Home prices in Vancouver have become so stratospheric that even the city’s well heeled are now vigilant about taking the plunge.

The proof is in the listings. According to listing website HouseSigma’s data, there were 2,331 terminated listings in the Vancouver region in February, 3,119 in March, 3,634 in April, and 5,140 last month. The overwhelming majority of those terminations were re-listed, a common sales ploy.

A confluence of factors is, to varying degrees, responsible for buyer reticence. At 6.8%, inflation hit a 31-year high, while the Bank of Canada has raised its Overnight Lending Rate by 1.25% since March 2, and runaway housing prices are already responsible for removing a sizeable chunk of homebuyers from the market.

“I think we are definitely seeing the effects of higher interest rates and the fever over housing prices during the last couple of years, where we’ve seen, in my mind, ridiculous increases in value. I think people are tired and weary of that, and having interest rates virtually double over the last several months has brought the whole thing to a head. We’re in a correction right now,” said Robert Mogensen, a broker with The Mortgage Advantage.

“I know that listings have been growing. Realtors in and around Vancouver and the Lower Mainland hold open houses on weekends where they used to have 30-40 people lining up to get in, but it’s not surprising now to have one or two potential buyers. A couple of realtors have been, in their words, ‘skunked,’ where nobody showed up. Six months, a year ago, that would have been unheard of.”

Mogensen says the housing correction is long overdue. He counts among his clients young couples in professions like accounting, law, dentistry, and medicine who cannot afford duplexes, let alone townhomes.

“That makes absolutely no sense long-term if you have professionals at the top of the wage scale of the population in a certain area and they’re struggling to get into a decent sized home in a decent part of town,” Mogensen said. “Something is radically wrong. We’ve been talking about this for years.”

According to Sam Wyatt, a sales representative with Stillhavn Real Estate Services in Vancouver, internal data suggests the number of terminated listings is lower than HouseSigma’s, but ranging between 1,439 in February and 2,844 in May, the trendline is the same.

READ: This is What a Housing Correction Looks Like

Wyatt says many local real estate professionals felt like the housing market had bottomed out at the beginning of 2020, and, of course, in the immediate aftermath of the pandemic hitting, the Bank of Canada plunged its overnight rate and set off a frenzied housing crush.

“We’ve reached a point [where] people in Vancouver who actually are end users of houses can’t afford them,” he said. “Even as interest rates rise, I’ve seen hot apartment markets. This morning, I’m helping clients buy a two-bedroom apartment in North Vancouver and it’s selling with multiple offers while houses are stagnating, and I think it’s because of an affordability issue. In previous markets with a lot of foreign capital, because it was about speculating, affordability was less of an issue.”

Wyatt says January and February 2020 demonstrated that housing demand was strong in the Vancouver region, but after the central bank’s response to the pandemic, all hell broke loose.

“That underlying demand was there even after COVID hit, and the response to COVID was to decrease interest rates, which added fuel to the fire in a market that was already about to explode.”

Home prices aren’t just cumbersome for priced-out buyers. People who entered purchase agreements in the last couple of months are having trouble getting appraisals high enough to close their transactions. That has left buyers scrambling to come up with the difference, and should they fail to secure those funds, they will most likely get sued.

Tina Lee, owner of Leemore & Associates Real Estate Appraisers & Consultants Ltd., is seeing homes, for which sale agreements were signed at the beginning of April, come in $100,000 below the purchase prices. Although Lee hasn’t seen “a ton yet,” she anticipates seeing them with regularity by the end of this month.

“New appraisals for today’s current market may not be able to support values from March to April,” she said, noting that appraisals are based off the most recent comparables, but sale prices have been dropping.

That more and more Vancouverites are priced out of their own city’s housing market isn’t lost on appraisers, either, Lee says.

“We hear that a lot, definitely, and with mortgage rates increasing, it’s pricing people out, but it’s been like that for years,” she said. “Personally, I worry about that for my own kids. Will they be able to afford a home in the next five to 10 years? I definitely don’t think they would be [able to] without my help, so again that comes back to the bank of mom and dad.”

To elucidate how much appraisals are declining, Mogensen is seeing them come in lower than BC Assessment’s values, which he says would normally be unheard of.

“We used to add 10-15% to BC Assessment’s value,” he said.

Mogensen added that he doesn’t anticipate Vancouver’s housing market returning to its previously indomitable form for nearly a calendar year.

“If I had to put money on it, I would say see you next spring,” he said. “I think it will take that long because the Bank of Canada indicated they would continue ramping up the prime rate, and the Fed in the US is saying similar things, and I don’t see interest rates going anywhere but up and that will cool the market. The increase in monthly payments will put some people off, where they may have otherwise gotten in with the multitude of additional listings now.”