Vancouver & Fraser Valley drag down BC

Remember when rising prices in Vancouver were bringing up national averages? It seems times have changed, now the numbers out of Vancouver and the Fraser Valley are so bad they’re dragging down the rest of the province:

The total value of homes sold in B.C. dropped by nearly one-quarter in November, with declines in Vancouver and the Fraser Valley leading the slide.

The dollar volume of homes sold through the Multiple Listing Service in B.C. declined 24.6 per cent to $2.3 billion in November compared with the same month last year, the B.C. Real Estate Association reported Thursday.

But don’t worry, the BCREA expects prices to start going back up next year.. hey, that’s less than a month away!

Cameron Muir, BCREA’s chief economist, said that tighter mortgage rules introduced this summer had squeezed some buyers out of the market, but he expects sales to go up in 2013.

“When I suggest that we’re going to see an increase in sales levels next year, it doesn’t mean we’re going to return to the heady days before the recession. But the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace, which may contribute to increased sales activity in 2013,” Muir said.

The number of units sold this November was down 17 per cent in the province from November 2011 to 4,680, while the average price was down 9.1 per cent to $480,891.

Read the full article in the Vancouver Sun.

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Keeping An Eye On The Pimps
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Keeping An Eye On The Pimps

“Cameron Muir, BCREA’s chief economist, said that tighter mortgage rules introduced this summer had squeezed some buyers out of the market, but he expects sales to go up in 2013.”

Nobody can know the future for sure, but we do know that Cameron’s predictions aren’t very reliable.

As I said some time ago, Cameron pulls numbers out of his anus. He has been predicting a rebound in sales in the latter half of 2012 all year.

It’s not going to happen Cam.

As for the tighter mortgage rules introduced this summer-that is nonsense; interest rates are still below zero.

My advice to Cam and the rest of the pimps is to start a new campaign to fetch any greater fools that may be left.

Try the fuzzy stuff…..

Buy so you can have a dog, put down roots……..

Anonymous
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Anonymous
On demographic time bomb facing Canada: Why have birth rates gone down? It’s a complex issue that involves social and cultural (women’s lib) and technological (the pill) changes in Western society but economic factors do play a role. Children have been transformed from being an economic asset to a liability. In the old days, people used to have kids to help out on the farm and to look after them in their old age. Now kids are an economic liability costing millions of dollars for food, shelter (that extra bedroom is an extra 300k in Van RE mkt), education, etc. Children are almost like something we consume–we have children so we can shop for strollers, baby clothes, redecorate the baby’s bedroom–it’s expense after expense. Many countries around the world have tried to make it more economical for women to have… Read more »
Anonymous
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Anonymous

“the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace, which may contribute to increased sales activity in 2013”

If the pent up demand is due to the CMHC mortgage changes then that pent-up demand will remain pent-up until prices come down.

Anonymous
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Anonymous

“Children have been transformed from being an economic asset to a liability. In the old days, people used to have kids to help out on the farm and to look after them in their old age.”

In Vancouver we used to have kids to help out on the farm? Really.

Devore
Member
Devore

How much of the pre-recession demand was speculative, and therefore there will likely be no “pent up demand” growing in the marketplace?

Patiently Waiting
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Patiently Waiting

Also Vancouver real estate is going to have a secular decline due to an aging population, lack of real immigration (not temporary workers) and stagnant (really declining) incomes.

I hope none of us bears are waiting for the bottom in anticipation of making money on appreciation.

Devore
Member
Devore

#2 Anonymous

That’s all very well and good, but having children is rarely a rational economic decision. It’s something that people do (or don’t), something that happens, a life event. The reason for declining birthrates is much less economic; western women can easily find meaning, purpose and fulfillment outside the home, doing things other than having and raising children.

Interestingly, I recall reading that birthrates are on an uptick recently in scandinavian countries for some reason.

Patiently Waiting
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Patiently Waiting

“Interestingly, I recall reading that birthrates are on an uptick recently in scandinavian countries for some reason.”

Possibly due to immigration of people with more “traditional” values.

Troll
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Troll

Cam might be right for 2013. Sales for 2012 were 30 down YOY. Good chance some months in 2013 might show small increases from those terrible numbers. Don’t suspect it will translate into rising prices though.

bubbly
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bubbly

“But the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace, which may contribute to increased sales activity in 2013,” Muir said.

What comes down, must come up? Is that how it works? But never the other way around?

jesse
Member
I don’t know if it’s hit home but look at the sales and price number nationally here. Vancouver has had it brutal this year compared to most of the rest of the country. When the government is looking to rein in debt and prices over the coming years Vancouver barely registers. The latest comments from Flaherty and BoC officials have been that, things are moving in the right direction. That means, in all likelihood, they will be keeping their thumbs on the market through the spring of 2013 to ensure things don’t take off again. In terms of Vancouver, that means credit conditions are likely to remain tight. Further there will be a deterioration in LTV ratios. Already most lenders are sticking a Vancouver-based premium on loans or simply not lending at all. (HCG backed away from Vancouver over a… Read more »
bubbly
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bubbly

What we need to do is create an economy that supports families–affordable housing, good paying jobs, affordable childcare (or jobs that pay so well you only need one parent working and the other one looking after the kid, then you don’t need affordable childcare, but average wage should be $40 an hour or so).

