2012: Worst July since 2008
Ring the bell! July 2012 has come to a close.
Soon we’ll see the press releases from the REBGV (and more entertaining from the GVREB) but it’s starting to look a lot like 2008 again.
Sales have dropped off dramatically, we’re down about 16% from last July and about 9% from last month.
Listings are growing slower than they did in the spring, but MOI is close to what it was in July 2008 according to VMD:
July 2012 Sales:
YoY: -16%
MoM: -9%Months Inventory:
2012-07: ~8.5 2012-06: 7.8 2012-05: 6.3 2012-04: 5.9 2012-03: 5.3 ... 2011-07: 5.9 ... 2008-07: 8.8
According to madashell we needed to see less than 115 listings on the last day of the month to have lower sales volume than 2008.
It looks like we just squeaked under that, Paulb says we saw 106 sales for the day. Here are the rest of the stats for July 31st:
New Listings 186
Price Changes 137
Sold Listings 106
TI:19188
August 1st, 2012 at 12:07 am 1
Yipeee! On other less fun news, the inventory is hedging a bit lower than in 2008. But does it matter really? What is the most important metric: inventory, or MoI (months of inventory)? I’ve look around the Google and it seemed that most RE ‘pundits’ give more importance to the MoI.
Now it would be interesting to see the MoI in dead-man-walking areas like Richmond, Van West, West Van, etc…
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August 1st, 2012 at 12:09 am 2
In case anyone missed it, Paul B updated his website stats to July 29th. I’d imagine these are basically going to be representative of the end of month stats.
———————–
AVERAGE PRICES – MoM
VANCOUVER WEST
-0.6% = Detached
-14.3% = Townhouses
-4.1% = Apartments
VANCOUVER EAST
-2.9% = Detached
-2.0% = Townhouses
-0.3% = Apartments
NORTH VANCOUVER
+10.1% = Detached
+5.2% = Townhouses
-3.1% = Apartments
WEST VANCOUVER
-2.0% = Detached
RICHMOND
-4.1% = Detached
-12.1% = Townhouses
-0.5% = Apartments
———————–
Notable mentions include:
1) Richmond Townhouse prices down 13% YoY (30 month low)
2) West Vancouver and Richmond Detached sales down over 50% YoY
3) North Vancouver detached hits all-time record high (???)
Looks like it is going to be a really rough July. And this was WITH the mortgage rush. The first half of July had us at an incredible sales pace, but then post-July 9th we saw a huge crash. August could be the straw that breaks the camel’s back. Time will tell.
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August 1st, 2012 at 12:16 am 3
@French_In_Exile:
It is true – if there’s one stat that says it all, it is MOI, which incorporates SALES + LISTINGS into a nice number. Richmond’s MOI is currently at 22 for detached homes. To put it bluntly: In August, only 1 out of every 22 homes in Richmond will sell. The other 21 will sit there with for sale signs up. Imagine if you were trying to sell your house and had to compete with 21 other homes, knowing only one of yours would sell. That’s a 4.5% chance to sell your house. And the house that will sell? The one that lowers its price the most…
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August 1st, 2012 at 2:53 am 4
@ScubaSteve:
All sellers have a 100% chance to sell. All they have to do is drop the price.
It’s not a matter of bad luck, just bad pricing. There are always enough buyers at some price.
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August 1st, 2012 at 5:53 am 5
Here’s the thing: I sense someone is cooking the books at REBGV – just two days before the end of July we stood at 54 sales. Two days later, there are 106 sales. WTF, are these numbers for real? Thoughts, anyone?
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August 1st, 2012 at 7:10 am 6
Remember that when inventory reached this level in 2008, the government did everything it could to reinflate the housing bubble – raised CMHC cap, extended amortization periods… etc. etc. etc.
Won’t happen this time. Look out below in September when market activity picks up and everyone’s attention turns back to the ongoing implosion.
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August 1st, 2012 at 8:10 am 7
The Shxt will not hit the fan until Sep/Oct. Sep is when the market is supposed to pick up. It wont. By Oct sellers will realize the market has gone no bid. We will see the real price reductions start taking place – like 25% off past sale prices. Developers will start their bulk sales. Banks will reduce credit. Construction on some projects may halt. I love the fall.
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August 1st, 2012 at 8:56 am 8
@patriotz: It’s not a matter of bad luck, just bad pricing.
The funny thing is how many view it as bad luck, when a sharply priced property right now would sell for just a bit under a record all time high price.
Instead people hold out for ‘what it’s worth’ and ride the market all the way down, just like we saw in the US.
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August 1st, 2012 at 9:09 am 9
@Lagos: “Instead people hold out for ‘what it’s worth’”
Probably because when they sell they will soon be buying again, even the purebred speculators who just can’t seem to walk away from the table.
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August 1st, 2012 at 10:14 am 10
9 jesse Says: “…when they sell they will soon be buying again, even the purebred speculators ….”
How does a zero sum scenario of owners and speculators buying soon after they sell reconcile with the explosion of listings in the US? They can’t all be foreclosures.
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August 1st, 2012 at 10:30 am 11
-
July average prices are posted on Yatkowsky’s Blog.
http://www.yattermatters.com/2012/08/three-arrows-down-vancouver-average-prices/
Just so beautiful.
