) the cost of holding underdeveloped property gives them incentive to build,” Better Dwelling noted.