[URBAN NOTE] "Vancouver’s hot real estate market reaches tipping point"

[rfmcdonald]

The Canadian Press' Natalie Obiko Pearson and Bloomberg' Katia Dmitrieva report on what may be the beginning of the end of Vancouver's real estate boom.

The graceful six-bedroom house in a Vancouver neighbourhood flanking one of Canada’s top universities and a massive park would usually have been met with a slew of offers above its $4.5 million asking price.

That’s if its July listing hadn’t coincided with the week the government announced a 15 per cent tax on foreign buyers intended to cool the market. The grey wood-frame house was soon pulled and relisted for $100,000 less before finally closing seven weeks later at just over $4 million, 9 per cent below its original price.

A 33 per cent drop in Vancouver home sales in September from a year ago signals North America’s once-hottest real estate market — where the average home was appreciating by more than $1,000 a day — has reached a tipping point. While the average price of a single-family detached home rose 29 per cent to $1.58 million, sales fell 9.5 per cent in September from August, according figures from the Real Estate Board of Greater Vancouver on Tuesday.

As Vancouver tops a list of global cities most at risk of a housing bubble, authorities are taking steps aimed at the froth. On Monday, the federal government unveiled new rules to end a tax break on home sales by owners outside Canada and to tighten mortgage insurance eligibility requirements, even for borrowers with large down payments. That follows the new foreign-buyer levy British Columbia introduced in August and Vancouver Mayor Gregor Robertson’s plan for the city to start taxing vacant homes next year.

Gone are the days of frenzy when buyers placed bids without inspecting properties and sellers collected all-cash offers. Properties are taking longer to sell, transactions are plummeting, and in some cases, prices are coming down in a city where the cost of housing has doubled in the past decade.