Does anyone know when was the last time that detached prices declined for 5 consecutive months?
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August 1st, 2012 at 10:42 am 12
looking at larry’s SFH Average Price stats:
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August 1st, 2012 at 10:45 am 13
I don’t even talk about housing anymore with some friends. These are the friends that have bought 800k to 1 million dollar homes and are in their early thirties. Being close friends, it is disconcerting how badly they will be hurt when this bubble falls apart. So I don’t talk about it. Tried to warn them though. Anyone else feel the same way?
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August 1st, 2012 at 10:49 am 14
Also, I looked at the SOLO development. Doesn’t look like much work has started despite the high number of units apparently sold.
Will there be a market for the 4 – 45 storie towers? Pros are the location with respect to the sky train and brentwood mall. Also, it is the best of the 4 condo sections of Burnaby. Cons are that is a lot of units! Will bosa get screwed again by the market similar to the Legacy development in 2008? Or, considering they haven’t started construction, do they have time on their hands?
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August 1st, 2012 at 10:50 am 15
On the ground report…
I was strolling around the Burke Montain area of Coquitlam this morning.
There is a stretch of newly built townhouses (The Breeze) on Coast Meridian between Gislason and David. Mostly empty.
On Gislason Ave, between Coast Meridian and Soball, there is a long row of new-build SFHs. All unsold.
In fact, it doesn’t even look as though they are even going to bother anymore with having an agent on hand or to have any open houses. Too much bother for so little return.
The lawns/landscaping have been let go. There isn’t even the pretense anymore of a spit and polish development.
This is only ONE small area of the newly-developing Burke Mtn. neighbourhood. They are all highly overpriced in this current market.\
Look for huge downward “readjusments”. Nyuk, nyuk…
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August 1st, 2012 at 10:54 am 16
for your viewing pleasure
http://s10.postimage.org/n4zpabsbd/2012_07_Avg.png
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August 1st, 2012 at 10:57 am 17
@Boombust: Thanks for the update. Just wondering, what kind of prices are we talking for the houses and condos?
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August 1st, 2012 at 10:59 am 18
Also had a question for VMD. How are things looking on the Chinese real-estate forums?
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August 1st, 2012 at 11:11 am 19
@900kCrackHouse:
For me, it’s boring to the point where I don’t feel very motivated to post. As I said a few days ago, it was more fun as a contrarian fighting a uphill battle in early 2011. Now even the bulls are adapting their stance to “we all know it’s falling, but I guarantee it won’t fall too much for too long, sellers should wait it out” (Their stance used to be “UPUPUP to the Moon!” lol)
I used to get a good share of jeers and typical bullish trash talk, but since a few months ago the resistance almost completely stopped.
It’s not that fun for a bloodthirsty warrior to walk onto the battlefield finding most of the enemies already deserted or defected.
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August 1st, 2012 at 11:27 am 20
Greater Vancouver Property Sellers are faced with a weakened pool of buyers after changes in credit conditions.
FOR IMMEDIATE RELEASE ON VCI
VANCOUVER, B.C. –August 1, 2012 – Property sellers in Greater Vancouver were met with changes in credit conditions which has reduced the purchasing power of the decreasing pool of buyers. The current standoff between unmotivated sellers and value conscious buyers resulted the lowest sales volume for the month of July in the past 12 years. Daily sales volumes also deteriorated towards the end of the month falling from 117 units per day in the first half of the month to 86 units per day in the last half of the month. Sales volumes decreased as the effects of the changes in credit conditions began to widely affect the market at all levels. We now see that prices have begun to fall in most markets as motivated sellers are accepting larger price decreases in order to complete their sale transaction.
GVREB reports that residential property sales of detached, attached and apartment properties reached 2,144 in July. This total represents a 17 per cent decrease compared to the 2,571 sales in July 2011. Sales in July 2012 were 1 per cent lower than the sales in 2008 when 2,174 units were sold. On a sale to list basis, July’s ratio of 45% was the second lowest of the previous 12 years.
The newly enacted mortgage rules have had an immediate impact on the market but the impacts on the sales levels are not yet fully reflected in these statistics for two reasons. Sales levels initially increased at the beginning of July compared to June after the changes in the mortgage rules were announced and several buyers immediately brought forward their purchase decisions to avoid having the new mortgage rules applied to their purchase. Second, due to the standard sale reporting time lag from the date a sale is contracted to the date a sale closes meant that only approximately 25 per cent of the sales included in these July statistics were for transactions subject to the new mortgage rules. In the final week of sales for the month, unit sales reported were mainly those subject to the new rules and the reported sales volume for the final week of July was the lowest weekly sales ever reported in July since July 2000 with a weekly average of only 83 sales per day. The July 2012 sales volumes of detached properties in Richmond, West Vancouver, Burnaby and Vancouver West have all fallen over 40% from July 2011 with Richmond being the weakest market with MOI exceeding 20 and fewer than 60 units selling during July 2012. We now see that most transactions in the detached market are for less than their tax assessed values which were determined at July 1, 2011.
New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,725 in July. This is approximately the average listing rate for the past 12 years. We note that the weakness in the market is resulting in fewer new listings coming to market as sellers wait in anticipation of better selling conditions in the future. In addition, when factoring in the effects on the monthly new listing count from frequent listing cancellations and subsequent relisting of the same property, listings for the 2012 year are more than 10 per cent below long run averages. As a result, the number of active listings has started to decrease. We believe this trend will reverse strongly in September when we expect an above average number of listings to come to the market.
