Are We In A "Balanced" Or "Buyer's Market"?

The latest June sale figures for Greater Vancouver showed that sales of resale and new homes were down sharply - a startling drop of 41% compared with the same period last year. The inventory of home listed for sale was up 53% compared with that of last year. Real estate prices have begun to slip in some parts of Greater Vancouver. Click here for Richmond's June figures.

The housing inventory chart by Paul Boenisch of North Vancouver below illustrated the steady increase in listings this year as compared with the past 3 years.

In the Fraser Valley, the typical single family house fell by 0.3 per cent in price in the past three months, while apartments were up 0.4 per cent and townhouses rose 1.6 per cent. The biggest drop so far has been in West Vancouver, where detached houses fell more than 10 per cent in price in the last two months, from just under $1.6 million to $1.43 million. West Van house prices there are now up only 0.9 per cent year-over-year.

Gone are the days when a listing is getting multiple offers as soon as the property is listed on the market. Listings are now taking longer to sell, and many sellers are reducing their listing prices to make their home more attractive to buyers.

More people are saying it is a buyer's market now.

What is a Buyer's Market?

The phrases "buyer's market" or "seller's market" are used by real estate agents and the media to describe the market condition.

When sellers are in control, the demand is more than the supply.Buyers are motivated to buy and house prices tend to move up. Multiple offers are normally associated with a strong seller's market.

Conversely, in a "buyer's market" the supply is more than the demand for real estate. Home buyers sense the weakness in the market, and they hold back or wait for prices to fall. Selling time increases and sellers who wanted to sell their homes will reduce their prices to sell their homes. In a down housing cycle, the decline in home prices may take years to stabilize at a new price level where demand and supply are in balance.

In Greater Vancouver and The Fraser Valley, home prices are now adjusting to higher inventory and dropping sales. Although most housing experts are saying the real estate market for Greater Vancouver is entering a "balanced market", that price gains for 2008 and 2009 will be more moderately. There are other critics who are bearish on the market, and predicted house prices will fall.

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