March 2007 – sales down, listings up, prices up?

Well it looks like we’ve got another strong start to the spring season, at least when it comes to the Real Estate Boards benchmark price for a single family home. I don’t have all the numbers yet, but theres a short story in the Sun, and here’s my short-term chart:

So it looks like the sub-prime mortage meltdown in the US hasn’t fazed this market yet – Not only that, we’ve got more listings, less sales and prices are still going up! It really is different this time!

UPDATE: Here are the March benchmark prices for the GVRD, and the price charts for townhouses and apartments – Everythings up this month, it must be springtime!

GVRD Benchmark prices, March 2007:
Detached: $682,173
Attached: $428,299
Apartment: $349,373

Short term housing charts, Attached & Apartments:

Thanks to Agent Will for the March stats package. This is a very peculiar market, at these prices buyers must be counting on continued appreciation.

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tunacan
tunacan
13 years ago

someone posted a comment about low inflation, low interest rates, strong economy etc.Low inflation? – only in the gov't stats. Ever open your eyes? Gov't reports ~2% inflation. Checked the price of food, gas, utilities, housing, corn, nickel, uranium copper, silver, gold lately?Also, inflation does not come from higher wages, or higher cost of things in general. Higher prices are the symptom. Inflation is a monetary event only. The central banks of the world are printing money out of thin air at a collosal annual rate. US M3 ~10-13%, Canada 8%, Russia 42%, India 10+%, China 10+%. Let me state that again for emphasis, taking Canada as an example: Canada created 8% MORE money into existence, in one freakin year. That means there is more money chasing a limited supply of goods. I bet you a bazillion dollars that central… Read more »

digi
digi
13 years ago

Until something else in the economy cracks, high housing prices won't deflate all by themselves. They need a trigger.What was the trigger in the US? Sure the sub-prime problem is rearing its ugly head now that prices are dropping, but as I recall that wasn't what cause their market to peak. It seems like they just used up future demand and hit an affordability wall.

miracle
miracle
13 years ago

Back to the original question: "sales down, listings up, prices up?" My theory is that as long as homeowners can sit tight and wait for higher prices, they will do just that. Until there is a significant pool of sellers who *need* to sell, the prices will stay high. Until something else in the economy cracks, high housing prices won't deflate all by themselves. They need a trigger.

patriotz
patriotz
13 years ago

I know that at least CIBC is offering to pay the five percent down paymentUm, I thought the down payment was the money that came from the buyer, not the bank. If the bank if fronting up all the money, that's 100% financing. Or is the buyer getting "instant equity"?Oh, and isn't this the same CIBC that got fined a few billion for some shenanigans with Enron, and then gave its top bananas a fat retirement package?Paging George Orwell.

bcubbins
bcubbins
13 years ago

spark, that rollercoaster video is a great analogy for the bubble, one that most people will intuitively understand. Hopefully lots of people see it and come to their senses.

northvan
northvan
13 years ago

Hmm.. should I invest in KD stock?

MillionPitfall
MillionPitfall
13 years ago

Patriotz,We call it speculation, they call it investment. Yes, it's true, ask around, but don't call it a flip or spec property as they will say no, ask if they own any "investment" properties.As I mentioned previously, in 1997 I purchased a so called asian "investment" property. This property was purchased in the height of the building boom in 1990, put up for sale in the height of the market in 1993, but it did not sell. It was up for sale for over 2 years when I purchased it.

Freako
Freako
13 years ago

"Just did a quick check, and weare now the 5th most expensive metro area in Vancouver. "5th most expensive metro area in North America, I mean.

Freako
Freako
13 years ago

"I know that at least CIBC is offering to pay the five percent down payment to get you to take out a mortgage with them – how far can this rubber band stretch? "That will take care of the downpayment, but if we don't start seeing neg am mortgages, the payments will be the limiting factor.In the absence of evidence to the contrary, I conclude that we do have a subprime situation here, though we may not know it as such. Sort of like convincing ourselves that if we don't call it that, there is no problem.Just did a quick check, and weare now the 5th most expensive metro area in Vancouver. Fourth if you combine San Fran/Oakland. And that is using Q4 2006 figures for the U.S. prices. No doubt those are down a few percent since. From an… Read more »

patriotz
patriotz
13 years ago

Yet, that's what's happening in the UK, particularly London. The huge runup has been followed by years of small rises.Yeah, but do keep in mind that new supply in the UK is virtually zero. That can work wonders in keeping prices high. It can also help explain why housing in Japan deflated over 15 years rather than crashing.The country to compare to Canada is – you know where.I was referring to properties bought for investment purposes only, properties that sit vacant ready to be sold at a moments noticeThat's not investment, any more than buying baseball cards is an investment. That's pure speculation, and if it's true, it's one more sign that this market is headed for a big dive.