At 18,071, the total number of active residential property listings in Greater Vancouver increased 19 per cent in the past year but fell by 2 per cent compared to June 2012. Total Months of Inventory increased for the fifth straight month and is 8.4 months of inventory. However, over the past 60 days, there has been a larger deterioration of the detached inventory increasing to 10 months at July 2012 from 6.4 months at the end of May 2012. Attached and apartment inventory increased only marginally to 7.5 months from 6.1 months. When considering the pace of sales in the second half of July, the MOI for detached reached 11.5 and attached and apartment reached 9.1.
The Residential Reference Price for all residential properties in Greater Vancouver over the last 12 months has increased only marginally to $617,000 in July 2012 from $612,200 in July 2011. We believe that in the next few months, the annual price comparison will show decreases in this index.
Sales of detached properties in July 2012 slowed to 802 units, a decrease of 27 per cent from the 1,099 detached sales recorded in July 2011, and a 12 per cent decrease from the 908 units sold in July 2010. July 2012 was the lowest sales volume of detached in the past 12 years and was 3 per cent below the 827 units sold in July 2008. The reference price for detached properties increased 1.2 per cent from July 2011 to $949,000 but fell from $961,000 in the previous month.
Sales of apartment properties reached 949 in July 2012, a 9 per cent decrease compared to the 1,040 sales in July 2011, and a decrease of 3 per cent compared to the 979 sales in July 2010. The reference price of an apartment property was equal to the level at the end of July 2011 at $374,300.
Attached property sales in July 2012 totalled 393, a 9 per cent decrease compared to the 432 sales in July 2011, and a 7 per cent increase from the 368 attached properties sold in July 2010. The reference price of an attached unit decreased 1.0 per cent from July 2011 to $466,000.
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August 1st, 2012 at 11:43 am 21
#17…
“The Breeze” townhouses are now trying to fetch “…from $399,000 and up!”
(they started off in the low 500k’s last year…
and, the new SHHs are trying to get from the high 7′s to the 8′s.
The agent flogging The Breeze is Chris Neely for Remax All Points Realty.
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August 1st, 2012 at 11:43 am 22
meanwhile, Canadian business confidence dips for fourth month, now at three-year low
not boding well for employment..
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August 1st, 2012 at 11:43 am 23
@GVREB: We did it!!! Sales are 1% lower than 2008 (2174 vs 2144). Pat yourselves on the back vancouver.
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August 1st, 2012 at 11:55 am 24
I kept telling everyone I know that THERE IS NO WAY this province will escape a serious recession. It has NEVER happened in the past.
The Fed response to the 2008 “crisis” was a head fake. It bought BC a little more time, that’s all.
We are always the last in and the last out of any recession/downturn.
This economy is going into the dumpster. As usual, the average Joe will ask, “What happened?”
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August 1st, 2012 at 12:19 pm 25
@VMD: So, at least four of you even think unemployment is a good thing? Yup, the hight of bitterness and cynicism.
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August 1st, 2012 at 12:23 pm 26
@Anonymous:
Lots of people think that unemployment is a good thing. I know lots of business owners who like unemployment because it drives down the cost of labour. China loves having hundreds of millions of unemployed. That’s when you can pay people $2 a day. If you are a true capitalist, you will love unemployment.
Full employment is a socialist goal. Commi.
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August 1st, 2012 at 12:24 pm 27
The average prices is now down around 16% from the peak in February 2012. When you look at the graph, it looks like condo average prices are down to 2009 levels.
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August 1st, 2012 at 12:26 pm 28
http://trendlines.ca/free/economics/RealtyBubbleMonitor/RealtyBubbleMonitor.htm
Some good info – in case this never made it on VCI when it was put out.
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August 1st, 2012 at 12:30 pm 29
A bit offside, but I was waiting in my GP’s office Monday when a man came in looking like a drug rep. He identified himself to the receptionist as a representative of Mosaic wanting to talk (he had packages in the two doctors’ names) to the doctors about the new development at Broadway & Bayswater. The receptionist put him off but he became quite insistent – he was asked why and told the receptionist that he wanted to talk to the doctors about having their senior patients informed about the housing options available in such a convenient location on West Broadway (btw, it is not assisted living, merely small condos over retail). He was sent on his way but I smelled desperation in the man – did he really think that he would be able to have doctors shill his development and if so, what was he offering them.
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August 1st, 2012 at 12:31 pm 30
@Anonymous:
hardly, stating the facts does not equate taking pleasure in it.
the mis-allocation of resources into RE over the past decade will make the situation worse.
in gloomy economic situations like what we’re in now (and perhaps the next little while), people need to be reminded not to overextend themselves, contrary to what most realtors preach (“take advantage of the low monthly payments!”)
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August 1st, 2012 at 12:37 pm 31
@Anonymous: “So, at least four of you even think unemployment is a good thing? Yup, the hight of bitterness and cynicism.”
Ideally, I would like that everyone is employed in productive jobs resulting in economic gains.
But, that is not what we have now. Right now our percentage of jobs in construction in particular, and FIRE in general, is at all-time highs. These jobs are the result of a credit binge, and are not sustainable.
