Category Archives: data

Is the boomer wave crashing?

Pacifica Partners has released a new report on the housing market and there’s a write up over at the Globe and Mail.

Anyone still think the housing market’s going to snap back from the weakening trend that has taken hold in the past couple of months? It’s not, so act accordingly. Adjusting our expectations about housing won’t be easy because we’ve seen prices rise dramatically. Canadian Real Estate Association numbers show an average annual price gain of 7.7 per cent over the past 10 years on a national basis.

Aman Bhangu, Pacifica’s vice-president of research, said real estate has performed a lot like stocks did before the twin stock market crashes of the past decade. “At the end of the 1980s and 1990s, you had that mantra of ‘buy and hold, stock markets always go up, just get in there.’ It’s likewise with real estate – ‘real estate always goes up.’”

Mr. Bhangu said that taking a fresh look at the fundamentals supporting the real estate sector suggests prices are overvalued today by one-third, while other estimates call for a price decline of 10 to 25 per cent from current levels. Forecasts like these are educated guesses, whereas the demographic impact on housing is rooted in basic numbers.

It’s worth reading both the original report in full, there’s lots of interesting graphs there.

November 2012 stats – prices keep sliding

The following is a release from the GVREB which should not be confused with the Real Estate Board of Greater Vancouver (REBGV). This is what the GVREB says about itself:

“GVREB is a not for profit real estate bulletin prepared by industry analysts and market participants. Comments, information and questions can be sent to the general e-mail box at”

Here’s their report on the market at the end of November 2012:

Firm trend of lower prices in Greater Vancouver as demographic changes bring motivated sellers to market

VANCOUVER, B.C. –December 3, 2012 – The pace of property sales slowed in November 2012 from October 2012 to be the second slowest month of November in the past 12 years. The slower selling pace combined with higher inventory levels continues to put downward pressures on home prices. In addition, the leading edge of a demographic change is appearing where aging home owners are selling their long-held principal residences in order to downsize in their retirement years. In certain higher priced markets, we are seeing older-aged sellers accept significant discounts on their asking price to complete their sale transactions. This is putting additional downward pressure on prices and setting the clearing price of the market lower. We foresee continued market weakness with no positive changes in macroeconomic factors expected in the next 18 months.

GVREB reports that residential property sales of detached, attached and apartment properties fell to 1,698 in November 2012, the second lowest total for the month of November in the past 12 years. This total represents a 28 per cent decrease compared to the 2,360 sales in November 2011. Contrary to mid-year predictions from local real estate market associations, the second half of 2012 has not resulted in an increase in sales from the first half but instead has continued to deteriorate.

November 2012 had a modest deterioration in sales pace which resulted in a seasonally unusual increase in the number of months of inventory. Prices also continued their downward trend with market-wide benchmark prices now down approximately 5% from their peaks in May 2012. With slow sales and high inventory, lower prices are now being set by the motivated and aging owners who desire or require their property to sell. These unlevered sellers are willing to accept very large discounts below their asking price in order to realize the large gains they have realized over their original purchase price. We believe this the front edge of a demographic trend that economists have predicted would occur.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 2,750 in November 2012. This was more than 10 per cent below the seasonal average and 15 per cent below the 3,222 listings in November 2011. However, as sales have slowed more than listings, the sales to new listing ratio of 62.0% was the second lowest for the month of November in the past 12 years. The number of active listings at the end of November 2012 was 15,680. Inventory decreased approximately 10 per cent compared to the end of October 2012 while MOI increased to 9.2.

The Residential Reference Price for all residential properties in Greater Vancouver over the last 12 months decreased by 1.2 per cent to $600,200 in November 2012 from $607,200 in October 2011. From the peak price level in May 2012, prices have now decreased approximately 5 per cent in those 6 months.

Sales of detached properties in November slowed to 637 units, a decrease of 30 per cent from the 916 detached sales recorded in November 2011, and a 39 per cent decrease from the 1,050 units sold in November 2010. On a monthly basis, the number of sales November 2012 was down almost 20 per cent from October 2012 and fell at a rate much higher than that of the attached and apartment segments. The reference price for detached properties fell to $916,000 compared to $936,200 in November 2011.

