February 2008 - prices and listings up
February saw a large number of listings and prices edge up yet again in Vancouver. Overall listings are up 26.2% compared to last February and sales are down 6.4%. The REBGV benchmark price for a single family home in Vancouver is now up to $761,342. The Townhouse benchmark price is $472.147 while the Condo benchmark is $387,032.
Get all the stats broken down by sub-area at Paul Boenisch’s site.
This certainly is an interesting market and one thing so far is true - it really is different here. A year ago other western markets were chugging along with Vancouver, but some of our neighbors are seeing some changes. Calgary, Victoria and Seattle markets have shown some weakness lately and even closer in its possible that the western blessing is fading. North Vancouver has seen a 2.38% price drop in the SFH benchmark and the Fraser Valley is looking less robust these days as well. Keep an eye on Mohicans blog for Fraser Valley analysis (not up at time of this posting)
There has been some news lately of fewer Canadians and fewer BC residents planning to buy in the next few years. Will this along with rising listings translate into downward pressure on prices as it has in other countries?
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March 5th, 2008 at 9:22 am
In the US there were increased listings and falling sales but continued price increases as sellers were reluctant to lower prices eventhough there was more supply and fewer sales. I recall reading articles in the US press that the latter was occurring all over America. According to the US press, eventually, realtors began advising clients to lower their price expectations. This was also against he background of increasing prices. Of course, this was the prelude to the US market crash.
If we see increased listings and falling sales - even with price increases - through the spring, I am certain that this market will go the way of the USA. So far Vancouver is behaving like the USA when that market turned. Lets see if it continues to follow that track.
In my opinion, we are seeing the immediate prelude to the Vancouver RE crash.
March 5th, 2008 at 9:54 am
Isn’t that in a way saying that past performance is a guarantee of future declines?
If the Bullish bias that past performance is a guarantee of future returns is logically questionable wouldn’t this idea be suspect as well?
A couple of question just to play devils advocate.
March 5th, 2008 at 9:55 am
yes! we are not immune to the laws of economic gravity, this will prove an eye opening experience to quite a few people…..
March 5th, 2008 at 9:56 am
March 5th, 2008 at 9:58 am
March 5th, 2008 at 10:09 am
“Isn’t that in a way saying that past performance is a guarantee of future declines?”
If I may use my favourite analogy. The bulls are saying that they will live forever because they have a history of not dying. The bears say that everyone in recorded history of billions of people HAS died therefore any expectation that one might live forever is ludicrous, it doesn’t matter if you hold the record for the longest lived person EVER, it’s still a safe bet that you will die one day.
March 5th, 2008 at 10:11 am
When you look at the US housing markets that are being hit the hardest they are the ones that had a high level of speculation driving prices far beyond what they could yield from rent, while local incomes didn’t keep up and ‘innovative’ loans like 40 year terms and adjustable rates made the monthly payment lower, but overall costs much higher.
Sound familiar?
March 5th, 2008 at 10:13 am
March 5th, 2008 at 12:14 pm
However, I am sure more poor people would love it going down than rich people.
No insult, just the truth. Think about it though, richer gets richer….
Can’t fight that…
March 5th, 2008 at 12:27 pm
Well no insult right back at you but uninformed opinions are worth less than the pixels they’re printed on. When you have an informed opinion I’d love to hear from you.
March 5th, 2008 at 12:51 pm
March 5th, 2008 at 12:53 pm
No insult, just the truth. Think about it though, richer gets richer….
Actually I do believe you have that backwards - poor people have all of their money wrapped up in their mortgage, the poorer they are the less able they are to deal with temporary setbacks like job loss or illness. The rich have the resources to buy when the economy is in a down cycle and will swoop in like vultures when people need to sell at a loss.
Generally speaking the rich don’t get richer by buying at the peak of a cycle and the poor have the most to lose from prices going down (unless we’re talking about the truly poor, who have never been a factor in driving real estate markets)
March 5th, 2008 at 12:54 pm
I wonder how many paper millionaires from the dot-com boom would agree with you.
Sometimes the lucky and stupid simply run out of luck.
It’s no longer a matter of “poor people” wanting prices to go down. It’s now a matter of middle class people who either can not or will not purchase into this market.
It is people with your attitude who are going to get a *really* nasty surprise, I think… no insult or anything.
March 5th, 2008 at 1:21 pm
March 5th, 2008 at 1:36 pm
March 5th, 2008 at 1:38 pm
I think you misspelled you name.
It should be: Yun
Noname
March 5th, 2008 at 2:10 pm
Nevermind.
March 5th, 2008 at 3:11 pm
March 5th, 2008 at 3:40 pm
You cannot be more wrong. I am not rich, but definetly not poor. I’ve sold my place and made a decent profit. However, I refuse to buy in this market.