Eventually the house of cards will collapse, resulting in higher unemployment. I cheer unemployment because it is the first step on the road to recovery.
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August 1st, 2012 at 12:40 pm 32
awwww i love you guys
thanks soooo much for these awesome stats!
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August 1st, 2012 at 12:59 pm 33
Wow. This is a really big drop. Taken from the Vancouver bubble thread at http://forums.redflagdeals.com/vancouver-bubble-road-50-housing-crash-w-monthly-stats-1194032/
—————-
DETACHED – $1,041,300
- Down 15.7% in 5 months from all-time high in Feb, 2012 ($1,235,200)
APARTMENT – $406,400
- Down 15.9% in 15 months from all-time high in Apr, 2011 ($483,400)
ATTACHED – $538,300
- Down 9.2% in 4 months from all-time high in Mar, 2012 ($593,100)
—————-
Condos are really dropping fast. Notice how condos hit a high in Apr, 2011, unlike detached/attached which hit highs in 2012.
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August 1st, 2012 at 1:22 pm 34
@VMD: Nothing wrong with posting the facts. I was referring to all the thumbs up in response to a story that supposedly does not bode well for employment. And, UnagiDon, could you explain how unemployment is a step to recovery? That sounds like completely loony, armchair economics to me.
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August 1st, 2012 at 1:42 pm 35
@Anonymous: I view a thumbs up rating on a comment to mean “Hey guys, this is important / interesting”
I don’t view it as “I LOVE THIS FACT!”
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August 1st, 2012 at 1:43 pm 36
@Anonymous: “UnagiDon, could you explain how unemployment is a step to recovery?”
Suppose your friend is a heroin addict. They decide to quit. They start having seizures, vomiting, diarrhea, etc. Should you applaud these awful symptoms that they’re experiencing? Yes, because it is progress towards coming clean.
Is the US economy in better shape now than it was in 2007? I think so. They have stopped doing useless things like building houses that no one wants at prices no one can afford.
“That sounds like completely loony, armchair economics to me.”
It is my opinion. If you want an economist’s opinion, feel free to ask Cameron Muir, Patti Croft, Gregory Klump, etc.
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August 1st, 2012 at 1:56 pm 37
Lets give this bear market the credit it deserves. The title of this post should read:
JULY 2012: WORST JULY SINCE (AT LEAST) 2000.
Does anyone know when the last July with less than 2144 sales was?
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August 1st, 2012 at 2:00 pm 38
Re: Condo price averages. I believe I posted a couple of weeks ago on the prices and how there was a noticable movement down in the average and median for condos. What I was seeing was that those purchasers who were the most likely to be cut away from being able to buy anything because of the rule changes were immediately bringing purchases forward. Thus, the very lowest priced units were selling at a much higher rate. This affected the mix and the average. Towards the end of the month, the impact of this was not coming through any more. Thus, I would not look at this as an immediate drop in average but more of a sales mix issue. I’m not saying that the prices are not falling – it’s just a component of the decreases we are seeing this month are driven by the types of buyers who decided to get in before the rule changes took effect and how those purchasers tended to be on the lower end.
Pretty telling however that sales rates at the end of the month were really down and especially once we stopped seeing the pre-July 10 sales post – the volumes we are left with are very very slow.
We could see 1600 units in August . . .
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August 1st, 2012 at 2:02 pm 39
@blamegame: Fair enough. But the trend on this blog is to give thumbs-up to all negative news that might lead to lower RE prices, even it also means pain and heartbreak and suffering families. I find that extremely cynical and indicative of a tunnel-vision; RE prices have become all-important to some of you and they MUST GO DOWN at all costs.
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August 1st, 2012 at 2:04 pm 40
@UnagiDon: This analogy doesn’t explain anything. Drug withdrawal symptoms are a matter of physiology. The economy is a totally different beast. So, please try again.
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August 1st, 2012 at 2:13 pm 41
@UnagiDon: “Eventually the house of cards will collapse, resulting in higher unemployment. I cheer unemployment because it is the first step on the road to recovery.”
are you the dumbest of what! no wonder, stupid bears just sit there widely open their mouths waiting to be fed.
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August 1st, 2012 at 2:19 pm 42
@UnagiDon: “They have stopped doing useless things like building houses that no one wants at prices no one can afford.”
According to 2009 estimates approximately 3.5 million Americans experience homelessness in any given year, of which approximately 23% are families with children. Prices are clearly an issue, but do you still want to maintain that no one wants those houses? Building and maintaining homes is a good thing, and absolutely vital to a thriving community.
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August 1st, 2012 at 2:20 pm 43
@Anonymous: An economy sustained by an inflated RE bubble is NOT sustainable. So to avoid even more pain, heartbreaking and suffering families (USA circa 2008 anyone?) in the future, it is NECESSARY that the economy comes back to sound fundamentals (RE and other assets appreciation as a proportional function of real wages appreciation. Not the other way around).
Stop leaving in a dream and face reality.
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August 1st, 2012 at 2:29 pm 44
@Anonymous
“According to 2009 estimates approximately 3.5 million Americans experience homelessness in any given year, of which approximately 23% are families with children. Prices are clearly an issue, but do you still want to maintain that no one wants those houses? Building and maintaining homes is a good thing, and absolutely vital to a thriving community.”
