Category Archives: BC

The ‘right price’ keeps changing

Yesterday we heard from a Vancouver Realtor about why condos aren’t selling.

They’re overpriced.

And now there’s this article in the Vancouver Sun Buyers on the Sidelines as Market Slows.

Its all about the market slowdown – we’re now seeing the lowest number of sales since 2000 in Vancouver.

Nice houses that are priced right are selling within days, some in bidding wars. But anything priced too high or considered undesirable is apt to sit idle in this market, which is, according to the Real Estate Board of Greater Vancouver, witnessing the lowest total sales for the region since July, 2000. The Board reported 2,098 property sales in July, a drop of 11.2 per cent compared to June. It’s a drop of 18.4 per cent compared to July, 2011.

There are many anecdotal stories around the Lower Mainland about houses that have sat on the market for months, priced too high for the more price-conscious market. A six-year-old West Vancouver home on a 21,000-square-foot lot overlooking Capilano Golf & Country Club was originally listed at $3.695-million three months ago. The owners have reduced the price by $400,000 and it still hasn’t sold.

“There is a lot of product but it’s not selling for the price that people expected or hoped for,” says real estate finance expert Tsur Somerville, who is director of the University of B.C.’s Centre for Urban Economics and Real Estate. “People aren’t buying at the prices that are being set.”

Well here’s a funny thing about ‘the right price’ in a correcting market: it keeps changing.

I live in a BC market that is several years into it’s correction and I can tell you that the places that are selling are moving only at prices that are lower than the ‘right price’ a year ago and far lower than the ‘right price’ several years ago.

No sale on overpriced condo

Local rockstar realtor Ian Watt speaks truth to power in his most recent youtube episode.

Sounds like he’s getting a little frustrated with sellers who think their condo is special.

Pink carpet in the bathroom adds an easy $20k right?

Nope.  As Mr. Watt says, there may be all sorts of reasons nobody is interested in your Vancouver Condo, but the number one reason is that it’s overpriced:

Meanwhile his evil twin Ten Volt still claims to be the worlds busiest real estate agent in the world:

First time buyer regrets

A new report from TD Canada Trust shows that many first time home buyers wish they had done things differently.

Despite being the single largest purchase of most peoples lives, research doesn’t seem to play a big role for most first time buyers.

More than half of those surveyed said they would have preferred to have a bigger down payment and bought sooner.

Many first-time homebuyers said they could have been better prepared and more thorough when budgeting, the poll found. Thirty-seven per cent of those surveyed did not budget for ongoing costs such as maintenance and utilities, while 17 per cent overlooked some of the one-time charges like inspection fees and five per cent didn’t budget for anything beyond the down payment and mortgage payment.

That article quotes a mortgage broker who advises that you make sure you’re able to make the monthly payment, don’t worry so much about the down payment or the timing of your purchase.

Some of the extra costs that some first time home buyers don’t seem to be budgeting for are inspection, appraisal, property transfer tax, legal fees, CMHC fees, Strata fees or mortgage rate increases.  Then of course there’s ongoing maintenance and insurance.

I suspect a ‘bigger down payment’ will always be on the wish list, but if the Vancouver market does the bubble pop dive you may see the ‘bought sooner’ wish drop right off there.

August 2012 Vancouver Market Outlook

B5Baxter posted this in the comment section yesterday, but the number of links tripped the spam filter and it was held up in moderation for a while.

We appreciate all market analysis and thought this one deserved it’s own post.

Here’s his summary of where we are in the Vancouver real estate market and roundup of forecasts:


I have started to put together a monthly housing analysis update that I share with interested people. Here is the most recent one:
Vancouver Real Estate Market Analysis – August 2012

July saw the lowest Metro Vancouver real estate sales in over a decade. Sales were lower than 2008 when prices saw a significant drop. And inventory has stayed near or above 2008 levels since the beginning of the year. That means that over the next few months we should see a drop in prices at least as great as we saw in 2008.

In 2009 prices recovered after interest rates were lowered and other government policies were introduced to stimulate the market. This time around there is less room to move interest rates and the federal government is signaling that they are interested in cooling the market rather than stimulating it.

The low sales and high inventory would indicate that we may be at the beginning of the long anticipated collapse of the Vancouver housing bubble.

Based on an analysis of price/rent, price/income and price/ gdp growth I am estimating that the current market is overvalued by 40-60% and we should expect to see declines of that magnitude sometime in this decade.

Average prices for detached homes in Vancouver have declined by 15% ( from a peak in February. This is the first time we have seen five months of straight declines since 1996. Some individual asking prices have declined 20-40% (see: )

The Teranet index for Vancouver (usually considered a more reliable indicator than average prices of the overall market) has not shown the same decline. It has remained relatively flat but tends to lag other indicators. The REBGV index showed a 1.4% drop since May. This would be consistent with price behavior and inventory levels in 2008 when prices started declining in the second half of the year.

This graph ( ) shows three of those metrics imposed on a graph of San Diego housing prices. I believe the Vancouver market is similar to the San Diego bubble market and the declines may follow a similar pattern.

If Vancouver prices did follow a similar trend to US prices we would see the 40-60% drop occur in 3-7 years.

Other estimates: has estimated a decline of 41% and a time to bottom of 97 months (8 years).

The Economist magazine recently ( ) stated that Canadian real estate is overvalued by 75% (this is an average for Canada, some markets like Vancouver may be higher). has estimated a decline of “about 50%” from a March 2011 peak with a time-line of “5+” years has projected a decline of 50-66%

Pacific Partners estimates a 40% decline ( )

Investment Comparison:

During the last six months Vancouver Real Estate showed annualized return of 1.6% (using the optimistic HPI). During the first two quarters of this year the non-cash portion of my own strategic allocation portfolio returned 5.2%.

Housing crash implications for banks

If you haven’t seen it yet, you should really check out this post by Ben Rabidoux over at The Economic Analyst.

This report was put together mid-June and things haven’t gotten any better since then.

It’s a lot of stuff you already know, but some data you may not have seen and it’s jam packed with beautiful charts.

Check out the how the BC economy has grown in construction, but flatlined outside:

And there’s this little data point as well:

Before diving into the data, consider this fun anecdote: There are currently over 5,000 homes in Vancouver metro area for sale for over $1 million according to  In comparison, the NAR reports that in April, just over 7,000 homes sold in the entire US were sold for over $1 million.  And this despite the fact that the US population is 135X greater than the metro Vancouver market, the average personal disposable income in the US is 20% higher than the Vancouver average ($37,100 vs. $30,800) while US per capita GDP is higher than the average for all of BC.

Do yourself a favour and read the full post over at The Economic Analyst if you haven’t already.