January 2007: house prices keep dropping.

The Real Estate Board of Greater Vancouver have released their stats from January 2007 and according to them the ‘benchmark’ quality adjusted price of a detached house in Vancouver continues to drop. Here’s my updated graph of the REBGV benchmark price including the most recent price peak of September 2007:

Graphs can be deceptive, and this one looks like we’ve lost a lot of value. We are about $20,000 down since September, and below my July 2006 start date, but in the big picture we’re still way way up. If you’re unfamiliar with the Vancouver housing price run-up you should check out the Vancouver Housing Blog for a bigger picture.

So which is more likely to happen? Prices continue to drop to get more in line with rental values, rent prices increase by 200% to catch up with real estate prices, or a combination of the two?


Note also:
last month detached houses took the greatest price hit – attached (townhouse) prices are nearly at the September peak, while apartments (condos) are also up from last month. Whats happening there? Are people ‘priced out’ of the detached market and buying condos and townhouses instead? Why are we seeing this steady price drops in single family homes right now?

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Freako
Freako
13 years ago

"I think that is exactly why we haven't seen decreases in apartments and townhomes yet. Because those types of properties are the only ones people are buying right now. "We discussed that in length at VHB about a year or so ago. Essentially it is price compression where the relative pricing gap between low and high density, central versus suburban, and quality versus crap narrows.Obviously relative pricing exists for a reason, so it is evidence that all is not well (not news to most people on the RE blogs).

Freako
Freako
13 years ago

"When the expectation of short term nominal gains disappears – probably around the time we see a negative y-o-y – look out below. "Yes, I agree. YOY neg could be a watershed event psychologically, depending on how much MSM coverage it gets. It certainly would shut up some of the realtor reports which use yoy to insist that prices are up.We have now had four months of declines (albeit minor). I think that fact alone may take some of the desperation out of remaining demand. Once desperation goes, the concept of value for dollar may be given more importance. Let's see what February brings.

betamax
betamax
13 years ago

I think that is exactly why we haven't seen decreases in apartments and townhomes yet. Because those types of properties are the only ones people are buying right now.Agreed – largely due to affordability, but also because they're still the vehicle of choice for speculators – and there's still lots of dumb money out there.

mohican
mohican
13 years ago

the pope: "I wonder if this is because its what's families can afford?"I think that is exactly why we haven't seen decreases in apartments and townhomes yet. Because those types of properties are the only ones people are buying right now. Something I am wondering is the Fraser Valley numbers are not the same as the GV numbers. I am wondering if the same effect – people buying what they can afford keeps prices higher for longer in the Fraser Valley because of GV residents buying farther out for affordability reasons.

patriotz
patriotz
13 years ago

in the big picture we're still way way upThat's just another way of saying that nominal prices always go up in the long run. You could have said the same in 1983 or 1933.When the expectation of short term nominal gains disappears – probably around the time we see a negative y-o-y – look out below.

the pope
the pope
13 years ago

So far townhomes have lost the least amount of value in the REBGV benchmark categories. I wonder if this is because its what's families can afford?