So your point is: homelessness exists, therefore building houses is good.
You might want to look up logical fallacy.
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August 1st, 2012 at 2:40 pm 45
@bcj: Common tactic here: mis-state the non-bear’s point and then accuse him of an unexplained logical fallacy. You might want to look up “strawman fallacy.” And UnagiDon might want to check out “false analogy.”
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August 1st, 2012 at 3:09 pm 46
@Anonymous: “This analogy doesn’t explain anything. Drug withdrawal symptoms are a matter of physiology. The economy is a totally different beast. So, please try again.”
Well, you are right, I did not give a precise explanation.
Let’s say that there are 3 stages:
(A) Unsustainable euphoria.
(B) Pain.
(C) Healthy.
For most addicts to overcomes their addiction, the necessary path is (A) => (B) => (C).
In economics, the analogous stages are:
(A) An economy based on a RE boom and credit binge.
(B) High employment due to loss of construction jobs.
(C) A vibrant, diversified economy.
Vancouver is very much in (A). Many parts of the US are in (B). It would be nice to be in (C).
Is it necessary to pass through stage (B) in order to transition from (A) to (C)? Or is it possible to transition to (C) directly?
I don’t know. But it seems to me that avoiding (B) would require masses of construction workers, realtors, and mortgage brokers to instantaneously find a job in a new industry, which presumably will require learning new skills. Seems unlikely.
But who knows, it might be possible. Maybe those soon-to-be-unemployed all have PhDs in molecular biology.
http://vreaa.wordpress.com/2012/04/24/realtors-with-phds-im-a-fully-qualified-brain-surgeon-i-only-do-this-job-because-i-want-to-be-my-own-boss/
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August 1st, 2012 at 3:11 pm 47
@Anonymous:
“Prices are clearly an issue, but do you still want to maintain that no one wants those houses? ”
Of course somebody wants them. Heck, I’ll buy a dozen of them for $10K each.
What, the sellers won’t take $10K?
Get the point?
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August 1st, 2012 at 3:22 pm 48
@UnagiDon: Much better. But, you seem to be taking for granted that the only way from A to C is a dramatic or instantaneous shift, resulting in massive loss of employment among construction workers, realtors, and mortgage brokers. Maybe junkies have to go cold turkey and suffer in order to get from A to C. But, this is still just an analogy. You need to explain why the same applies to the economy and why there can’t be a “soft landing” and a relatively painless gradual transition. I still can’t accept your view that unempoyment is a good thing because it is a necessary step towards a recovery.
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August 1st, 2012 at 3:34 pm 49
@Anonymous:
There can’t be a “painless transition” because the longer people keep buying at excessive prices the more damage is done to the real economy, because capital keeps being allocated to unproductive RE and people get more in debt.
If you think a slow drawn out decline from a RE bubble is a good thing, just look at Japan. And Japan saw far less misallocation of resources to its RE bubble than the US or Canada because of its very strict controls on new development.
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August 1st, 2012 at 3:37 pm 50
@Anonymous: I’m no expert, but it would appear to me that the ‘soft landing’ scenario is one that is hoped for in all housing bubbles and it never really seems to work out that way.
I think you need to explain why you feel it’s reasonable for us to expect a ‘soft landing’.
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August 1st, 2012 at 3:45 pm 51
@Anonymous: Let’s look at this way: you seem to agree that housing here is overpriced and due for a correction.
If houses are selling for more than they are worth and they must correct to a lower selling price, who is served best prices slowly drag down for years? If prices reset to new level overnight, who would be hurt?
Presumably once prices are back to a normal level it means more people buying and no slow drag down as everyone leaks equity.
Anyone who owns a house is not hurt by even a huge drop in prices unless they have to sell and move somewhere else. This isn’t a problem in a normal housing market, because only a sucker would pay more for a house than they could rent it out for.
If they want to move up they are actually helped by a big drop in prices because the difference in prices between each home will be reduced as well.
The only people hurt are those that owe more than they can pay, but that’s a debt problem – someone with growing debt is going to be hurt eventually no matter what since they simply can’t handle their money.
Alternately we could have prices slowly drop over years, and watch as more families and companies move away to places where the housing market isn’t screwed.
I think your ‘soft landing’ scenario is not as rosy as it sounds.
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August 1st, 2012 at 3:49 pm 52
@Simple: This year has wiped most of the rally in avg. apartment prices off the ’09 lows. We’re back at 2007 prices. Next stop: 2003 prices.
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August 1st, 2012 at 4:02 pm 53
@crashcow: That must be a sobering thought for people renewing five year mortgages right now. Can they even sell without bringing money to the table?
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August 1st, 2012 at 4:04 pm 54
@blamegame: Look, I got into this discussion because I took issue with what appeared to be lots of thumbs up over an expected increase in unemployment. In response, UnagiDon suggested that unemployment was a good thing because it was a necessary step towards a recovery (recovery from what I am not totally sure, I guess unaffordable housing). Nowhere did I say we should expect a soft landing. I am actually “agnostic” about which way prices are going to go; I am just not ready to accept UnagiDon’s theory that increased unemployment is a good thing.
