Condos pulling down Vancouver home prices

Dropping prices on condos are being blamed for pulling down home costs in Vancouver.

..because what could be worse than more affordable housing?

Prices on all housing types are falling with forecast for more price drops, Royal LePage is forecasting a 3% drop overall in 2013 but the largest drops so far are being seen in the condo market, which have fallen 3.6%.

“Buyers are waiting for that big decrease to happen but I think if they’re going to keep waiting for that, chances are they aren’t going to see it,” said Todd Talbot, realtor and host of W Network’s Love It or List It Vancouver.

That’s because industry experts say some sellers aren’t interested in making significant price reductions, and are taking their homes off the market.

“They don’t have to sell,” said Brendon Ogmundson, an economist with the BC Real Estate Association.

“You don’t find a lot of extra listings unless people need to sell quickly because of some financial catastrophe, and that simply isn’t in the cards, so what we’re going to see is normal demand and supply dynamics.”

Now I’m curious – what’s you best guess.  Does the BCREA economist really believe that prices are set by people taking their property off the market, or by the properties that are sold?

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patriotz
Member

Buyers are waiting for that big decrease to happen but I think if they’re going to keep waiting for that, chances are they aren’t going to see it,

If buyers don’t buy who are the people who have to sell going to sell to?

“They don’t have to sell,” said Brendon Ogmundson, an economist with the BC Real Estate Association.

See above, Brendon.

http://piggington.com/fence_sitters_will_be_sorry

K
Guest
K
One-year-old condo building in Calgary with apparently major construction defects: “Calgary firefighters rescued a family on Wednesday after they became trapped in an elevator that was starting to fill with water. “It was a very bad moment,” says father Alireza Tabatabaei who was trapped with his wife and two-year-old daughter…. Water from a burst pipe on the eighth floor caused a short circuit in the wiring which cut the electricity and sent water pouring into the elevator below. Jason Li, who lives on the seventh floor, says he heard a popping sound as he was locking his door and then he noticed water coming down the elevator doors and nearby air vents. “It was literally like a waterfall,” says Li…. Jason Li says the ceiling on the eighth floor is falling down and the seventh floor is wet as well… Read more »
K
Guest
K

Arson suspected in burnt condo under construction in the interior. From CBC:

“RCMP in B.C.’s Columbia Valley are trying to determine what sparked a spectacular fire over the holiday season that gutted five condos under construction.

Arson is suspected in the fire at the half-finished Columbia Eagle condo complex in Fairmont on Dec. 22.

Construction on the luxury five-condo project began about six years ago, but then the vacation housing market collapsed.

The weathered framed buildings sat like skeletons by the highway for years.

“The buildings are unfinished and quite dried out and they just went up like candles,” said fire chief Jim Miller.”

http://www.cbc.ca/news/canada/british-columbia/story/2013/01/07/bc-arson-suspected-condo-fire.html

Boombust
Guest
Boombust

BUYERS always determine the direction of the market. It’s not the other way around as he would have it. Dumb.

Lorenzo Cavanaugh
Guest
Lorenzo Cavanaugh

I think it depends on the months of inventory. An increase in cancelled listing could stabilize prices if the months of inventory was low. However, if the months of inventory, after the reduction of non motivated sellers remains high, then you have a market full of motivated sellers competing to get their home sold before another Vendor can sell their house. That would make prices decline.

Harry Wang
Guest
Harry Wang

Macleans article – Great Canadian real estate crash of 2013

http://www2.macleans.ca/2013/01/09/crash-and-burn/

Canada building permits plunge into the basement

http://business.financialpost.com/2013/01/10/canada-building-permits-plunge-into-the-basement/?__lsa=9270-0ec7

Many Franks
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Active Member
Many Franks

Ah, Vancouver. It’s a long way from the crow’s nest to the poop deck. Canadian million-dollar home sales booming — except…

The Vancouver market, however, did fall back, with sales of homes valued at over $1 million declining by 34 per cent on the year, falling back from the stratospheric highs in 2011.

Even in Vancouver, though, in the first half of the year, 22 per cent of homes listed at more than $1 million ended up selling over asking. By the latter half of the year, that dropped to five per cent.

Even the silver lining is looking a little brown.

b5baxter
Member

Here is the newest inventory graph:
http://vancouverpeak.com/Thread-Inventory-Graphs?pid=188#pid188

Since the beginning of the year the average daily increase was: 79
At this rate we would reach 13,000 in 10 days (Jan-20-13)
At this rate we would reach 21,000 in 98 days (Apr-18-13)
and 25,000 by June 21, 2013

So, far inventory has increased faster in 2013 than in 2012.

Thanks PaulB for the numbers!

Bag it and tag it
Guest
Bag it and tag it

1 Patriotz
I love that chart with the quotes superimposed on it. Hopefully someone from this site puts something like that together in a couple years for Vancouver.

HAM Solo
Guest
HAM Solo
One of the things we learn as skeptics of the great Canadian housing boom is how seemingly unsustainable market dynamics can go on longer than one ever imagines. On the other end, post-bubble, this appears to be true as well. I’m linking in a summary from Mark Hanson (for all intents and purposes, the Ben Rabidoux of the U.S.) which describes the ongoing and fundamental weakness in the US market. You would think that 6 years after the US market peak that there would be a pretty good fundamental case for a rebound. However, if one cares to do homework, as Mark has, it appears that it’s not that simple. Housing looks ready to flatline in the US for another year at least. I think it’s worth reading for anyone who cares to make an early bottom call on Vancouver… Read more »
Anonymous
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Anonymous

@Many Franks:

It’s been a while since I heard the words “red hot” used to describe Canadian real estate…

“Canada’s conventional housing market is showing signs of a slowdown, but the action at the high end of the market continues to be red hot.”

patriotz
Member

“You would think that 6 years after the US market peak that there would be a pretty good fundamental case for a rebound”

Prices in the US are simply back to historical multiples and incomes, so in fact there is no fundamental case for a rebound.

