GVREB Press Release May 2012

Note: Every month the GVREB releases a market update. These are very similar to the official REBGV press release – both use real numbers and expert anecdotes, but they spin different directions.  Here is the newest press release covering the Greater Vancouver real estate market for May 2012.

High Inventory Levels and Low Sales Volumes as Greater Vancouver Enters Summer Market

FOR IMMEDIATE RELEASE ON VCI

VANCOUVER, B.C. –June 1, 2012 – Sales in Greater Vancouver showed a typical seasonal trend in May but continue to be at low sales volume levels not seen for more than a decade. May showed a pronounced decrease in sales per market day falling from 147 last month to 130 in May. This decrease of 12 per cent compares to the typical average decrease from April to May of 9 per cent. Continued below average sales combined with continued above average listings have resulted in both record high seasonal inventories and near record low sales to listings ratios. Global economic uncertainty, tightening mortgage regulations, cautious buyer sentiment and reduced net immigration rates have reduced overall buyer demand.

May’s total unit sale activity was 2,857 properties. Although this is flat compared to April’s sales, there were 22 market days in May compared to 19 in April and May was the lowest May sales since May 2001. May 2012 sales were 15 per cent below the 3,377 units sold in May 2011 and 5 per cent below May 2008, which was the most recent low for May sales. May’s sale to list ratio of 41% was the second lowest in more than a decade and significantly below the historical average for May of approximately 61%.

GVREB reports that May 2012 continued a negative market sales trend which has existed for the past 10 months and considering expected changes in credit conditions, a recent reduction in the level of foreign buying activity, global financial uncertainty, macro-level demographic changes and continued media coverage of a possible overvalued market, there are no foreseen factors that could change the trend to a positive direction. Failure of current listings to be removed from the market or an immediate reduction in new listing rates will result in measurable price decreases by motivated sellers in the near future. May 2012 also brought significant decreases in average selling prices of detached and attached properties with the average detached price down 13 per cent from its peak in February 2012. During May, the average detached price in the last half of the month was 7 per cent lower than the first half resulting from more pronounced seller discounting in order to complete their sale transaction.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 6,950 in May. This is approximately 22 per cent above the 10-year listing average for the month of May. Listings in May 2012 represented a 17 per cent increase compared to May 2011 when 5,931 properties were listed for sale and an 1 per cent decrease compared to the 7,014 new listings reported in May 2010.

Greater Vancouver continued to have near seasonal record active listings. At 17,834, the total number of residential property listings in Greater Vancouver increased 8 per cent this month alone and 22 per cent compared to May 2011. Total Months of Inventory now is firmly in buyer’s market territory with approximately 6.2 months of inventory.

The Residential Reference Price for all residential properties in Greater Vancouver over the last 12 months has increased 5.1 per cent to $684,100 in May 2012 from $650,800 in May 2011. We expect that high inventory levels will put pressure on prices and we foresee very little likelihood of higher prices in the near future based on current market conditions.

Sales of detached properties in May 2012 slowed to 1,184, a decrease of 25 per cent from the 1,570 detached sales recorded in May 2011, and a 5 per cent decrease from the 1,256 units sold in April 2010. The larger year/year decrease in sales compared to the attached and apartment markets is due to the higher than normal sales volumes for detached properties in May 2011. The reference price for detached properties increased 5.4 per cent from May 2011 to $1,060,000 but fell from $1,064,800 in the previous month.

Sales of apartment properties reached 1,190 in May 2012, a 3 per cent decrease compared to the 1,228 sales in May 2011, and a decrease of 12 per cent compared to the 1,354 sales in May 2010. The reference price of an apartment property was up 3.0 per cent from May 2011 to $385,000.

Attached property sales in May 2012 totalled 483, a 17 per cent decrease compared to the 579 sales in May 2011, and a 12 per cent decrease from the 546 attached properties sold in May 2010. The reference price of an attached unit increased 0.4 per cent from May 2011 to $480,000.

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gordholio
Member

That’s a beautiful thing. Obviously a ton of work. Just awesome.

rp1
Guest
rp1

I blame Christy Clark for this disaster. She clearly deserves it, and the masses aren’t likely to accept the housing bubble explanation anyways. It’s all BC Christy’s fault.

boogeybear
Guest
boogeybear

Just the facts please. Assumptions of what is causing the changes is outside of any one persons knowledge. 6.2 months of inventory is not FIRMLY into buyers’ territory. The months of inventory is too general and not described what it means. If the MOI was 6.2 for new construction, then that would be a market good for sellers of new or to be built complexes.

Let’s take the high road on presenting the information.

Sparky604
Guest
Sparky604

“a recent reduction in the level of foreign buying activity”

I was under the impression that they don’t have any data on foreign buying activity. How can they claim there has been a reduction?

patriotz
Member

@boogeybear:
“6.2 months of inventory is not FIRMLY into buyers’ territory.”

The sale price of a property (i.e. if it sells) is always determined by the high bid. Since nobody has to buy, the market is always in “buyers’ territory” regardless of MOI.

MOI is actually a metric of how many sellers are asking above market. That’s all.

jumpin in
Guest
jumpin in

Thanks a lot for the good work!!!
I was wondering: is there a typo (13 % since February 2012 –> 2011 or 2010)?