Some unemployment may a “symptom” of a healthy economy, but excessive unemployment is always a bad thing, especially if it becomes chronic and systematic. And if we do have a major crash in the real estate market, with all the hardship that will inevitably follow (note that it won’t just be construction workers and real estate agents suffering) there is absolutely no guarantee that out of the ashes will rise a healthy and balanced economy, with a proper allocation of resources etc. Just as likely, nothing will rise out of the ashes for a long time. Following the US crash we have had years of high unemployment and a generation growing up with diminishing hope for a decent quality of life.
I think you have to be careful what you wish for.
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August 1st, 2012 at 4:08 pm 55
it’s interesting that the Chinese web portal put my post on headlines again. They even included my somewhat dramatic average price graph
Note the comment section at bottom:
comment #1: “don’t trust what realtors say, treat them like insurance salesmen”
#2: Vancouver West will be in biggest trouble, look for 3-5 years of price decline, down 30-40%. Home owners beware.
#3: realtors never tell you the truth like this
#4: he’s tell the truth, unlike the realtors trying very hard to mislead us.
http://www.westca.com/News/article/sid=238998/lang=schinese.html
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August 1st, 2012 at 4:18 pm 56
@UnagiDon: “Right now our percentage of jobs in construction in particular, and FIRE in general, is at all-time highs”
Nope. I don’t disagree that construction employment is high in historical terms but we are not at “all-time highs”. It is entirely possible to have a massive crash with low unemployment but would mean allocating workers to other industries and almost certainly lower wages and increased government debt.
The other way — one that’s occurring under our noses — is migration: construction workers hard-pressed to find work will leave to areas where there is work, and this occurred to some degree when TSHTF in the interior some moved into the Lower Mainland where construction was still occurring. That will leave vacant properties in their wake but need not necessarily lead to higher unemployment.
I think increased unemployment is likely but I don’t think it’s necessarily a “good thing”. Prices will crash regardless, but the undertone I sense is that higher unemployment gives the rest of us a better deal due to increased distresss and it enables some sort of accountability to those who lived high off the hog in the bubble years. From what I’ve seen in the US it doesn’t work that way: those who suffer most aren’t always the ones who most “deserve” it.
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August 1st, 2012 at 4:44 pm 57
@Anonymous: It may be possible for a housing bubble to pop without a big rise in unemployment, but I’ve never seen it happen. Construction is the most volatile of the major industries, look at the numbers:
http://www.bcstats.gov.bc.ca/Files/2bd86b08-a46b-4ed3-88e6-b14e27bda5b3/EmploymentbyIndustry.pdf
Between 2001 and 2011, total employment is up about 18%, but construction employment is up 85%. If we get back to 2001 levels of construction employment, it alone will increase total unemployment about 3.5%.
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August 1st, 2012 at 5:03 pm 58
Everyone needs to fill in this survey and Comment…
http://ow.ly/cFNkm
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August 1st, 2012 at 5:08 pm 59
@crabman: Agreed. Which is exactly why I hope for a “soft landing” and gradual adjustment, allowing rents and income to catch up. Yes, high prices suck, but as long as decent rentals are available and rents reasonable, high RE prices per se are not quite as evil as some like to make them out to be.
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August 1st, 2012 at 5:10 pm 60
@Anonymous:
“I am just not ready to accept UnagiDon’s theory that increased unemployment is a good thing”
It isn’t. What’s a good thing is that the army of workers currently making and selling overpriced, shoddy houses and getting people over their heads in debt gets decommissioned. Unfortunately the economy can’t turn on a dime and that means a lot of them will be unemployed until they can find something more useful to do. We’d rather this didn’t happen, but it’s inevitable.
Your argument, like so many others, is like those heard in the US five or so years ago. “A bust will be terrible so there can’t be a bust”. Well they were past the point of no return and so are we.
“I think you have to be careful what you wish for.”
If we got what we’d wished for prices would never have risen from 2005 levels and we really could have had a soft landing.
As for the inevitable hard landing that we are going to get, do note that there are a lot of people, even in Vancouver, who are employed in sectors that do not depend on RE or local consumer demand.
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August 1st, 2012 at 5:26 pm 61
Here is another good post from the vancouver bubble thread. We are now at 5 months month on month decline in a row. Someone went back and found the last time we were 5 MOM decline and also a 6 MOM decline in a row. They are both the same as the last two Vancouver bubbles. So is this an indicator that this bubble is the real thing?
———————————-
1981 – 6 month drop
Apr/81 – $181,200 (PEAK)
May/81 – $180,800
Jun/81 – $179,700
Jul/81 – $165,400
Aug/81 – $157,200
Sep/81 – $154,400
Oct/81 – $135,500
1996 – 5 month drop
Jul/96 – $426,400 (PEAK)
Aug/96 – $397,800
Sep/96 – $393,100
Oct/96 – $365,800
Nov/96 – $354,900
Dec/96 – $347,000
2012 – 5 month drop (current)
Feb/12 – $1,235,200 (HIGH)
Mar/12 – $1,155,500
Apr/12 – $1,106,600
May/12 – $1,073,300
Jun/12 – $1,061,100
Jul/12 – $1,041,300
———————————-
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August 1st, 2012 at 5:35 pm 62
@ScubaSteve: Interesting. Is this for sure comparing apples to apples? E.g. average to average, but not an index to average? How far down did they ultimately go in the previous two cases?