March 5th, 2008 at 4:00 pm
with you all!!!!
You guys are so right!!! wow
March 5th, 2008 at 4:00 pm
March 5th, 2008 at 4:05 pm
March 5th, 2008 at 4:05 pm
Yeah yeah yeah it mite drop but really not that much…
but yeah yeah i agree i agree, it’s gonna drop huge huge crash bubble… sure!!!!
March 5th, 2008 at 4:23 pm
Good luck!
March 5th, 2008 at 4:24 pm
Something inside doesn’t want this market to crash quite yet!
March 5th, 2008 at 4:34 pm
This blog is chock full of reasons why the prices will collapse by a pretty big margin. Your attitude is just typical of ignorant Vancouverites, you seem pretty sure of yourself in spite of a complete lack of anything resembling evidence. Your blind faith does you no credit.
March 5th, 2008 at 6:35 pm
March 5th, 2008 at 6:39 pm
This is not surprising actually. Many people who don’t how to save or accumulate responsibly are also the most likely to be tempted by either fear (I’ll be priced out foreever!) or greed (I’m going to be rich!).
March 5th, 2008 at 8:19 pm
March 5th, 2008 at 8:28 pm
If it’s any consolation, remember that rising inventory rather than falling sales is the first sign of a market about to tank. Does’nt say much for the smarts of those buyers.
March 5th, 2008 at 9:28 pm
Can we be more detail of what the market is going to do (for the next 3 years or so) instead of shouting it’s gonna crash and crash, again and again?
Just my two cents after reading all these…
March 5th, 2008 at 9:36 pm
I have no problem with educated contrary opinions. The problem is that the ones we’ve been seeing this thread are woefully ignorant and just spout a few ‘opinions’ that are based entirely on emotional wants rather than a rational system. It’s great to WANT everything to be ok, but that doesn’t help progress the debate and so they’re just wasting space.
IMO, in the next three years:
3-8 months from now, market will be over the top and on the downside.
Next year this time, steady slide with the occasional bump as someone calls bottom.
2010 will probably be the year with the greatest declines, we’re talking 25% YOY losses or so.
2011 things will finally start to flatten out at under half of current values, IMO the bottom of the trough will see prices 1/3 of current values.
2012 market finally stabilizes at approximately 40% of current.
These are just opinions, and guesstimations, my timeline could be off by a year or two on any of these but the numbers will prove pretty accurate.
March 5th, 2008 at 9:46 pm
This is happening in a lot of east side neigbhourhoods, although I’ve never seen a place gentrify quite aa fast as Mount Pleasant (helped along by the neighbourhood business improvement association).
I expect the next neighbourhood to go will be the area around Hastings between Victoria and Renfrew. A few of those young refugees from Kits have already moved in. You can almost graph the gentification by counting baby carriages on Commercial Drive any sunny afternoon,
Rising gas prices might have something to do with it, but I think it’s more a generational shift towards big city living and away from the suburbs farther out. If that’s the case, then prices in the suburbs will drop substantially faster than those near the downtown core.
March 5th, 2008 at 9:49 pm
March 5th, 2008 at 10:13 pm
We will see about that. After all this market is hard to predict…
Anyone else got more different predictions to share?
March 5th, 2008 at 10:22 pm
I agree. Actually I remember back in 2004, 2 friends of mine were getting married and they were looking for a place to move in together…and then at one point they thought the market was at peak already so they decided to wait ‘cuz they were so sure it’d crash pretty soon…but it never did and they winded up buying something smaller than what they could have bought back in 2004
March 5th, 2008 at 10:27 pm
2011 things will finally start to flatten out at under half of current values, IMO the bottom of the trough will see prices 1/3 of current values. 2012 market finally stabilizes at approximately 40% of current.”
What you are describing could only happen with a worldwide recession. And that could be what we’re seeing the beginning of now. On the other hand, if it ends up being just a matter of Vancouver prices having reached unaffordable levels, I think 20% of current would be the stablizing point.
Still, there’s a nagging little voice that tells me it might not happen here. Not because Vancouver is “special” in any of the ways mentioned on this blog. I’m a bit of a peak oil/global warming convert these days and am starting to think that, short of low-lying areas in places like Richmond, the Lower Mainland isn’t a such a bad place to be and maybe there are more than a few others thinking the same way.
If gas prices continue to stay high, ships and rail will be the cheapest ways to transport goods. Vancouver is a port city and railway terminus. The port is closer to Asia than many others in North America. Waves of immigration from there means people here have contacts to establish and expand trade.
The climate is moderate. Not only does this make life more pleasant, but home heating costs are lower.
