Why are sales and prices dropping?

Let’s carry on with our look back at September.

The official stats are now out from the REBGV and there’s some headscratching stuff in there.

Take this article in the Vancouver Sun for example:

Metro Vancouver home prices continue to drop as sales activity falls sharply below historical levels, according to the Real Estate Board of Greater Vancouver.

“We thought we’d see a slight increase in activity in September, but we didn’t,” said REBGV president Eugen Klein. “There doesn’t seem to be any urgency between either the buyer or the seller.”

I guess we’ve gotten so used to ‘increase’ (whether it’s prices or sales) that it’s confusing when the opposite happens.

And you’ve got to love that little bit of justification you see in every housing bubble, it goes a little something like this: “Well, prices might fall a bit in the poorer areas, but not in the hot areas!”

..but of course the hot areas are always the ones that fall:

Prices fell more sharply in expensive areas including Richmond, West Vancouver and Vancouver West, which saw a sharp run-up in prices in 2010 and 2011.

Vancouver West, for example, saw a 6.5-per-cent, year-over-year decline in the benchmark price of single detached homes to $2.09 million.

Tsur Sommerville has some theories about why the market is stumbling right now:

“This is the first time since 2007, 2008, when prices have come down by this degree,” added Somerville. “When you have nine months of continuous months of weak sales, it will show up on the price side.”

Somerville believes high prices, and reduced economic optimism, are behind the sales drop. “And cycles happen.”

The winning quote goes to Eugen Klein, who blames this market change on the federal government ramping back some of their market interference in the form of short amorts:

Klein said some of the fall-off in sales could be attributed to the federal government’s decision to eliminate 30-year amortization on government-insured mortgages.

“This makes homes less affordable for the people of the region,” said Klein.

Yes, as soon as house prices start to fall it puts buyers in a real pickle.  If they fall too far no one will be able to afford a home.

…oh, wait.  He meant ‘affordability’ as in huge long amortizations based on current low interest rates, not on overall price.

Some commenters here posted highlights from the data package.  Not much of a name posted this breakdown:

Overall – benchmark down 0.8% YOY – Down 0.6% MOM
Detached – down 0.5% YOY – Down 0.7% MOM
Apt – down 0.7% YOY – Down 0.4% MOM
Attached – Down 2.7% YOY – Down 0.8% MOM

..and VMD posted this historical comparison of Months of Inventory (MOI):

MOI  2012  2011  2008
Oct        6.6  14.1
Sep  12.1  7.2  12.5
Aug  10.7  6.5  11.4
Jul  8.6  5.9  8.8
Jun  7.8  4.6  7.5
May  6.3  4.3  5.4
Apr  5.9  4.4  4.7
Mar  5.3  3.2  4.8
Feb  5.5  3.9  4.3
Jan  8.0  5.7  5.5

VMD also posted this list of areas with the biggest sales declines:

SFH Stats Sept 2012: (ranked by worst sales decline)

Sales:-50% YoY, -10% MoM
Ratio: 22% vs 32%
HPI: -4.2% YoY, -1.3% MoM
Median: -9.8% YoY, -1.4% MoM

Sales -49% YoY, -10% MoM
Ratio: 18% vs 35%
HPI: +4.2% YoY, -0% MoM
Median: -13% YoY, -6.3% MoM

Van East:
Sales:-48% YoY, -6% MoM
Ratio: 30% vs 51%
HPI: +3.2% YoY, -1.1% MoM
Median: -2.5% YoY, -0.6% MoM

Sales:-37% YoY, +16% MoM
Ratio: 30% vs 51%
HPI: +3.6% YoY, -0.2% MoM
Median: +0.4% YoY, -3.7% MoM

Van West:
Sales:-17% YoY, +15% MoM
Ratio: 27% vs 27%
HPI: -6.5% YoY, -1.3% MoM
Median: +1% YoY, +0% MoM



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Why is so laughable that tighter mortgage rules could cause softer than usual sales? That was the entire point of the exercise. A sharp drop in sales has occurred after ever single mortgage tightening by the Federal Government. http://www.bcrea.bc.ca/about/bcrea-blog/economics-blog-posts


@Anonymous: “All the tenant has to do is notify the landlord in writing what needs to be done with a reasonable deadline. If the landlord doesn’t do it the tenant can pay to have it fixed and deduct it from the rent. This is legal. The problem is most tenants don’t understand their rights.”

Actually, all the tenant has to do is put a sponge under the drip to get rid of the noise.