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August 1st, 2012 at 5:40 pm 63
@xyz:
those interested in the matter can also check out this new online consultation re: immigrant investor program launched by CIC. ends Sept 4.
“Stakeholder and Public Consultations on Improving the Immigrant Investor Program”
http://www.cic.gc.ca/english/department/consultations/immigrant-investment-program-2012/index.asp
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August 1st, 2012 at 5:41 pm 64
This market is overdue for a serious dose of what’s real in my opinion. I mean…half a Mil or more for a lousy condo in some areas. I feel closer to reality watching Avatar with 3D glasses than trying to make sense of this place.
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August 1st, 2012 at 5:42 pm 65
@ ScubaSteve
Seems every 15 yrs or so Van RE corrects 25-30%, so ya i think we still have a ways to go at least 15% more likely around 20% for a total of 30-35%
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August 1st, 2012 at 5:42 pm 66
@VMD:
Thank you! I’ve got a few more cents in me yet
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August 1st, 2012 at 5:56 pm 67
@Anonymous:
It’s all averages, not benchmarks, detached only. From the 2nd post on the thread, the lows hit were:
- Dec/84 @ $113,300 (38% decline in 45 months – 51% with inflation)
- Feb/99 @ $339,900 (20% decline in 31 months – 23% with inflation)
So ultimately, after each of the 5/6 month declines, RE dropped for another 2-3 years in each case.
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August 1st, 2012 at 5:56 pm 68
New Listings 258
Price Changes 99
Sold Listings 61
TI:18708
http://www.paulboenisch.com
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August 1st, 2012 at 6:02 pm 69
Heading into August, 2012, it is interesting to note that the last time we saw 6 digits in Vancouver was August, 2010, when prices were $999,400.
Can we do it?????? LEAD THE WAY RICHMOND!!!!!
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August 1st, 2012 at 6:06 pm 70
@Tacky Tocker:
The late 90′s bear market was a slow leak hardly noticed except by leaky condo owners.
This is not a once in 15 years event, it’s a twice in a lifetime event, and the first one was the rapid bust of the early 80′s which was 34% nominal and 50% real. The current US bust is now 45% real and I think it has a few % to go – and remember that’s the whole country not just the biggest bubble markets. Inflation is way lower these days which means nominal will be higher, as I think 50% real for Vancouver is baked in the cake.
What will be different about the upcoming bust from the one of the 80′s is that the current bubble lasted so much longer and so many people bought in at high prices, and at prices that were higher in real terms. As well so many refinancing (hardly happened in the 80′s due to high interest rates). I think the effects will persist for decades.
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August 1st, 2012 at 6:08 pm 71
So from Paulb’s numbers it appears that all the buyers are glued to their TV’s watching the Olympics, yet the sellers can’t afford cable…
Can’t wait to see what the excuse du jour is today
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August 1st, 2012 at 6:18 pm 72
“What will be different about the upcoming bust from the one of the 80′s is that the current bubble lasted so much longer”
There is really no comparison to the 80s bubble. The 80s was a blip that lasted a few months at peak levels. Few people actually had the chance to buy at really inflated prices. This one has gone on for 5 years at close to peak prices. And the 80s was followed by 30 years of declining interest rates to put a tail wind behind housing. Not only will we not have a tail wind we will have a head wind with rates rising. This is a once in a life time real estate bubble which will take a generation to recover from.
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August 1st, 2012 at 6:35 pm 73
Haper’s government engineered this house bubble to artificially lift Canadian economy in order to get re-elected as minority government.
Haper’s government sure knows the bubble will burst. Now this government wants the bubble burst as quickly as possible so that it will recover before the next election ( in about 4 years ).
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August 1st, 2012 at 6:42 pm 74
59 Anonymous Says: “…I hope for a “soft landing” and gradual adjustment, allowing rents and income to catch up.”
Soft for whom? Wages are a main component of the cost of goods and services. Generally rising wages uncoupled from a mass change in the type of work can only be nominal increases, which equates to inflation. That ‘soft landing’ you wish for home owners and real estate industries would devastate savers and those on fixed incomes. Better to wish for strong worker retraining programs, I see no justice that I should wait a full generation before these unearned special privileges are finally flushed from the system.
Many were misled into both buying and building homes and it cost those on the sidelines, now it’s time to switch places. Take it up with the deceivers.
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August 1st, 2012 at 6:46 pm 75
How did we get below 19k when new listings are higher than sold listings?
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August 1st, 2012 at 6:49 pm 76
@Joe_blown_away_by_high_housing_costs
Expired listings
People pulling their homes off the market expecting higher prices in the fall:)
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August 1st, 2012 at 6:58 pm 77
@good-format:
Also, I fear a much lower demand for Canadian raw resources in coming years…. I see more upcoming damage than just a housing correction…
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August 1st, 2012 at 7:02 pm 78
@s: Thank you.
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August 1st, 2012 at 8:16 pm 79
@good-format:
“Haper’s government engineered this house bubble to artificially lift Canadian economy in order to get re-elected as minority government”
Harper was first elected in 2006, so unless he was pulling magic levers from the opposition bench your theory is a bit thin.
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August 1st, 2012 at 8:47 pm 80
Manufacturing is slumping across the globe as confidence in the recovery ebbs and Europe’s troubles ripple through other economies.
