Vancouver home prices fell 4.5 percent over the last year

The numbers don’t lie — the city of Vancouver is in the midst of a massive correction in its residential market.

The composite home price for Metro Vancouver fell 4.5 percent in January on a year-over-year basis to $780,000, the most significant yearly fall since May of 2013. That price is 8 percent below the market’s peak in June, according to numbers compiled by the Real Estate Board of Greater Vancouver and a report by Bloomberg.

Rising mortgage rates — which have also tempered the U.S. housing market — new taxes and tighter lending rules all contributed to the correction. A local realtor estimates there’s 19.5 months worth of unsold inventory on the market. Sales in the city fell 32 percent last year, according to Canadian Real Estate Association data.

Vancouver home prices have skyrocketed in recent years thanks in part to an influx of foreign capital, mostly coming from mainland Chinese buyers.

The high-end market has been hit especially hard as foreign capital dries up. Prices for homes in the upper class neighborhood of West Vancouver fell 14 percent over the last year, according to Bloomberg.

Price growth has “significantly outpaced” local income growth, according to the Canada Mortgage and Housing Corporation, a government entity. Even despite pricing drops, the CMHC still considers the market to have a “high degree” of overvaluation.

The Austin, Texas-based home auction company Concierge Auctions is opening an office in Vancouver to capitalize on the correcting market. [Bloomberg] – Dennis Lynch