We have some of the lowest personal taxation rates in Canada.
The government in power is beginning to take action on climate change.
I can’t think of many places better suited than this to ride out any crisis, either economic or climate-related. Besides, I’ve lost track of the mornings when I glance out at the mountains and feel grateful to live here - whether richer or poorer and in spite of the real estate prices.
March 5th, 2008 at 11:27 pm
March 5th, 2008 at 11:31 pm
A 20% drop would cause speculators to bail and cause a drop in employment and consumer spending, making any slowdown/recession worse. The virtuous cycle becomes vicious and prices fall further before hitting bottom.
While Vancouver might be a relatively mild place to weather (pun intended) a climate crisis, a crisis sufficient to drive droves of people to Vancouver would also be sufficient cause a series of economic crises (finance, credit, employment, infrastructure), so much so that housing prices would likely bust rather than boom.
March 5th, 2008 at 11:37 pm
Yes, we’re saving the world from global warming … though the planet is actually cooling .. but I guess that’s why we now call it climate change …
March 5th, 2008 at 11:55 pm
I don’t see this serene side of Vancouver so much anymore. In fact, I’ve seen some people freak out lately. In rush hour traffic, in the grocery store etc.
Have you noticed how exhausted and zombie-like cashiers are now? All the stores are understaffed.
This is a much more stressful city thanks to this boom. Too many people with not enough time and too much work. No time to sit back and contemplate the mountains.
March 6th, 2008 at 2:00 am
So how does the post below meet your requirement of a rational system?
…we’ve had bigger drops before, and it won’t stabilize with a 20% drop.
A 20% drop would cause speculators to bail and cause a drop in employment and consumer spending, making any slowdown/recession worse. The virtuous cycle becomes vicious and prices fall further before hitting bottom.
Rich gets richer…from property and infrastructure build up
Asia’s booming billionaires
Let’s hope they give BC and Canada a miss!
March 6th, 2008 at 3:17 am
The climate is moderate. Not only does this make life more pleasant, but home heating costs are lower.
We have some of the lowest personal taxation rates in Canada.
Hm, kinda sounds like Seattle, but since taxes are quite a bit lower there it has even more going for it, right?
So why should Vancouver be almost twice as expensive as Seattle? Oh I forgot, it’s our world-class employers like Lululemon.
March 6th, 2008 at 7:19 am
March 6th, 2008 at 7:22 am
Not to be too negative, but while this might happen, I do not expect see 100% or more increases in Vancouver’s family median income anytime soon, and not in the next five to seven year cycle.
Anyway, global warming suggests living right on the coasts might not be that much of a boon unless one really enjoys treading water, and peak oil suggests we might have a few challenges in terms of moving people and goods to and from our gateway position.
While our carbon tax is not a bad idea, it is only a small step forward in reducing our carbon emissions. BC’s low tax rates are not a bad thing either, but are not necessarily the silver bullet that draws new capital investment in.
I would say Drachen’s scenario seems most likely.
March 6th, 2008 at 7:33 am
Poor crops means higher food costs and reduced availability.
If ya can’t eat who cares about the view.
March 6th, 2008 at 8:43 am
Your comment is on-topic so I’ve released it from the spam filter and left your links intact, but I thought I’d let you know linking search terms to your website from the comments will not increase your google ranking. This blog (along with most others) uses ‘nofollow’ in the comments code to tell search engines to ignore comment links for ranking.
This prevents spam comment links from having an effect on search engine results which I’m sure we can all agree is a good thing.
March 6th, 2008 at 8:56 am
“So how does the post below meet your requirement of a rational system?”
…we’ve had bigger drops before, and it won’t stabilize with a 20% drop.
A 20% drop would cause speculators to bail and cause a drop in employment and consumer spending, making any slowdown/recession worse. The virtuous cycle becomes vicious and prices fall further before hitting bottom.
Well it’s missing out on the finer details (because most of us are already aware of the finer details) but yeah in the broad strokes he’s got a very rational system going. Certainly this kind of argument is infinitely more useful than the typical:
bulls “I don’t think it will fall and if it does it will only fall a little.”
bears “Do you have any data or evidence to back you up?”
bulls “Haha, you guys are crazy.”
bears “If you have any rational reason to believe it won’t fall we’d love to hear it.”
bulls “Yeah that’s what I thought, you guys are so close minded.”
bears “Umm yeah, whatever.”
March 6th, 2008 at 9:16 am
“AP: The Fed says Americans’ percentage of equity in their homes has fallen below 50 percent for the first time on record since 1945.”
what do you think the percentage is around here? lol!
2%?
March 6th, 2008 at 9:17 am
err…actually….
maybe not the general economic chaos, but lower housing prices would be nice