Gentlemen, behold the “Buy one get one free” deal of Vancouver West. $898000 / 2br – 1460ft² – Buy one get one free (no kidding) (South Cambie) Buy one Townhouse in Vancouver and get a single family house in US free. ( special offer, no kidding) Townhouse in Vancouver, BC: $898,000 1460 sqft, 2 big bedrooms + 1 den, built in 2004, south Cambie Best Schools – just 1 blk from Churchill High, Laurier Elementary and community centre! Private garage, blt-in central vacuum. Designer paint, custom made window covering, build in security system, all double glaze windows with good acoustics. This well designed, bright corner townhouse and great community is the best place to raise your kid! Free single family house in Ohio, USA Property Description: 6900 sqft land size, built in 1962 This is a 3 bedroom, 1 bath… Read more »


@Patiently Waiting: The topic is about to roll over, so I will beat this one to death here 😉 That’s pretty much all I was saying. I can’t, in good conscience, recommend someone hire out a plumber @ $200 to replace a $1 washer, if I wasn’t absolutely sure they wouldn’t get stuck with the bill. Maybe it’s an emergency repair, maybe it isn’t. As an ex-home owner, current renter, and (I’d like to think) a sensible person, I’m gonna go with no. Regardless, if you’re having issues with your landlord or rental, your first step is to check the RTO web site to figure out where you stand, legally. Second, bring it up with the landlord, and try to work it out amicably. Failing that, contact the RTO, they will tell you to document everything.(Always document everything anyways, even… Read more »


Wow. Looks like I struck a nerve with someone today HEY?!?! The truth burns. I hear some people have a lot of time on their hands now. I’m not against owning a home or property. I have both. I have REITs too. I just buy and sell at the right time based on fundamentals and knowledge and not emotion and lies. What I’m against is groups of individuals colluding to hide and skew data for their own gains from the average person when making one of the biggest financial decisions of their life. I’m also not rooting for people to lose their life savings and for young property virgins to become hopelessly in debt in a real estate crash. There is an unfortunate reality in a major real estate correction in that it will drag on the economy. If it’s… Read more »


@market stats: I don’t track expiration data, though it can be calculated from the REBGV monthly reports.
You can get all you need from the reports:
New listings
Benchmark price

From that you can calculate monthly expiration data.

I use Teranet for price changes but I do use MLS-HPI for tracking sub-regions and housing types. Historical MLS-HPI data to the end of 2011 are here.

Patiently Waiting

@Devore: I think Devore may be right, that this isn’t an emergency repair. Regardless, the best thing for a tenant in this situation to do is formalize the process with signed and dated letters. First of all, this may persuade the landlord of how important this is to the tenant. If not, the letter is an important CYA. It proves you, the tenant, have been diligent in informing the landlord about such issues and it potentially shows the landlord is negligent with maintenance (and doesn’t care about the tenant’s well being). Jerk landlords always try to steal damage deposits. So this will be handy when she tries to get hers DD back when she moves out, or if the situation does become an emergency (flood). A tenant in this situation should also recall whether an opening inspection was done (you… Read more »

market stats

‘price change to MOI correlation’

Is that data available? I would be interested in historical price change and expiration data in addition to sale/list and MOI.


@patriotz: “No real estate agent or board in Canada or the US has ever been successfully sued over market statistics” It becomes a bit of an issue when policymakers rely on board data to make policy decisions and the data turn out to be incorrect. NAR got caught out by overstating sales and not quickly revising their mistakes. If CREB’s larger affiliates like TREB and REBGV were caught out over-reporting sales and clawing them back later that would be a politically stupid move; they’re already in the hotseat when it comes to refusing to open up up past sales data in the MLS system. From that POV I would be somewhat upset, but I also think the effects of government policy changes after a housing crash are muted. This is just me — I enjoy reading about all the zany… Read more »



Thanks for the info but I’m not sure I agree. As you are probably aware for a successful negligence action you need to establish a duty of care, prove a breach of that duty, and show damage. I can see how it would be somewhat difficult to establish the duty but not insurmountable.

I know a class action lawyer so I’ll ask him the next time I see him. In fact I might suggest to him that he launch the action – these guys don’t need to be sure of winning to start something…they just need a sufficiently rich target that they can see a chance of getting their contingency fee paid! Wouldn’t hurt to have REBGV spending time fighting legal actions rather than revising data & spinning tall tales!



You may say that these 90 buyers have helpful realtors.

