November 2006: Vancouver Price Drops

Well its the slow time of year and a bit of a wierd month as well with muddy water and snowstorms, but the Real Estate Board of Vancouver has release stats for November and we’re seeing prices coming down in a lot of sectors. A few of the biggest price drops were:

Single Family Homes: Vancouver West (-4.1%) and West Van (-7.7%)
Apartments: Maple Ridge (-9.3%), Vancouver West (-7.5%)

So maybe now is the right time to buy that House in West Van or Apartment in Maple Ridge.

VHB created the handy Price RE/set graphic* shown above to visually track where we are historically on the price rollercoaster. Looks like November saw prices drop back a few months to about what they where in July 2006.

Some people think that this is the start of a softening market with prices dropping steadily for a while like they are in many places in the US. If this happens to be true, and it follows past trends for Vancouver House Prices it could be a while before it turns around. Previous drops from peak to trough have lasted anywhere from a short term of 1 year to several years of steadily dropping prices.

Personally I don’t believe that would be reasonable. I have been told that this time it is different, and assured that there will be a steady supply of people with ever increasing buying power to keep making our prices rise higher and higher until they reach my prior prediction of $3,000,000 for a 600 square foot condo in 2010.

UPDATE: There’s an article in todays Sun that take a suprisingly negative look at our market. under the headline Could big price drops be approaching? they look at the history of Vancouvers ups and downs and include some very negative possibilities:

By Gartman’s estimate, in the current cycle a Vancouver detached house rose from $340,000 at the last trough in the winter of 1998-99, reaching nearly $800,000 this year.

“If the peak was made earlier this year, and if history is any guide to us,” and Vancouver prices decline by the average of the last three cycles, Gartman said it could take 25 to 30 months to go down the trough, and 65 to 70 months to see a new peak.

Based on past experience, Gartman added that the drop could be in the order of 28 per cent, taking that $800,000 house down to $575,000.

*Graphic stolen and re-used without permission. I have assembled a crack team of legal ninjas to defend against any legal action VHB attempts to pursue.

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Deliverator
Deliverator
13 years ago

"Cameron Muir, chief economist with the B.C. Real Estate Association, said Gartman's observation ignores the prevailing economic conditions that brought about past "price breaks," such as the crushing interest rates of the early 1980s, or the economic stagnation that B.C. experienced in the late 1990s."One thing he forgets (or ignores to make his point) is that the price drop of the early '80's started about 3 months before the huge interest rate hikes.

digi
digi
13 years ago

What happened to the CMHC? How did they change from an organization that was supposed to help housing into one that brought in zero down mortgages in a credit bubble? How are their interests served by the current situation in Vancouver? I just don't get it.

wannaget2calgary
wannaget2calgary
13 years ago

the CMHC … work to improve quality of life and affordability for all canadians, they are not a marketing organization.Do you really believe this stuff when you write it?Might it be better to say, "Once upon a time the CMHC served the interests of the people of Canada, but today they serve the interests of …"?

patriotz
patriotz
13 years ago

"Cameron Muir, chief economist with the B.C. Real Estate Association, said Gartman's observation ignores the prevailing economic conditions that brought about past "price breaks," such as the crushing interest rates of the early 1980s, or the economic stagnation that B.C. experienced in the late 1990s."Uh huh. And in 1981 people were saying prices couldn't fall without a repeat of what had brought about the previous big fall in prices – the Great Depression.In fact price drops always have the same cause – prices out of whack with fundamentals. It's just that different macro conditions can be responsible for the deviation from fundamentals an d the ultimate correction.

Van Housing Blogger
Van Housing Blogger
13 years ago

Not to mention all that Hall and Oates research. And with respect to Muir: I think he could be John Oates's long lost brother, by the looks of him. I hope and pray that Cam can dance better than Oates, though.

whatever
whatever
13 years ago

I was reffering to the post above yours..Sorry paulb, reading back I can see that is pretty apparent, I guess I got a little defensive without any reason. No offense man.

the pope
the pope
13 years ago

Thanks VHB, I would have asked, but you seem pretty busy over there what with all your charts and information on last months numbers.

paulb
paulb
13 years ago

whatever…I was reffering to the post above yours… of course a US recession would be very damaging for our industry and economey on whole

whatever
whatever
13 years ago

Why do you guys even bother arguing with some of the flippers above?I think that even though it can get tiring it is important to point out when arguments are based on stupid faulty logic. Not everyone has the time or inclination to become fully informed even on a major purchase like housing. Most people just want to live their lives and can be convinced its all about the monthly payment, which leads us into the problematic territory we're in today. Lets not allow jackasses and thieves to put misleading or just plain wrong information out there unchallenged.