Drachen
Drachen
13 years ago

ReductimatNot when VANCOUVER Asian culture is the subject. There are so few Japanese immigrants they don't even appear on any of the stats I could find, Trinidad has more people coming here than Japan. Chinese make up 44% of immigrants in the years I could find. Trinidad and Tobago make up 2.6% as the bottom listed country. Japan is somewhere below that. So, Japanese immigrants are statistically insignificant next to Chinese immigrants when you're talking about Vancouver real estate.

ex-suburb
ex-suburb
13 years ago

OT…Harley Davidson stock prices down blamed on sub-prime…http://tinyurl.com/2x7wrg

ReductiMat
ReductiMat
13 years ago

My mistake Drachen, I was unaware that the Japanese do not fall under the umbrella term, "Asian Culture".

the pope
the pope
13 years ago

Dosh: good luck with that elevator that only goes up. Do you plan on taking the stairs back down or will you just be leaping off the roof?

the pope
the pope
13 years ago

Freako: the benchmark price for detached is $682,173.I've updated the main page with the charts for attached and apartment benchmark prices. Everything is up for the first month of spring, it will be interesting to see how long that trend can hold.I know that at least CIBC is offering to pay the five percent down payment to get you to take out a mortgage with them – how far can this rubber band stretch?

Jesse
Jesse
13 years ago

"Our broker says we can probably stretch that as far as a $600K mortgage"Pre-approved for a 600K mortgage with 100K income. I assume basement suite(s) (read: stated income) is factored in as well. As has been said many times before, tradeups in a rising market will increase DP% and reduce a lender's risk.

MillionPitfall
MillionPitfall
13 years ago

e, You said it. I purchased one of these so called asian investment properties in 1997. A really lousy real estate market year. I purchased the property way under appraised value. The bank mentioned that the price paid under the appraised value was not unreasonably low considering the market conditions.

MillionPitfall
MillionPitfall
13 years ago

ReductiMat,I was referring to properties bought for investment purposes only, properties that sit vacant ready to be sold at a moments notice, not the homes people actually live in on a day to day basis.

e
e
13 years ago

millionpitfall: i can concur with your statement re: asian (at least chinese) buyers. 10 years ago i had first hand experience watching them sell their homes at firesale prices. 1 million dollar homes going for 700-900k. you are right about the mentality. it is fast money "easy come easy go". i have also seen them flip (800k bought in 2004, sell 1300k in 2007) things as well. if you want evidence, go to the casinos and see how many chinese there are. also look at the chinese stock markets — they are extremely volatile. look at their own real estate market, it is extremely volatile as well (gov't even needs to have anti-speculation controls to steady things) but this is the fast money lifestyle, and it is being played here as well.

spark
spark
13 years ago

<a href="http://tinyurl.com/397pw8http://tinyurl.com/397pw8<br />home prices adjusted for inflation…as a rollercoaster.

Drachen
Drachen
13 years ago

ReductimatWell Japanese culture and Chinese culture when it comes to money are VERY different, since we have a relatively small Japanese population here and a very large Chinese population that doesn't really apply (I don't know the numbers but I'm sure Chinese outnumber Japanese in Vancouver at least 10 to 1).It's a bit like saying the Italians did such and such so the British will too, apples and oranges and all that.

ReductiMat
ReductiMat
13 years ago

My friend said, "You don't understand the asian culture, it is better to suffer a loss and save face, then to own a asset that can depreciate further."That doesn't reconcile with this Wiki entry. Especially this part, "The time after the bubble's collapse (崩壊, hōkai?), which occurred gradually rather than catastrophically, is known as the "lost decade" (失われた10å&sup1;´, ushinawareta jÅ«nen?) in Japan."That said, I hope your friend is right.

rentah
rentah
13 years ago

chip: Yes, the UK market has continued to ratchet up.There is a possibility that the UK are significantly less overvalued than we are.For a start, their Ave House Price/Ave earnings ratio is about 6.Going by the latest benchmark of $681K and average income of $56K, ours is 12.2. (Seems bizarre, but that is the math).(Longterm average in the UK is 3.5).Further, their price/monthly rent ratio appears to be lower than ours: taking a look at some of the UK rental forums reveals ratios of about 200 (our recent discussion shows ratios can be over 400 in vancouver for SFHs).SO, it is possible that the UK are simply following through on a later stage of their bubble, with valuations substantially less absurd than ours.By these above two metrics, we appear to be 'twice as unaffordable' as the UK.(I realize there's problems… Read more »

chip
chip
13 years ago

The most significant number from the GVRD and FVREB releases was the 46% jump in inventory in the latter since last March.If that remains steady or increases while sales continue to decline, we should be seeing lower prices this summer.

duck
duck
13 years ago

OT but is this what we've been waiting for? …Toronto Star -"Value of building permits drops in FebruaryApr 04, 2007 09:36 AMJohn WardCanadian PressCanada's construction boom came to an abrupt end in February as the value of building permits fell by more than a fifth from January.Municipalities issued $4.9 billion worth of building permits in February, down 22.4 per cent from January and 12 per cent below last year's monthly average, Statistics Canada reported Wednesday.The drop, the fastest in 13 months, came in both the residential and non-residential sectors. Permits fell in all provinces except Manitoba.Among the provinces, Ontario incurred the biggest dollar loss in the value of residential permits, posting its lowest total since December 2001 at $1 billion.Significant declines were also recorded in British Columbia, Alberta and Quebec."