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Ashley Smith, president of the Real Estate Board of Greater Vancouver, believes that housing “demand today isn’t aligning with our growing economy and low unemployment rates.” She holds regulatory changes responsible for the declining market trends in the greater Vancouver.

Smith is of the view that the host of government interventions that introduced new transfer taxes and stringent lending regulations have effectively sidelined “potential homebuyers in the short term.”

Garry Bhaura, president of the Toronto Real Estate Board, echoes Smith’s concerns. Bhaura also believes the OSFI-mandated stress test, which requires borrowers to qualify for a higher rate than the contracted mortgage rate, and other regulations have impacted “home buyers’ ability to qualify for a mortgage.”

The MLS Home Price Index composite benchmark price for Vancouver, which compares prices of similar homes over time, was down by 7.7 per cent year-over-year (YOY) in March 2019. The benchmark price for detached homes at $1.43 million was down by 10.5 per cent (YOY). Prices of condominiums and attached homes were also down.

While prices have been dropping in Vancouver, buyers also have a richer set of choices. Compared to March 2018, the number of houses listed for sale was 52 per cent higher in March 2019. The sales-to-listing ratio was 13.5 per cent for all property types and 9.4 per cent for detached homes.

More choice and lower prices should have attracted more buyers. But that’s not what usually happens in real estate markets. When prices fall, potential buyers stay on the sidelines in the hope that prices will drop even further. This reduces demand and puts additional downward pressure on prices resulting in even fewer sales. Remember, sales in March were down 31.4 per cent (YOY) in Vancouver.