Vancouver Condo Info

Yeah, I know. August is far too early to be using an autumnal metaphor, but housing market cycles don’t run on a regular schedule like the seasons do.  You already know that our local real estate boom has withered on the vine, but did you know markets are slowing across the country?  I guess the big question now is how bad will our housing hangover be?

Anyone looking to sell in the next couple of years has to be hoping we don’t follow the US cycle, where one third of all new owners owe more than their house is worth and a quarter of homes sold in the last year were sold at a loss.  Of course thats on a national level, cities like Stockton California are in much worse shape with prices dropping 38% in one year.

Will demand return to the lower mainland real estate market or will we see modern day ghost towns in the burbs?

If you don’t believe in all this doom n’ gloom perhaps its time to buck the trend and invest in real estate.  Money is still cheap and sometimes big risks bring big rewards.  You could try Spain where prices are predicted to drop 20 to 30% over the next four years, or the UK where there’s lots of listings to choose from.  Some see bright spots in the New Zealand housing market if you want to go a bit further afield. They’re only talking about drops in the 10% range.

Feeling brave?

Deflate.  That’s the word the Vancouver Sun is using in their report of July sales data from the REBGV:

The so-called benchmark price for all property types in Metro, excluding Surrey, hit $556,605 in July, down 2.1 per cent from May.

“We’re seeing more price reductions in properties listed on the market, which is a levelling impact on the housing price increases experienced at the end of last year and into the first quarter of 2008,” Dave Watt, president of the Real Estate Board of Greater Vancouver, said in a news release.

The numbers from out in the Fraser valley are in as well and looking at least as bad. The Surrey average detached-home sale price is down six percent from June.  As Mohican brings to our attention Chilliwack saw the average house sales price drop 9 percent last month and is now negative year-over-year.

YLTNBoomerang sent in some extremely detailed townhouse market tracking data for downtown Vancouver with the following note:

Hi,

Long time reader and sometimes contributor to your blog. I sold my place last March in Yaletown (townhouse on Marinaside Crescent) at $890/sqft and have been tracking townhouses in Vancouver ever since. More recently (January) I started recording changes in prices etc. on MLS in a increasingly large spreadsheet. I thought you might be interested in seeing how this specific slice of the market is reacting and have attached this sheet. Please feel free to use or distribute as you please.

Keep up the good work!

The information in this spreadsheet includes square footages, new listings and price changes from January 10 until July 29th (today).  Within the tracked time period for Waterfront townhouses in downtown Vancouver there have been 5 instances of asking price increases and 73 instances of asking prices being dropped.  The entire database is color-coded, with red indicating price increases and green indicating drops.

We discussed options for graphing the data included here, but neither YLTNBoomerang nor I could figure out the best way to do it, so here’s an open challenge to Vancouver real estate market data obsessives & excel graphing gurus: Can you figure out a way to present the information in this spreadsheet in an interesting and informative visual manner?

Click here to download the XLS document.

Want to share a graph? You can email it to me along with the name you’d like credited and I’ll post it here.  If you want to cut out the middleman (me) you can make a post in the discussion forum with any graphs or images attached and link to it in the comments below.

UPDATE: That was fast! Here’s a “day’s on market / price drops” scatter graph courtesy of an anonymous contributor:

UPDATE 2: Yet another anonymous graph-maker sent in this chart showing asking price per square foot for downtown town houses for the first half of 2008:

Even after years of falling real estate prices in Miami it’s still cheaper to rent than to buy according to this article in the Wall Street Journal, sent in by bcbuds.  As prices are falling so are rents.

It’s a dilemma for owners, do you try to wait out a recovery and pour money into the condo you’ve got rented out at a loss, or do you stop the bleeding and sell in a down market?  Many are choosing to wait out the market and hoping for a recovery soon.

…But that has created a new, predictable situation. “Rents are falling,” says Miami broker Leslie Cooper. “You and your brother and everyone else is trying to rent your new condo out. So no wonder. But the rents won’t even cover your costs.”

I looked a number of fabulous condos in new developments on Brickell Avenue in downtown Miami. Their prices had been slashed drastically from peak levels. Some are now in forced sales.

You can get a two-bedroom condo in some places for $400,000 or less. And that’s considered a great deal.

Of course the problem is that even these reduced prices aren’t justified by the rental income.  The article goes on to examine the numbers- even if you aren’t renting the money and have the $400k cash interest free to buy one of these condos it’s still a losing proposition in a post-boom era of property depreciation.

May 15 2011 - Vancouver house prices have fallen for the 35th continuous month as the fallout from the global credit crisis continues to hit the metro area hard.  In April the benchmark price for a single family detached home dropped an additional 9% bringing the year over year losses to 74%.  The benchmark price for a detached home now stands at $47,034.

While prices have dropped dramatically across the entire spectrum of housing no market has been hit hard as downtown condos, where prices have dropped to zero and many speculators have simply walked away from their debt never to be heard from again.  Supply continues to increase as some condo towers started during the building boom are completed, but many others have been abandoned by bankrupt developers in a state of partial completion.

