It wasn’t all that long ago that the prospect of buying a detached home in the City of Vancouver for under $1 million seemed like a dream from another era.
The so-called “million dollar line” that used to divide Vancouver’s east and west side has now crept well into the suburbs, and back in January there was just one such property in the city listed and sold for under the $1 million bar.
That appears to be changing, as B.C.’s real estate market enters what some analysts believe is a sustained downward trend.
As of Oct. 26, there were at least six detached homes in Vancouver with a sub-$1 million sticker price.
PHOTOS: Six Vancouver detached homes listed for under $1 million
“I think we’re in the midst of a correction right now,” said Vancouver realtor Steve Saretsky.
“When one or two start to sell like that it sets a new benchmark, it’s what buyers start to expect or anticipate.”
Saretsky said rising interest rates and new housing taxes have helped to bump inventory in the City of Vancouver to levels that haven’t been seen since 2012.
Those numbers are reflected in data from the Real Estate Board of Greater Vancouver, which reported listings across the region were up 38 per cent year over year, and 10 per cent since August.
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With all of those listings stagnating on the market, the psychological dynamic has flipped and buyers are now waiting longer to pull the trigger — helping push prices even lower, according to Saretsky.
Real estate board data showed September sales were 36 per cent below the 10-year average.
“Everybody fears paying too much now, as opposed to prior it was the fear of missing out, the prices were rising every month, and now it’s kind of the opposite where people think next month prices are going to be slightly lower,” he said.
The biggest movement is at the higher end of the market, where sales of homes valued over $2 million have dropped by about 20 per cent, Saretsky estimated.
Condos, on the other hand, have been the slowest segment of the market to correct, being the last affordable slice of the pie, he said.
Mortgage broker Angela Calla said the greater availability of sub-$1 million-priced homes is good news for buyers, who can qualify for a better deal.
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“When they’re able to purchase under $1 million they’re able to qualify for an insured mortgage, which in today’s market does have lower interest rates,” she said.
“And so it does reduce the overall cost of borrowing.”
However, she cautioned buyers about trying to wait out the correction and cash in when it bottoms, saying a better strategy is to craft a plan about what they want, how much they can afford and shop with the intention of finding a secure home.
As for what buyers can afford, Saretsky said now is a good time for them to flex their muscles at the negotiating table, as rising inventory puts sellers in competition with one another.
“Every listing agent is trying to coach their clients that you have to be prepared to negotiate and the buyers are ultimately in the upper hand right now,” he said.
“It is a buyer’s market.”