September 2006: Listings up, sales down

September is the fourth month in a row that real estate listings have gone up while sales have gone down according to this brief story in the vancouver sun.

The number of sales in the greater vancouver area are down almost 25% from september one year ago, while the number of listings are up 11.4%. Fraser Valley saw similar numbers with a 23% drop in sales and a 19% increase in listings.

“Rick Valouche, Real Estate Board of Greater Vancouver president, said the figures show the region is “moving towards a balanced market.”

Does anybody know what a balanced market is? What years would the real estate market have been considered ‘balanced’ in Vancouver? What effect does ‘balance’ have on prices?

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The Digger Group
The Digger Group
12 years ago

As a Realtor in Vancouver BC, dealing with properties in the Downtown and Westside Market i'm seeing the market balance. There's certainly more Listings on the market and we're seeing Product stay on the market longer. Development is still in full-swing and there are a number of projects completing in the coming months and years. The Real Estate market has been so crazy that a bit of leveling off might not be so bad. The way i see this market is still going to be super busy for the next few years.If you're interested in learning more about some of the new Condo Developments coming to market soon feel free visit a couple of our websites. For a look at the Downtown New Condo Market check out <a href="http://www.SpectrumDigger.com,” target=”_blank”>www.SpectrumDigger.com, project built by Concord Pacific. Also, there's a new building… Read more »

solipsist
solipsist
13 years ago

Actually, rent don't always go faster than inflation.I agree with that (I haven't had a rent increase for 3 years). I was referring to allowable rent increases under the Residential Tenancy Act (BC)- which stipulates that rents can increase no more than inflation (currently around 2%) plus 2% per annum.Interestingly, this equates with the historically expected increase in RE prices of ~5% per annum.

bellcurve
bellcurve
13 years ago

I'd like to add to Markx comment – Some people seem to think that rental value of a property matches up with the monthly mortgage cost, but then conveniently forget about extra costs like taxes, fees, maintenance. These can easily add several hundred dollars per month to the cost of a place.If you've got a place you're paying $1400 per month on the mortgage and you're renting it out for $1400 per month you're losing a lot of money.

Anonymous
Anonymous
13 years ago

d_oush: The rental value of a property is not always the bottom of sales value. The bottom of sales value is based on EXPECTATION of future rental prices. If a rational investor expects large amount of housing coming from the pipeline, he/she will not pay for a property based on current rental value, but rather future rental value. Rent can and do get depressed sometimes.

Anonymous
Anonymous
13 years ago

solipsist: Actually, rent don't always go faster than inflation. In fact, per-square-feet real rent actually declines over 20 to 30 year time frame. Rent increases faster than inflation if population is booming, which is what has been happening to Canada in general, and Vancouver in particular. Rent also depend on new development. Large influx is net supply while rental demand stays stable will drive down rent.

max
max
13 years ago

historically housing always goes up? check out schiller's graph – real housing costs over the last 100 years have been pretty steady with no big gains – except for those with great timing.. http://tinyurl.com/j842ahere is a great quote from an abstract of an academic paper out of MIT " Our conclusions are two. First, adjusting for inflation, commercial office property values are 30% lower in 1999 than they were in 1899. Secondly, within any decade values often rise and fall by 20-50% in real terms. With these results, the long term appreciation in commercial property is seen to be no greater than inflation and to experience considerable decadal risk. "http://tinyurl.com/lgk9dof course none of us are investing for 100 years, I guess its the decades that matter most

d_oush
d_oush
13 years ago

Oh, and how long have you been renting that house? Is that the current rental value? If you were to move in today would you get it for that price?

d_oush
d_oush
13 years ago

At that rate the house that I rent for $1200/month will take ~ 30 years for the rent to catch up.Yes, but there's nothing that says prices cant stay stable for 30 years. I think thats highly unlikely though, historically real estate values always go up.

solipsist
solipsist
13 years ago

If they stop going up they'll just wait for rent to catch up.At that rate the house that I rent for $1200/month (and would cost me ~ 3k/month mortgage to buy) will take ~ 30 years for the rent to catch up – at the present rate of inflation (`2%) plus 2% allowable under the RTA.

d_oush
d_oush
13 years ago

I'll tell you how far down it can go: rent. The rental value of a property will always be the bottom of how much it can be sold for. Rent is always going up – this is why property values will never crash. It doesn't make any sense that prices would go down.. If they stop going up they'll just wait for rent to catch up.

digi
digi
13 years ago

ken:I think the Vancouver real estate market IS the turkey market right now. We're at the top of a roller coaster and we can't see how far down it goes through the clouds.Or is that too many analogies in one comment?

ken
ken
13 years ago

The good news from that same link:Turkey growers set for record sales!Quick! Missed out on the real-estate boom? Get into the turkey market! It's about to explode!