As for those who complain about the spin: this is fair game 😉
This is why it is fun.
Who ever presented an objective report in the past 10 years? Surely not Global TV or The Vancouver Sun 🙂

boogeybear
Guest
boogeybear

No one is putting a gun to your head and telling you that you HAVE to buy. Very True. But that would not be a free market situation anyway. The free marketplace is about willing buyers and willing sellers. The person that is not actively looking to buy or chooses not to buy has no affect on prices. Just as I have no affect on prices in London, England.

boogeybear
Guest
boogeybear

@patriotz: The market value of a property requires a willing buyer and a willing seller. Someone who chooses not to buy, just as someone who chooses not to list their property has no affect on market value. Just as I have no affect on prices in London, England.

boogeybear
Guest
boogeybear

Sorry about the double posts, I was trying to edit and just F’d up.

patriotz
Member

@boogeybear:
That is entirely correct, but that’s what I’ve said as well in the referenced post and elsewhere.

registered
Member
registered

3 boogeybear Says: “Just the facts please. Assumptions of what is causing the changes is outside of any one persons knowledge.”

Thanks, but like rain follows clouds I’ll continue to risk associating the market stumbles to the steady return of historically normal lending standards. Its predictive power has been solid so far.
As I intend to ignore advice to not press this point, especially for an industry that had no qualms leveraging the worst aspects of hubris, fear and greed to move product, please feel free to continue making a case for them in the spirit of ‘fairness’. As a reasonable person who sees both sides, I’m sure you’ll agree that given their past behaviour it’s no stretch to suspect they’ll try anything to fulfill their fiduciary responsibility, including astroturfing bearish forums with ‘bears defending bulls’.

mac
Member
mac

@patriotz: So funny to hear you state that. It’s the complete opposite of what realtors tout–prices are always sticky as no one ever has to buy a place. It’s all just BS sloganeering depending on what camp you’re in. What will foretell who’s selling and who’s buying at what price are the fundamentals, of course.

mac
Member
mac

@mac: Whoops! To early for me. Realtors are always touting prices are sticky as no one ever has to sell a place. BS!

N
Guest
N

@mac:

“What will foretell who’s selling and who’s buying at what price are the fundamentals, of course.”

Fundamentals are good at predicting in the very long term (multiple decades), but often useless in the shorter term. I don’t think it is worth trying to predict prices. What fundamentals can tell us at any time, however, is whether a certain price is a good deal or not.

Mick Murphy
Guest
Mick Murphy
grrrr
Guest
grrrr

It’s looking increasingly clear that the Titanic is getting closer and closer to the iceberg. Sellers, don your lifejackets and wave those SOS ‘reduced’ signs around in hopes of rescue! Realtors, umm, just keep playing your annoyingly out of tune violins and pretend everything is fine.

patriotz
Member

@N:
“Fundamentals are good at predicting in the very long term (multiple decades), but often useless in the shorter term.”

Worked pretty well in the US over the past 6 years. Assuming we’ve hit the peak in Vancouver and Toronto (rest of BC and Alberta are already past it), I think we’ll see similar results over the next 6. Or faster if China goes TU or some similar shock occurs.

Troll
Guest
Troll

@patriotz:

Worked pretty well in the US over the past 6 years. Assuming we’ve hit the peak in Vancouver and Toronto (rest of BC and Alberta are already past it), I think we’ll see similar results over the next 6.

So in that scenario prices are overvalued in your opinion from 2003 to 2018, 15 years. Seems like you’re agreeing with N, that’s pretty long term.

Troll
Guest
Troll

I always laugh when someone says, “Nobody ever needs to buy”. Sure that’s academically true, but tell that to someone who doesn’t believe renting is an option, believes a family needs to be raised in an owned home, gets constant pressure from family, friends and society to buy, and is living in fear of being priced out forever. These people will behave as if they HAVE TO BUY. Saying that they don’t just misses the bigger picture.

oneangryslav2
Guest
oneangryslav2
From the CBC story linked to earlier in this thread: Predictions of a bursting real estate bubble have swirled around the Vancouver market for years. Despite the indications, economist Tom Davidoff, of UBC’s Sauder School of Business thinks it’s too early to name it yet. “It’s going to take several months of data-confirming of what we seem to be seeing before I would be anywhere close to be prepared to say, ‘That’s it, we had a bubble and now it’s bursting,’” Davidff said. I agree that it’s much too early to tell if the bubble has burst, the only thing holding this market up is low interest rates. Every other indicator–from incomes, to the international economic situation, to lending standards, to debt levels, etc., etc.,–would suggest that there is no support for current prices. Also, if you can’t see that… Read more »
mac
Member
mac
I walked by The Residences at West preview on opening day. Crickets. Crossed-arm realtors looking out the window as I walked by wondering if I was coming in. I wasn’t. Today I get this in my inbox: Preview Event – 1 Additional Day to Preview Our 5-Day Preview Event has been a resounding success! Prospective purchasers have recognized the value and convenience of WEST and have filled the Sales Center each day. Based on the level of interest and the feedback our team has received, we have extended our Preview Event for 1 additional day – Monday June 4th from 11:00am to 5:00pm. I sure hope it goes through, though. I’d like to see this project developed for all the retail it will bring to the area. Sure, it’ll block my view but there’s nothing I like better than seeing… Read more »
Dave
Member
Active Member

@Troll:

Drachen claims prices have been overvalued since 1985. If you follow the rationale behind such opinions, you end up sitting on the sidelines for decades.

Anonymous
Guest
Anonymous

@patriotz:

“the market is always in “buyers’ territory” regardless of MOI.”

Not by it’s most commonly-used meaning, which is what’s most important.

Anonymous
Guest
Anonymous

@Troll: “These people will behave as if they HAVE TO BUY.”

Exactly. Which is why some go as far as to leave the city in which they currently live in order to buy.

Best place on meth
Member
Best place on meth

@Dave:

“Drachen claims prices have been overvalued since 1985. If you follow the rationale behind such opinions, you end up sitting on the sidelines for decades.”

Are you suggesting that prices are not overvalued now and that it would be unwise to sit on the sidelines at this point?

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