604 Receding Gains

@airbourn canine

That REBGV submission gives us one interesting angle to pursue: it is a submission to the “Select Standing Committee on Finance and Government Services”. And this Commission accepts submissions from *everyone* through their web portal:


Perhaps some of our VCI heavyweights like Jesse, Scuba, VHB, VMD, b5baxter, AG Sage, and the rest could submit summary data illustrating the insanity of past government policies and the impact of CMHC loosening.

The big push now from real estate lobby groups seems to be on restoring the bubble through looser finance and tax breaks. The Committee needs evidence that the bubble is ultimately destructive over (and short-term pain of adjustment downward in prices will help everyone over the longer-term).



A dripping faucet is absolutely an emergency repair. It could cause significant other damage with a flood.

You’re free to test your landlord’s resolve if this happens to you. There’s definitely a grey area in what may be considered an emergency repair. If the leak threatens flooding or water damage, it’s an emergency. I pointed the poster to information at the RTO web site, and my opinion as a layperson is that a drip-dripping faucet does not constitute an emergency. I can only go on the limited information provided by the poster, I don’t know what’s happening on the the ground. Exercising rights you do not have or overstepping your boundaries can end up costing you a lot of money.



@Devore: “This is incorrect. The advice given only applies to “emergency” repairs. A dripping faucet is not an emergency.”

A dripping faucet is absolutely an emergency repair. It could cause significant other damage with a flood.



Or they are the smart ones and are downgrading…


Paul B’s numbers:

New Listings 245
Price Changes 142
Sold Listings 90

Who are the 90 that are still buying? Do they not read the news? Maybe they’ve been scraping to save for their mortgage payments, that they forgot to buy a tv:=)



It’s the end of the world as we know it….and I feel fine ;p

Romeo Jordan


I think we could see panic listings over the days and weeks to come.

When national press is calling the industry out on it’s lies it means the die has been cast.

Rats will abandon the ship.

I expect sales to firm up as bargain hunting sets in – although prices will continue to fall.

Renters will look like geniuses, give it a handful of months. And that’s just to start.



who knew, thanks! that is good info to have if I ever have a bum landlord

This is incorrect. The advice given only applies to “emergency” repairs. A dripping faucet is not an emergency. The RTO web site provides lots of useful information on these topics, including the text Residential Tenancy Act itself. If you have questions about tenancy issues, always check there.


What will probably happen is if, after being notified, the landlord does not fix the issue, you open a case with the RTO, and it will eventually lead to some kind of mediation, assuming the work doesn’t get done in the meantime. No one really likes to deal with the RTO process if they can avoid it.

Arthur Fonzarelli

Almost 80 added to inventory today… keep that up for a few weeks and we’re in good shape for some (good) pain!!


@anonymous: “All the tenant has to do is notify the landlord in writing what needs to be done with a reasonable deadline. If the landlord doesn’t do it the tenant can pay to have it fixed and deduct it from the rent. This is legal. The problem is most tenants don’t understand their rights.” Although this may be legal, in practice it is fraught with difficulties in many situations. Many rentals have multiple physical deficiencies. Many tenants do not have upfront cash to pay for repairs. Many deficiencies have to do with building systems that go outside of one tenants’ particular unit. When a tenant seeks legal remedy through the Residential Tenancy Branch (RTB), there is always the risk that the landlord will react negatively. A tenant who is always fighting for their rights is one that many landlords would… Read more »


“All the tenant has to do is notify the landlord in writing what needs to be done with a reasonable deadline. If the landlord doesn’t do it the tenant can pay to have it fixed and deduct it from the rent. This is legal. The problem is most tenants don’t understand their rights.”

who knew, thanks! that is good info to have if I ever have a bum landlord

Mick Murph

Truth is coming out

“As housing market slows, industry scrambles to paint positive picture”


Vancouver’s real estate board likes to tout what it calls the MLS HPI (home price index) composite benchmark price for all residential properties. It was down 0.8% to $606,100 in September from a year ago and off 2.3% over the past three months.

Doesn’t sound too bad. But when you pull out actual sales data, you find year-over-year prices in August in Canada’s most expensive housing market were off 6.9%. For the first two-thirds of the year, prices fell 7.3%. The decline is happening; it’s the severity that seems to be under dispute.


“Even Phil Soper, chief executive of Royal LePage Real Estate Services Inc., is feeling the heat to promote real estate after his company’s release yesterday suggested a decline is to be expected after a long expansion. “I got a hate email from someone in the industry saying ‘how could you talk about negative things in the housing industry.’ Well it’s a cyclical industry,” says Mr. Soper.”

this could explain why Phil Soper was so nauseatingly bullish on BNN this morning