The latest report from realty organization Royal LePage offers grim news to anyone hoping to buy a home in the Vancouver area.

"There is now reason to believe that the market correction underway in Vancouver may be short-lived," said Royal LePage CEO Phil Soper. "The principal victims of the B.C. government's foreign buyer tax were Canadians who had planned to sell or buy a home and were frightened away by unsubstantiated rhetoric in which the Chinese were entirely to blame for Vancouver's housing shortage.

According to the report the price of a home in Greater Vancouver climbed 12.3 per cent year-over-year to nearly $1.2 million in the first three months of 2017.

Whiplash effect?

Soper says a natural correction was on the way last summer just as the foreign homebuyers tax was introduced and what he calls "heavy-handed regulatory intervention" suddenly slowed demand, but has now caused a whiplash effect resulting in higher prices.

"Vancouver house prices are up compared to the first quarter of 2016, yet this doesn't tell the complete story," continued Soper. "For weeks now, we have witnessed a steady fall in real estate values in the Lower Mainland, with sales activity down some 40 per cent compared to recent norms."

"The reality is that as much as 90 per cent of the housing activity that disappeared overnight in the Lower Mainland after the tax was introduced was from Canadian residents, not foreign investors. Homebuyers are waking up to this reality and may be ready to rush back into the market."