DJB
Guest
DJB

That’s because industry experts say some sellers aren’t interested in making significant price reductions, and are taking their homes off the market.

“They don’t have to sell,” said Brendon Ogmundson, an economist with the BC Real Estate Association.

Well without sellers I guess the ranks of R/E agents that BCREA represents will be dropping like flies.

If there are no homes on the market and no sales then I guess the economics of that situation will render Brendon to be redundant.

Many Franks
Guest
Active Member
Many Franks

@Anonymous: What could be more appropriate than “red hot”? Nobody wants to touch it or they’ll get burned. And it sure would explain a rash of spontaneous condo combustion.

RaggedyRenter
Member
RaggedyRenter
I am not sure why BCREA send a message to people to not lower their price. What good does it make to their member? I’m sure they’d rather have an elevated sales number with 15% lower price than the current market stand-off. Turning tricks is the key to their income. If anything they should be encouraging people to list at lower price to encourage faster turnaround. There are still some people who are looking to buy even in this kind of market. I can help with the lingo to soften the blow and massage the ego right-price : list at 10% off quick win : 20% off boil the ocean : trying to sell at assessment circle back : another right-pricing after a month rapid cycle : right-pricing every 2 weeks peel the onion : death by thousands right-pricing think… Read more »
Moldcity
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Moldcity

@raggedyrenter its not about the comfort of sellers, it’s about not scaring away buyers. You can bet realtors are trying to talk sellers into lowering their listing price so they can get their commission and move on.

But they don’t want the message to scare off potential buyers. Who in their right mind would buy if even the realtors were publicly saying house prices are too high, they will continue to drop. If you wait a year selling price on the average bungalow will likely be $100k lower?

Crikey
Guest
Crikey

@raggedyrenter and Moldcity

About those used house salespeople that urge sellers to unite and remind them they don’t have to sell.. yes it would make most sense for them to want sales income at whatever price the market wants to bear.

However, I think they are fighting to keep the “Dumb Money” in the market. As soon as it becomes painfully obvious to even the dumbest segment of RE speculators that it will not be a good time to put money into the local RE market for many years, that proportion of buyers will start to dry up.

Not only will the salespeople be taking home a slightly lower commission on sales at lower prices than today, but they know they will be making fewer sales to people like “I buy 3, husband buy 3!”

Not much of a name...
Member
Not much of a name...

Here is an update on “The Kimpton” in North Van. This was a featured condo on VCI that had put up a sign with their “$100,000 Price Drop Guarantee”. The new sign states to bring your offer and their are only 5 units left. I don’t remember when this was put up, but it hasn’t changed and 5 units are apparently still for sale.

There was a private sale in the building (V97211) that was originally listed at $739k on Sep 16. The seller dropped his price to $699k and it now shows as sold for $670k. A $69k (9.3%) drop from the original ask. According to the listing info the original purchaser paid the HST. So with that and transaction costs, I’m sure there was a huge loss. Ouch.

gokou3
Guest
gokou3

RE #17:
“However, I think they are fighting to keep the “Dumb Money” in the market. As soon as it becomes painfully obvious to even the dumbest segment of RE speculators that it will not be a good time to put money into the local RE market for many years, that proportion of buyers will start to dry up. ”

Agree. It may be obvious to many of us reading this blog that the market is falling, but to the masses (read: majority) the market is still stable / mildly positive.

gokou3
Guest
gokou3

Re #10:

“One of the things we learn as skeptics of the great Canadian housing boom is how seemingly unsustainable market dynamics can go on longer than one ever imagines.”

As economist Keynes said, Markets can remain irrational longer than you can remain solvent. Of course, most of us don’t have the means to short the RE market, so solvency is not a problem.

VMD
Member

From comment #107 on garth’s site today:
“While it is still early in the year, sales show a 35% year over year drop in January, and a month over month drop of 49%”

FVREB STATS – as of January 10, 2013
6 of 22 Working Days
JANUARY 2013 Listings 656 Sales 124
DECEMBER 2012 Listings 363 Sales 244
JANUARY 2012 Listings 731 Sales 191

painted turtle
Guest
painted turtle

Let’s keep in mind some realtors are also speculators.
They need some time and a few greater fools to unload before the collapse.
Also I am wondering in which ways they have shared interests with developers. The panic mode is not in the interest of realtors for the time being, it seems, but it will come.

gokou3
Guest
gokou3

Re #21:

I am sure the dark side will spin it as “xx% increase m/m!”

Anonymous
Guest
Anonymous

…..its not about the comfort of sellers, it’s about not scaring away buyers. You can bet realtors are trying to talk sellers into lowering their listing price so they can get their commission and move on…..

I think you’re giving them too much credit. The reason they don’t want to admit to lower prices is that they’re all trying to dump their own overleveraged holdings before the Tsunami comes ashore.

PCinWA
Member
PCinWA

Per VHB’s posts the last three years:

01/10/11 Inventory: 9863 Months of Inventory: 6.36
01/09/12 Inventory: 11582 Months of Inventory: 9.07
01/09/13 Inventory: 12466 Months of Inventory: 11.37

Inventory is up 7.6% year-over-year, and months of inventory is up 25.4% year-over-year (since sales have slowed).

2013 is going to be ugly…

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