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April Inventory Blooms

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Spring is here and the listings are blooming like crazy. Both Vancouver and the Fraser Valley are being hit by a combination of fewer buyers and a greater number of owners looking to cash out. Here’s the REBGV listings chart for the last 4 years courtesy of Paul Boenisch:

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Clicking the graph above will bring you to his blog which has additional graphs for sub areas- we’re seeing rapid inventory growth on the west side and north shore. Paul also tracks daily statistics on sales, price and listings on his website.

In the Fraser Valley listings are growing as well – They now have a near record amount of inventory. The following sales and listings chart for the FVREB was created by Mohican at Langley Financial Planning. Check out his site for more charts and detail on the Fraser Valley market.

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It looks like growing inventory is starting to put some pressure on prices. Prices in all categories are up year over year, but the month over month figures look unusual for the spring selling season. The Benchmark price is down in all categories in North Vancouver, slightly up for houses and townhouses in Vancouver, but Vancouver condo’s and apartments saw their benchmark price drop by 3.16% in April. The spring market so far this year is looking markedly different from the last few years, we’ll see how this trend holds up into the summer.

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jesse

patriotz, further to your point, anyone getting paid only on a completed sale cannot be working in the best interests of the buyer and often not the seller.

Other considerations can keep them honest to a degree but we all gotta eat sometime. It's enough of a concern that buyers and sellers should know the deal.

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jesse

"Anyone getting a commission on the sales price cannot be working in the best interests of the buyer. Ever." They aren't necessarily working in the seller's interests either. The marginal commission of keeping prices high is normally secondary to a sale at all and this I am sure will become crystal clear in the next few years. It is during a strong buyer's market, and in the extreme bidding wars, that things go out of whack. I'm sure we'll be kicking around the phrase "selling wars" at some point. There have been discussions here, on Chipman's blog, and RETalks about alternative ways to pay Realtors. I don't think it's a simple problem to solve. The best we can do is to educate people that they are effectively on their own when it comes to price negotiation. A Realtor I used… Read more »

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I despair

Mold City, Thanks, those are good observations regarding the mechanisms at work. Probably next year would be a better time to make the move, assuming there will be a crash of course which I think is inevitable …. but timing is so hard to call.

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Mold City

despair: just make sure you know what you're in for, take a look around at rental listings, and I assume you guys have jobs you're coming for that pay decently? According to statscan we've suffered the biggest drop in income in Canada. There's tons of minimum wage jobs available here, but living expenses mean with that income you'd be living in a basement suite with roommates, so make sure you've got the income figured out before moving to Vancouver.

I suspect that if our market is anything like the busting US bubble cities you can expect rentals to get tighter temporarily. Many people are selling right now and if they've decided to wait out a crash they'll be looking for rentals as well. In Miami this meant rents went up a bit around their peak before everything came crashing down.

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Anonymous

patriotz,

you hit the spot! it's simple logic. they should have laws against this bullshit.

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Holdem

Just sold my place over the weekend and started looking for an apartment to rent downtown. After being an owner for the past 3 years, it felt really strange being in a place with 15+ other couples, filling out an application, providing personal details, hoping we'll get selected…I felt like I did when I finished school.

At current prices (buying vs renting) and cash in the bank, I can suck it up for a while…

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patriotz

Just trying to find a limited and unusual case to get an agent working for the buyer.

An agent is working for a buyer only if his renumeration is not positively correlated with the sales price. Nor can it be contingent on making a sale.

Since the interests of the buyer and seller are opposed, the compensation of their agents much be the inverse of each other, or at the very least not positively correlated.

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I despair

My wife wants to move to Vancouver. Arrgggh! But I may have to face reality and make the move. With growing inventory, when do you think the rental market will soften up especially on the west side, say Cambie and west?

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Vansanity

Building permits fall unexpectedly in March, led by Alberta which plunged 32.9%. Not to worry though BC increased .8%

http://preview.tinyurl.com/3fn85q

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alexcanuck

Patriotz:

One could use a different buyers agent for each property you have decided to bid on, perhaps? Just trying to find a limited and unusual case to get an agent working for the buyer.

Easier and more effective to hire one hourly to negotiate for you, no commission at all. Was that you brought that up a while back? I strongly agree, BTW, realtors do NOT represent the buyer! Period.

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patriotz

The real incentive is not the marginal commission but getting the buyer and seller to make a deal so the Realtors get paid at all.

Yes, but the point is that in a declining market, it is not in the interests of the buyer to buy at all. But if the buyer doesn't buy, the realtor doesn't get paid. Ergo, the realtor is incented to acting in the interests of the seller, i.e. making a sale, even if he gets the seller to drop the price, because it is against the interest of the seller not to sell.

Anyone getting a commission on the sales price cannot be working in the best interests of the buyer. Ever.