Fresh data released Wednesday show manufacturing activity stalling in the United States, declining in Europe, and close to contracting in emerging economies such as China.
Global slowdown dashes recovery hopes
This ain’t your Dad’s recession….
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August 1st, 2012 at 8:58 pm 81
Chart of the day from Ben Rabidoux: http://t.co/fLT64csY
Add in July’s figures using a permanent marker.
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August 1st, 2012 at 9:01 pm 82
I agree – actually i think this could be the once every THREE generations CRASH for Vancouver, we could see nominal price declines in the 60% range.
Muppets, pay attention.
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August 1st, 2012 at 9:06 pm 83
I agree with previous comments. I am giddy with these numbers but it all seems so easy. We are no longer fighting a rear guard action in Dunkirk we are 200 miles from Berlin with no Germans in sight.
Where have all the Bulls gone? I guess they are finally realizing that we can be wrong for a very long time but we only need to be right once.
This melt down will be possibility the biggest Vancouver has ever seen especially in light of how there were no external shocks that caused it. Prices just started to go down. Also the fact it went on way way too long due to artificial stimulus.
Vancouver put on your crash helmets!
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August 1st, 2012 at 9:08 pm 84
RJ thanks for taking time away from your job at McDonalds to share the battle earned knowledge of a 21 year old.
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August 1st, 2012 at 9:11 pm 85
The Great Bearded One (a.k.a Garth Turner) is on fire today! Apparently the GTA (a.k.a CondoVille) is gearing up for a bloodbath soon: http://www.greaterfool.ca/2012/08/01/wont-end-well/
As for VCI, it’s funny how many comments have over 20+ votes today. It’s Bear Market Appreciation Day
:):)!
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August 1st, 2012 at 9:31 pm 86
I got an email from Sam Wyatt.
The Months of Inventory (MOI) metric for Westside Vancouver houses rose for the fifth consecutive month in June. It has risen from 4.39 in February to 12.51 in July.
…..
Active listing volumes for detached Westside houses are still over 1000 listings and sales dropped to only 83 homes this month.
……
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August 1st, 2012 at 9:38 pm 87
#79 @Anonymous: “Harper was first elected in 2006, so unless he was pulling magic levers from the opposition bench your theory is a bit thin.”
And later that year, we got zero down 40 year mortgages from the CMHC.
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August 1st, 2012 at 9:38 pm 88
Mclovin – don’t give up your (Saturday) night job.
Mmm, mmm good – enjoy every last drop, you piece of shat.
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August 1st, 2012 at 9:41 pm 89
@79 Anonymous: Agreed, he used it to convert that minority into a majority. The current US election demonstrates how important the economy is to an incumbent.
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August 1st, 2012 at 10:06 pm 90
I don’t see how North Van can be a + 10.1% for detached?, doesn’t make sense to me…is anybody able to explain?
Thanks.
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August 1st, 2012 at 11:50 pm 91
@Anon:
They are averages, so North Van could have sold a few houses worth like $10m which brought the average up. The only problem is, that doesn’t explain the +6% for attached. So I think North Van maybe just had one of those months where only high priced places sold and lower ends didn’t. Not really sure, would need to sell the full pricing data.
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August 2nd, 2012 at 11:44 am 92
Thanks ScubaSteve, we’ll keep watching, very interested in seeing how this pans out.
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August 3rd, 2012 at 6:54 am 93
[...] “The Months of Inventory (MOI) metric for Westside Vancouver houses rose for the fifth consecutive month in June. It has risen from 4.39 in February to 12.51 in July. Active listing volumes for detached Westside houses are still over 1000 listings and sales dropped to only 83 homes this month.” – good-format relaying info from Sam Wyatt at VCI 1 Aug 2012 9:31pm [...]
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August 3rd, 2012 at 6:27 pm 94
Don’t worry stupid bears;even it has retreated to 2008 level,we still enjoy a huge gaint after 2002.The majority of us(the prudent and thrifty Chinese) bought our house or houses in mid 90 when we moved to this was once dead water city.Isn’t that white bears has been drumming the doom since 93.In long run Van RE will reward those who put their money in the right spot,instead of drug and alcohol.
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August 3rd, 2012 at 6:36 pm 95
@900kCrackHouse:
Don’t worry Bosa’s main customer base is Rich Mainland Chinese and well paid chinese middle class,not the average wage earners white folks or poor local Chinese.
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August 3rd, 2012 at 6:42 pm 96
@Boombust:
This province will escape reccession because Chinese are the majority in Vancover and they keep investing billions of dollar in this was once dead city.
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August 6th, 2012 at 7:48 pm 97
[...] man – did he really think that he would be able to have doctors shill his development..?” – local observer at VCI 1 Aug 2012 12:30pm Share: This entry was posted in 15. Misallocation of Resources, 16. Missed The Boat? and tagged [...]
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August 7th, 2012 at 6:34 am 98
[...] “I don’t even talk about housing anymore with some friends. These are the friends that have bought 800k to 1 million dollar homes and are in their early thirties. Being close friends, it is disconcerting how badly they will be hurt when this bubble falls apart. So I don’t talk about it. Tried to warn them though.” – 900kCrackHouse at VCI 1 Aug 2012 10:45am [...]
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