Van Housing Blogger
Van Housing Blogger
13 years ago

Pope! You thief! I'll get you for this!! ha haJust kidding. Properly attributed (as you have), I don't care if people repost my stuff. I actually like it. Gives me jollies.

Anonymous
Anonymous
13 years ago

Why do you guys even bother arguing with some of the flippers above?The one anonymous poster believes "Cameron Muir" is unbiased and that his predictions are therefore, unbiased predictions … LOLThe others believe that if the USA, Canada's LARGEST TRADING PARTNER, goes into a recession, it will have little impact on Canada's economy … LOL

tazz
tazz
13 years ago

I don't see why price drops should come as a suprise to anyone. You cant get richer by getting deeper and deeper into debt, eventually it catches up with you no matter how far you choose to stretch the idea of 'affordability'

mk-kids
mk-kids
13 years ago

"I heard a report on the radio this morning that said Canada's economy is essentially recession proof, so why worry too much about the US?"And I heard Larsheid call a Canucks v. Columbus game a few years ago a "guaranteed win night" – and guess what, we didn't.

whatever
whatever
13 years ago

Do you mean me paulb? I'm not kidding. There's no way we're insulated from a US recession.

paulb
paulb
13 years ago

your kidding right?

whatever
whatever
13 years ago

A recession in the US wouldn't be GOOD for canada, but I don't think it would be that hard on us.Thats absurd. A full-blown recession in the US would be VERY HARD on Canadas economy, Particularly in the west which is very dependent on Americans buying our resources. Even the minor downturn currently happening in the US is having a negative effect of resource industries.Another thing to consider: Mills have a source of tons of cheap wood right now with the pine beetle problem. That will probably last for a couple of years, but when it runs out the forestry industry here could be in for some hard time with lots of mill closures.

Anonymous
Anonymous
13 years ago

I heard a report on the radio this morning that said Canada's economy is essentially recession proof, so why worry too much about the US?A recession in the US wouldn't be GOOD for canada, but I don't think it would be that hard on us.

dingus
dingus
13 years ago

Sure. Muir's terrific. Top notch unclouded judgement. Yet he's seemingly unable (or, um, unwilling) to point to the downturn in the US and probable recession as a risk factor to the economic fundamentals in Vancouver. Nope. Our economy is completely isolated from all that bad stuff. Perpetual motion machine, it is.

mk-kids
mk-kids
13 years ago

"So far our market has been very strong so that indicates that it has a healthy future, but no one can give you a definate prediction."Yeah, except when it hasn't been…

d_oush
d_oush
13 years ago

Can you give me one (JUST ONE) reason why he can see into the future now?of course not, no one can see into the future, if thats what you're looking for you're bound to be dissapointed.All anyone can do is try to look at indicators and guess what is going to happen. So far our market has been very strong so that indicates that it has a healthy future, but no one can give you a definate prediction.

stucco-slushy
stucco-slushy
13 years ago

Isn't it a bit strange that Muir went from CMHC to the BCREA? He's clearly a cheerleader for the vancouver market and always has been.

ReductiMat
ReductiMat
13 years ago

Cameron Muir has a lot of experience with the local marketYet he was unable to explain things on the way up.A fat lot of good his "experience" with the local market did him.Can you give me one (JUST ONE) reason why he can see into the future now?

d_oush
d_oush
13 years ago

Paulb, of course the real estate board has an interest in a healthy market. Whats wrong with a healthy market?And the CMHC is a government organization that is set up to help buyers, they work to improve quality of life and affordability for all canadians, they are not a marketing organization.

d_oush
d_oush
13 years ago

A local economist sees more of the day to day fundamentals and would be more aware of the minutiae of the market. Cameron Muir has a lot of experience with the local market, and this other guy does not. I think Muir is more qualified to comment on our market and is likely more knowledgeable about it, Thats all I'm saying.

paulb
paulb
13 years ago

LOL!!! because the BC real esate association and CMHC have to vested interest in the health of the market! Can you imagine if the Real estate board said the sky is falling….. give me a break