You can’t legislate higher wages without either creating huge unemployment or making everything else expensive. My bet is that when the average wage reaches $40/hr, bread will cost $8 and monthly rent for 1 bedroom apartment in or near downtown will be over $2000.

Patiently Waiting
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Patiently Waiting

bubbly, the problem is wages have actually gone down for the majority of the population while inflation still continues to grind away. By wages, I also include benefits, which are non-existent now for a huge part of the population.

gokou3
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gokou3

“the longer we see sales levels fall below the long-term average, the more likely we’re going to see pent-up demand (grow) in the marketplace”

Is Muir implying he believes in mean reversion?

bubbly
Member
bubbly

@Patiently Waiting: That does not contradict what I wrote.

Patiently Waiting
Member
Patiently Waiting

Well we know why wages can go down while inflation continues: expansion of consumer credit. Inflation right now is really being caused by increasing debt, not wages. Even if wages started going up, if credit is cut, prices could still go down if too many are too deep in debt.

bubbly
Member
bubbly

@Patiently Waiting: Sure (though unlikey), but the question is *how* would wages go up. Naturally (through increased productivity and high demand for labor) or forced (by law or union action). Your scenario is valid for the first. I was arguing the second.

bubbly
Member
bubbly

I was arguing *against* the second.

vancouverguy
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vancouverguy

“In Vancouver we used to have kids to help out on the farm? Really.”

Believe it or not, people in the Lower Mainland used to be employed in a variety of endeavours, historically a significant portion in agriculture. Shockingly, our economy has not always been built entirely on condo flipping.

Anonymous
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Anonymous

““Interestingly, I recall reading that birthrates are on an uptick recently in scandinavian countries for some reason.””

Cause people bought condominiums then couldn’t afford condoms.

HAM Solo
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HAM Solo

Pent up demand! 15 years of above average construction and sales activity and six months of below-average. Falling rents, empty, unsold condos, empty monster houses, negatively cash-flowing “investments” being held onto until “the market improves”, record home ownership levels, shoeshine boy RE “investors” loading up on doomed pre-sales.

This is pent-up demand like the “pent-up” demand for flare leg jeans in 1984.

Domocrass
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Domocrass

I don’t think that the concept of pent-up demand applies to a speculative market like Vancouver real estate.

When prices stop rising – like now – speculative demand is gone. Low transaction rates will not create a backlog of speculators itching to buy because the impetus for speculation is price action not sales action.

RealityCheck
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RealityCheck

Can we have a dedicated box in the top right of this webpage that lists names of people who are too biased in their opinions. I’ll start it.

1. Cameron Muir

Seriously, I don’t want to waste my time reading lies. However, there are bulls that present an intelligent forum and i enjoy that. But lets not talk about this moron anymore. He is way above his head.

C.Junta
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C.Junta
Anon #2 “Children have been transformed from being an economic asset to a liability” Agreed. “What we need to do is create an economy that supports families” I wish we could. Unfortunately, this is not the direction the world economy as a whole is moving towards. “affordable housing, good paying jobs, affordable childcare” Easier said than done. If “affordable” means “subsidized by state” we: – end up getting the system abused by many, so its efficiency drops quickly; – get to the model some European countries adopted and the results are still questionable – birth rate growth is anemic, taxes are high, so people are not really motivated to work a lot to make the economy grow faster (I am oversimplifying here, but you get the idea). And if we want a “naturally affordable” housing, childcare, food etc we have… Read more »
southseacompany
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southseacompany
Van Sun, Dec 17: “Real estate authority cuts Canadian sales forecasts in wake of tighter lending rules. The industry association said now expects home sales this year to slip 0.5 per cent compared with 201” http://www.vancouversun.com/business/Real+estate+authority+cuts+Canadian+sales+forecasts+wake+tighter+lending+rules/7709927/story.html#ixzz2FKziJoD8 “BMO deputy chief economist Doug Porter…”But, for now, the landing looks to be soft in most cities, with the rather obvious exception of Vancouver.” However, economist David Madani of Capital Economics said the belief that the Canadian market was enjoying a “soft landing” because prices have not fallen sharply was misplaced. “The continued decline in existing home sales support our view that a potentially severe housing correction is underway,” Madani said. “Assuming that sales continue to trend lower heading into next year, then sharper demand and supply imbalances will eventually lead to widespread home price declines. We still think that house prices will decline… Read more »
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