A slide in Lower Mainland real estate prices that began in March is likely only half-way to a bottom that will likely come sometime next year, one economist predicts.

Helmut Pastrick of Central 1 Credit Union (formerly Credit Union Central of B.C.) says home prices are down roughly four to five per cent from their peak earlier this year.

"I'm saying a 10 per cent decline from top to bottom, from peak to trough," he said. "It could be more, I'm not ruling that out at this point."

Pastrick said he therefore expects a similar drop of at least five per cent on top of what has occurred so far before prices stabilize some time in 2009.

"I think it will continue for another six months and potentially 12," he said of the declines.

Within the Greater Vancouver zone (Metro Vancouver excluding North Delta, Surrey, White Rock and Langley), the sale prices of detached houses dropped two per cent in August to $738,000. Townhouses and duplexes fell 2.2 per cent to $463,400 while condos slid 1.9 per cent to $374,400 for a benchmark property.

In the Fraser Valley, median selling prices for detached houses were actually up 2.2 per cent from July to August, but down 1.3 per cent for townhouses and down 1.8 per cent for condos.

The numbers show home prices in most of the region are no longer at levels double what they were five years ago. Detached houses are up 84 per cent over five years in Greater Vancouver and 70 per cent in the valley. Only condos in Surrey, Port Coquitlam, Richmond, east Vancouver and Abbotsford are significantly more than double their value of August 2003 (up 110 to 135 per cent).

While price changes vary from month to month and city to city, Pastrick says the data shows this year's drop is a broad-based decline.

"It's market-wide," he said. "It's hitting detached homes, townhouses, apartments all roughly the same."

Pastrick says it's a different type of real estate downturn from what's been seen before.

Past triggers – like dramatic spikes in mortgage interest rates or high unemployment – aren't present now.

Instead he attributes the drop to prices that had risen too high – beyond the affordability levels for first-time buyers – coupled with consumer angst about everything from high oil prices to the U.S. economy and the real estate market meltdown there.

"These kinds of things affect consumer confidence," Pastrick said.

Falling prices will deter potential sellers, he said, who will opt to postpone selling unless they're forced to sell.

Investor owners sitting on empty units will likely begin renting more of them, he added.

The price decline will translate into less new home construction, Pastrick predicts, and that drop in activity will shake out in fewer construction jobs and less money buoying the Metro Vancouver economy.

He says the signs of an impending drop were present a year ago when realtors first began to report declining sales.

"That always raises a red flag that housing prices will be responding," he said.

Going back even further, he added, sales began to plateau in 2005, an early signal the hot market would not keep climbing indefinitely.

Home sales in August were down 53 per cent in Greater Vancouver and 48 per cent in the Fraser Valley region from a year earlier.

Fraser Valley Real Estate Board president Kelvin Neufeld said potential buyers "took a wait-and-see approach this summer."

When the market was soaring, buyers often had to make snap decisions on properties and could still end up paying more than asking price.

Now buyers are in the driver's seat.

"Selection is at record levels," Neufeld said. "Interest rates remain competitive while prices have moderated."

Housing Price Index tracks benchmark property price changes. Index started at 100 in June of 2001

August 2008, one year % change

Abbotsford

detached house – $435,000 (+ 4.6 %)

Burnaby

detached house – $729,900 (+ 2.0 %)

Coquitlam

detached house – $667,500 (+ 9.3 %)

Delta - South

detached house – $604,000 (+ 4.5 %)

Langley

detached house – $532,100 (+ 7.7 %)

Maple Ridge

detached house – $438,100 (- 2.6 %)

Pitt Meadows

detached house – $461,100 (- 8.1 %)

Mission

detached house – $376,700 (+ 0.5 %)

New Westminster

detached house – $545,900 (+ 1.0 %)

North Vancouver

detached house – $868,200 (+ 2.6 %)

Port Coquitlam

detached house – $523,400 (+ 0.3 %)

Port Moody

detached house – $725,000 (- 10.8 %)

Richmond

detached house – $767,000 (+ 6.4 %)

Surrey

detached house – $510,000 (- 1.7 %)

Vancouver - East

detached house – $664,700 (+ 2.2 %)

Vancouver - West

detached house – $1,371,600 (+ 1.4 %)

West Vancouver

detached house – $1,512,900 (+ 7.2 %)

White Rock

detached house – $765,000 (+ 8.5 %)

- Benchmark or median sale prices from Greater Vancouver and Fraser Valley real estate boards.

jnagel@surreyleader.com