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jesse

"They certainly do, and they are paid on an incentive scheme that rewards them for getting the lowest price for the buyer, not the highest price for the seller. If you don’t know this you’re pretty thick, and if you do know this you think we’re pretty thick." Realtors are also rewarded in the long term for making their clients happy, either by repeat business or referrals. The real incentive is not the marginal commission but getting the buyer and seller to make a deal so the Realtors get paid at all. I know there's as much pressure on the seller to reduce their price as there is on the buyer to raise theirs though realistically in a "seller's market" I think the buyer does more moving on the price. Opposite on the way down though… It's obvious from the… Read more »

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patriotz

If there is a supply constraint due to government regulation or a monopoly situation and someone has market power I am sure you realize this could result in a run up.

That's not a bubble. If the supply of houses is restricted due to government regulation, or a monopoly of supply, rents will be higher too. A bubble is not simply something getting expensive. It means asset prices are not justified by the income returned to the buyer.

Only buyers can cause asset bubbles.

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Krrish2

Strataman,

People who are selling single properties they are selling like this…

May 2,2008 highest over the list 25%

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anonymou

patriotz"They certainly do, and they are paid on an incentive scheme that rewards them for getting the lowest price for the buyer, not the highest price for the seller. " I agree this is a conflict of interest and a cause of the realtors not being honest brokers but nevertheless the realtor is expected to be honest and represent his client not himself. I have gone to a listing realtor when I was looking and told him I did not have a realtor. The guy smelled double commission and was telling me he could talk his client down. And as for your comment that only the buyer causes an assset bubble. Well this one has been caused by buyers. But bubbles could be caused by different reasons. If there is a supply constraint due to government regulation or a monopoly… Read more »

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krrish2

"show me the buyers ?"

Here you go man…

April sales volume rose in comparison to March, to 3,218 compared to 2,997(+7.3%)you want some more?

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cashisking

Stop slagging Realtor's. I'm a bear, but it's not an agents fault people are idiots about there money. They're just doing there job and the good ones deserve the money they make.

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Strataman

yup! right you is! so original too except all the yank sellers beat them to it..probably a lot of discount sales in the coming month heh heh

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patriotz

The used car salesman is hired by the lot. He is an extension of the lot just think of him as the vendor. And in the same way an RE agent is hired by the seller, to act in the seller's interests. In both legal and economic terms he is an extension of the seller. And that also goes for the so-called "buyer's agent", who is a partner of the listing agent. In no way is a stock broker comparable to an RE agent. One, stocks trade on exchanges with transparent pricing. It is the exchange which negotiates the pricing, not the broker. Two, stock brokers have very clearly defined legal obligations to both buyers and sellers. Three, stock brokerage commissions are based on the volume of stocks bought and sold, not on the sales price, so stock brokers are… Read more »

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show me the buyers

?

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krrish2

"I want best BS pumper I can find for an agent. The job that an RE agent is hired to do is to extract the maximum amount of money from the buyer – period". Some point that can bring the buyers,sellers,and realtors to their sense quickly are: 1.If the prices are sharp the property most likely to sell quickly if not the property may never sell. 2.If the seller have to lose $100,000 from listed prices realtor will lose only $1,000. 3.If the buyer does not pay the listed or assessed price for the unit he is buying his unit and that perticular building gotta lose it's appreciation value in the future the time of reassessement. From the points above it is very difficult to cheat with the market only buyer to sellers and sellers to buyers market tip the… Read more »

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anonymou

patriotz your market view is one dimensional. There are buyers and sellers and they are part of the equation. You have the used car analogy let me give you the stock analogy. There are both buyers and sellers. I can be a seller who has a broker and a buyer who has a broker. The broker works for who he represents. The used car salesman is hired by the lot. He is an extension of the lot just think of him as the vendor.

Just like companies hire buyers to make purchases for them some hire marketers to sell for them. And some hire traders that do both.

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show me the buyers

RE agent is hired to do is to extract the maximum amount of money from the buyer – period.

caveat emptor!

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patriotz

Oh by the way, only one group of people is really responsible for any asset crash, be it stocks or RE.

The buyers. Yes, that's right.

Asset crashes happen when prices get too high, and prices get too high when buyers are willing to pay more for an asset than it's really worth. That's all there is to it.

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patriotz

I’m his friend and can’t even think what he tells his clients. When the market does turn and some of clients lose out on their money I’m sure he will blame the US, the economy and the developers but never himself for the Vancouver housing crash.

One more time.

RE agents are commissioned salespeople, and the clients of commissioned salespeople are the sellers, only. Buyers are not clients, whether they are buying used houses or used cars. Everyone understands this for cars, but for some reason they have trouble understanding this for houses.

And when I sell a house, I want best BS pumper I can find for an agent. The job that an RE agent is hired to do is to extract the maximum amount of money from the buyer – period.

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