Sales of apartment properties fell to 752 units in November 2012, a 25 per cent decrease compared to the 1,000 sales in November 2011, and a decrease of 28 per cent compared to the 1,052 sales in November 2010. In the past 12 months, the reference price of an apartment property decreased by 2.2 per cent to $362,500 from $368,600.

Attached property sales in November 2012 totalled 309, a 30 per cent decrease compared to the 444 sales in November 2011, and a 24 per cent decrease from the 407 attached properties sold in November 2010. The reference price of an attached unit decreased 3.1 per cent from October 2011 to $459,000.

Government meddling hurts first time buyers

Peter Simpson is the former president and CEO of the Greater Vancouver Home Builders Association and he’s got a column in the Vancouver Sun that strings together some numbers and anecdotes and then blames the federal government for hurting affordability.

Since this column is about first-time homebuyers, I must comment on federal Finance Minister Jim Flaherty’s changes to the rules governing federally insured residential mortgages, including a reduction in the maximum amortization period from 30 to 25 years.

It is not clear that a tightening of mortgage rules helped Canadians to manage their debt. What is clear is that the shorter amortization period has reduced housing demand by eroding affordability.

Now of course this ‘reduction’ in the maximum amortization period is actually just a reset to a historical norm, not to mention that it only applies to government insured loans.

Mr. Simpson refers to an older generation with homes that are paid off, but I can guarantee you that those homes were not bought on a 30 year amortization, so did longer morts help or hurt affordability? Is it possible that pushing more money into the housing market simply helped to drive up prices and worsen affordability?

It may be that Mr. Simpson is not primarily concerned with the well being of the first time buyer, but is instead concerned with a reduction of customers for his industry.

His conclusion is especially telling:

Finally, Vancouver-area pundits predict there is a sales shift to moderately priced homes, and a buyers’ market will continue until mid-2013. There is no assurance interest rates will remain low through 2013. The bottom line is it seems to be a good time to consider buying a new home.

Read the full thing over at the Vancouver Sun.

A note from Ben Rabidoux

Ben Rabidoux runs a blog called The Economic Analyst that features focused analysis of economics and the Canadian housing market.  He is currently in Vancouver to do a presentation with David Lepoideviv titled Vancouver Real Estate: What’s Next?

This is happening tonight Wednesday the 28th – 7:00 pm at the Westin Bayshore in downtown Vancouver.

Update: the talk was last night, you can find some participant impressions in the comments below.

We don’t normally post about events, but many readers here may be interested in this one.  Here’s a comment Ben left here yesterday:


Hey to the VCI crowd.

I’m enjoying my time in this beautiful city, although I’ve been looking over my shoulder a lot with the CAAMP conference in town. I keep waiting to get jumped. So far, so good.

Had the pleasure of meeting a few of the forum characters. Most casual readers of this forum have no idea how many really smart professional analysts and portfolio managers read and contribute to this site. VCI is without a doubt the top online real estate forum in the country (should also give a shout-out to House Hunt Victoria which is also very solid).

One final plug for what brings me to the city: The seminar will be tomorrow at 7pm at the Westin Bayshore and as a teaser, the staff at the Lepoidevin Group have printed (in colour) and bound the entire presentation for every person in attendance to take home. Should be a fun conversation piece if you leave it on your coffee table. for more info.


All aboard the poverty train.

The middle class in Vancouver is shrinking.

A widening gulf between the rich and the poor makes for a marked shift in demographics over the last 40 years.

And there’s a fascinating difference between Toronto and Vancouver when it comes to distribution of these two classes:

In Toronto high income residents have centered around transit hubs, while in Vancouver the opposite has happened and poverty has spread along the skytrain line.

And numbers from 2010 income tax returns that Ley received this week show accelerated polarization between rich and poor, especially in the Downtown Eastside.

Vancouver’s experience is opposite of Toronto when it comes to transit, Ley said, as high income residents concentrate around transit in Hogtown.

It’s a phenomenon Martin Wyant, CEO of Tri-Cities social services organization the Share Society, can see simply by looking at the increase of residents that need Share’s food bank – a 59 per cent rise since 2007.

In the suburbs, new condo developments hide the poverty, he said, but most people are forced to commute for higher paying jobs.

I guess the question is this: will the recent push to build and sell condo towers at transit hubs shift this trend up or down?