The number of properties listed for sale in Greater Vancouver continued to rise in May, while the number of sales showed a year-over-year decrease.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential property sales in Greater Vancouver totalled 3,156 in May 2010, a decline of 10.4 per cent compared to the 3,524 sales in May 2009; 5.1 per cent more than the 3,002 sales in May 2008; and 27.1 per cent less than the 4,331 sales in May 2007. May 2010 sales also represent a 10.1 per cent decline compared to last month's sales.

In terms of number of property listings, last month marked the third consecutive month during which more than 7,000 homes were listed for sale on the Multiple Listing Service (MLS®) in Greater Vancouver.

New listings for detached, attached and apartment properties totalled 7,014 in May 2010, a 48.2 per cent increase compared to May 2009 when 4,733 new units were listed, and an 8.3 per cent decline compared to April 2010 when 7,648 properties were added to the MLS®.

At 17,492, the total number of property listings on the MLS® increased 10 per cent in May compared to last month, and is up 28.2 per cent compared to this time last year.

"Prospective home buyers in today’s market have a broad selection to choose from in every property type. REALTORS® are telling us they’re working with buyers who are not feeling as rushed to make a decision as they did late last year and earlier in the year," Jake Moldowan, REBGV president said.

Over the last 12 months, the overall MLSLink® Housing Price Index (HPI) benchmark price for all residential properties in Greater Vancouver increased 16.7 per cent to $590,662 from $506,201 in May 2009.

"It's important for those looking to buy or sell a home to remember that real estate is local and wise real estate decisions are made by those who understand current market conditions at the neighbourhood level," Moldowan said.

Sales of detached properties in May 2010 reached 1,256, a decrease of 10.4 per cent from the 1,402 detached sales recorded in May 2009 and a 4.4 per cent increase from the 1,203 units sold in May 2008. The benchmark price for detached properties increased 19.1 per cent from May 2009 to $810,175.

Sales of apartment properties reached 1,354 in May 2010, a decline of 7.1 per cent compared to the 1,458 sales in May 2009 and an increase of 8.8 per cent compared to the 1,244 sales in May 2008.The benchmark price of an apartment property increased 13.9 per cent from May 2009 to $398,783.

Attached property sales in May 2010 totalled 546, a decline of 17.8 per cent compared to the 664 sales in May 2009 and a 1.6 per cent decline from the 555 attached properties sold in May 2008. The benchmark price of an attached unit increased 14.8 per cent between May 2009 and 2010 to $500,339.

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Rapidly changing market conditions have led the Canadian Real Estate Association to lower its forecast for housing sales this year.

The Ottawa-based group, which represents 100 boards across the country, now says 2010 sales will not be as strong as previously forecast and by next year prices will begin falling.

CREA expects 490,600 sales through the Multiple Listing Service in 2010, a 5.5% jump from a year earlier and the second-best year on record. However, by 2011, sales are expected to fall by 8.5%.

“The revision reflects a weaker-than-expected start to the year in British Columbia, and recent developments that pulled forward the timing as to when sales are expected to ease in other provinces,” the group said in a statement.

A major factor pushing people into the market earlier has been new mortgage rules that went into effect April 19. Canadians buying homes with mortgage default insurance must now qualify based on what is called the benchmark rate for a five-year fixed-rate closed mortgage, if they opt for terms of under five years.

The impact has been that borderline borrowers get less cash for their homes because they must qualify based on a rate that is 6% today. Consumers going for terms five years or longer can qualify based on the rate on their contract, which is as low as 4.25% for a five-year mortgage based on discounting.

The rules have forced many consumers out of variable rate mortgages tied to prime, which even after yesterday’s Bank of Canada rate hike, stood at 2.5%.

“The changes prompted some homebuyers to finance their home purchase before the new regulations took effect in April, which pulled forward a number of sales that would have otherwise taken place at a later date,” said CREA.

With the Bank of Canada on Tuesday finally increasing its overnight lending rate, which prime tracks, that too is expected to impact home sales in the coming months. “Interest rates are expected to rise slowly and at a measured pace during a new era of government spending restraint, so home financing will remain within reach for many homebuyers,” said Georges Pahud, CREA president.

CREA now says the market peaked in the fourth quarter of 2009 and predicts by next year the average price of a home sold through the MLS will be $318,300, a 2.2% decline from 2010. This year’s average price increase is now expected to be only 1.6% higher than 2009.

Average price increases were previously forecast to rise 5.4% in 2009, but the lower sales activity in British Columbia, which includes the country’s most expensive market in Vancouver, drove down the national numbers. In fact, only B.C. and Ontario are not expected to post price gains in 2011.

“With interest rates soon expected to rise, Canada is widely believed to be entering a typical demand-driven downturn due to recent prices increases and rising interest rates,” said Gregory Klump, chief economist with CREA. “A downward trend in national sales activity combined with an increase in listings will result in a more balanced market. In keeping with the return of a balanced housing market and typical demand-driven housing market cycle dynamics, prices will remain stable.”

Mr. Klump emphasized that Canada’s mortgage market remains “solid,” and that conservative lending practices mean the country will not experience the same type of correction the United States has had where prices have fallen as much as 50% in some markets.

Last month, CREA issued a report debunking the theory put forward by a number of commentators that the Canadian housing market was headed for a major correction. The report came on the heels of an analysis from Canadian Imperial Bank of Commerce senior economist Benjamin Tal that housing prices in Canada were 14% overvalued.

The Bank of Canada raised its key interest rate by a quarter point today, and most lending institutions are expected to respond by increasing their prime lending rates by a quarter point. This marks the first rate increase by the Bank since 2007. Rate hike means it may be time to revisit mortgage strategies

Today’s announcement means an increase in the rate for a variable-rate mortgage. However, lenders do vary in when exactly they adjust their rates for variable-rate mortgages. Fixed-rate mortgages are not affected directly by today’s announcement as their rates are influenced more by movements in the bond market.

Prime: 2.50%