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VANCOUVER (Reuters) - Emily Yao admits to disappointment when her bid on a three-bedroom condominium in this desirable West Coast city was turned down last October.
But a month later the systems programmer, who moved to Vancouver from mainland China six years ago, snapped up the still-unsold condominium on Vancouver's East Side for C$550,000 ($550,000), C$9,000 less than the original price tag.
It's a pattern being replicated across the Pacific port city, in a dramatic turnaround from the bidding wars, show day stampedes, and above-market offers that long dominated North America's costliest property market.
"Since October, it was like someone turned off the tap. It became absolutely dead," said long-time realtor Pam Allen.
What's taking the sizzle out of Vancouver prices and putting the brakes on sales are expectations that rock-bottom Canadian mortgage rates will stay low, so there is no rush to buy.
At the same time, Chinese investors, who have long helped to underpin the city's red-hot market, are holding back because property market curbs back home means they have less cash available.
But with immigrants still streaming in from China and elsewhere, and the city frequently rated one of the most livable on the planet, most experts see prices fizzling rather than imploding with a bang.
Hemmed in by mountains on one side, and the Pacific Ocean on the other, land-scarce Vancouver can't build homes fast enough to cope with demand from locals, immigrants and Chinese investors, who see Canada as a perfect place to park their cash.
In a report published last month, Demographia, a consultancy on urban development, tagged Vancouver as the second most unaffordable of the housing markets it surveyed, with median house prices at 10.6 times income levels. No. 1 is Hong Kong at 12.6 times.
The average price for a residential property in Vancouver in December was C$734,766, more than double the national average of C$358,480, according to Canadian Real Estate Association data.
A single family home in Honolulu, the most expensive U.S. metropolitan market in data from the National Association of Realtors, fetched a median $597,000 in the fourth quarter, while Detroit homes were worth a paltry $50,800.
Nearly one-fifth of Greater Vancouver's 2.1 million people are ethnic Chinese, according to 2006 census data, by far the highest proportion for any city in Canada.
No official figures are available on the percentage of Vancouver home sales to investors from mainland China or Chinese immigrants. But local realtor Tom Gradecak says that in popular areas such as the West Side, a leafy block of land flanking the university, it could be 50 percent, rising to up to 75 percent for homes selling for more than C$3 million.
"Chinese money is a big factor ... today as it was in the period after 1986," said David Ley, author of the book "Millionaire Migrants", which examines the impact immigrants had on Vancouver's housing market.
"House prices in greater Vancouver bear no relationship to the local labor market. Prices are kept high by offshore capital arriving from immigrants and from foreign investors."
Money from Hong Kong investors, who were edgy ahead of the city's handover to Chinese control in 1997, is credited with changing Vancouver's skyline as immigrants streamed into Canada and funds poured into new condo towers that now dominate the waterfront.
The factors that tempted immigrants then remain today: the chance to learn English in a city that is a virtual "home from home" with Chinese eateries, TV channels and newspapers. Beijing is 11 hours away, versus 14 hours from Toronto or New York.
"I can see more and more people in the coming years going to Canada, and Vancouver is the No. 1 city they want to go to," said Derek Lai, director of international property at real estate consultancy Colliers in Shanghai, who specializes in helping Chinese clients buy houses in Vancouver.
Despite a mid-recession dip around 2008, Canada's housing market has remained resilient for the past decade, and the Vancouver market has outperformed the rest of the country for seven of the last 10 years.
Vancouver price rises peaked at a stunning 19.8 percent in 2006, dipped in 2009, and came roaring back with double-digit growth in both 2010 and 2011.
A house bought for C$500,000 in 2001 would have fetched about C$1.2 million a decade later, based on average price changes.
But the latest month-to-month figures show Vancouver prices fell in five of seven months from last June to December, including drops of more than 5 percent in November and December.
In the United States, the Case-Shiller index shows home prices are back at 2003 levels after a steep slump in 2008.
There is always talk of bubbles, of course, but experts don't see the Vancouver market crashing as the U.S. one did.
Mortgage rates are at near record lows just above 3 percent, but Canadian borrowing rules are tougher and the sub-prime market that downed the U.S. housing sector is tiny. With inflation muted and the economy recovering only slowly from recession, interest rates will likely stay low for years.
"I would anticipate Vancouver house prices falling further. We don't know by how much," said Sal Guatieri, senior economist at Bank of Montreal, co-author of a report entitled "Will Canada's Housing Boom Forge On, Fizzle Out, or Flame Out?".
"But that is one area that appears ripe for some sort of correction, though we are not anticipating a severe correction.
Chinese investment is still the wildcard. Reliable statistics are hard to find, but analysts expect Beijing's moves to cool its own property market may hurt Vancouver.
Beijing has taken measures to rein in its property market - including raising mortgage rates and minimum downpayments - to ease public discontent with rocketing home prices. It has vowed to continue to thwart property speculation in 2012.
"In China, people put all their money into property. So with the market stagnant, their cash on hand is on hold and their investment all over the world is not as strong as it was last year or the year before," said Collier's Lai.
Realtor Tom Gradecak, who specializes in property in Vancouver's pricey West Side, says it is too early to see any impact here, though he expects there will be some domino effect. In the business for the past 20 years, he remains sanguine about Vancouver's real estate prospects.
"We will see ups and downs, but I think five years from now the prices will be higher than they are today," he said.
Additional reporting by Jon Cook, editing by Janet Guttsman, Martin Howell and Rob Wilson