The sad state of the downtown core can be blamed on a confluence of factors: the credit crisis, the exodus of jobs and population, multiple bank collapses, oversupply and the discovery of the unique health hazards caused by granite and stainless steel.  The elimination of the CMHC and the requirement for 70% down payments certainly isn’t helping the local market.

While many speculators have been financially destroyed by this market, not everyone is unhappy with the collapse.  Local teacher Sandy Ursus just bought three homes in Vancouvers southlands neighborhood and is quite happy with the purchase.

“The minute I saw this house I fell in love.  We’ve been saving for years, but when this and the neighboring homes came on the market for a combined price under $200k I knew it was time to take my money out of the bank and buy” Ursus explains sipping champagne on her sunny deck. “Since we had the two neighboring homes torn down it’s almost like living in the country here.  Its funny thinking that just a few years ago people were fighting to pay more than the next guy for a house in Vancouver while these days the seller will throw in a new car and a years worth of gas just to get you to buy.”

Is she concerned about predictions of further depreciation and economic woe?

“Not at all, this is a place to live, a place to raise a family, not an investment. We’re debt free and maxing out our RSPs so the price of the house is really not a concern for me.”

Local economist Rusty Summervile disagrees “She should really get rid of that house as soon as possible. History has shown that real estate is a massive wealth destroyer.  The most sensible course of action is to rent and save as much as you possibly can, let someone else shoulder the depreciation.”

This last month saw small gains in the REBGV benchmark price which now stand at the following levels:

Detached (Single family home): $764,616
Attached (Row + Townhouses): $473,543
Apartment (Condominiums) : $389,609

The big change is in the elevated number of listings and lower number of sales we’re seeing at the beginning of the spring selling season. Housing sales in greater Vancouver have dropped to 2001 levels as the credit crisis and financial problems in the US seem to be affecting buyer psychology.

New listings in Greater Vancouver grew by four percent this month, while sales dropped by sixteen percent. In the Fraser Valley listings dropped off by about three percent, while sales dropped by twenty five percent.

Mohican has a great post of current supply and sales data graphed out at Financial Planning and Personal Sanity showing the dramatic shift in listings to sales ratio we’re currently seeing, while Paul Boenisch provides current REBGV statistics broken down by area if you want to keep track of this market going forward.

I found this shocking bit of info over at Rob’s blog posted by Awum:

Here’s something I was wondering about. I heard anectdotally that Vancouver east side condos seem to be on a downhill slide as far as price goes. This morning I was reminded of http://www.landcor.com/market/housing_price_index.aspx to check it out, typed in Vancouver East, apartments, pushed refresh graph. Waited. Looked at the graph. Wow.

Other areas really don’t show so much weakness (I looked at a few) but Van East apartments looks like its in bust mode already. Looks like a 15% drop in HPI from peak. That’s a big deal.

Now before anyone accuses me of going all “Chicken Little” over this one piece of data, let me be clear about my point: The only reason for this drop in HPI that I can ascertain is plain old supply & demand. Too many properties for sale, not enough buyers with the required $$.

I have to admit I was very suprised to see that graph as well - I’ve always looked to the MLS Housing Price Index which doesn’t show any such correction underway. I tried to find information on the Landcor site on where they get their data and why it would vary so much from the MLSlink data and the found this page on their site which is heavy on buzzwords, but light on specifics:

The accuracy of Landcor™’s AVM is further enhanced by the quality of our data. We update our copy of BC Assessment Authority property information on a weekly basis. There are typically between 3,000 and 9,000 property information and sale changes each week. Our competitors in BC and across the nation typically update data stores once a month. Landcor™ has the most up-to-date information on property in BC.

So are East Vancouver apartment prices crashing as shown by the landcor data or are they remaining fairly steady as shown by the MLSlink data? I suspect the truth lies somewhere in between - It’s pretty tricky to ‘benchmark’ housing based on all the variables, but I’d be interested in hearing your opinion on this data.

The receivers report for the Eden Sophia condo development has just been released. Pre-sales buyers now know how much extra they’re likely going to have to pay for their units. Article from the CBC:

According to the report by the receiver, The Bowra Group, which was filed in the B.C. Supreme Court on March 11, it will cost $9.2 million to complete construction, if and when work on the building resumes.

In order to fund the construction process, it is suggested in the report that the pre-sale price paid by condominium purchasers, from January 2005 to November 2006, be increased to 90 per cent of the current market value of the building units.

Due to soaring real estate prices, the buyers will have to come up with an average of $84,600 more than they originally paid to keep their homes, the report recommends.

The full receivers report in PDF format can be found here.

On a side note, prices may be going up at the Sophia, but ‘Interested Observer’ writes in to say that prices are going down at ‘the Duke’. The following is an excerpt from the email pitch for that project:

I wanted you to be among the first to know that Duke on Dunbar’s prestigious suite #307 has now been reduced to $999,900! This 1,034 square foot two bedroom, two bathroom home includes lavish finishes and features and breathtaking city, ocean and mountain views and a beautiful, private 468 square foot balcony complete with an indoor/outdoor fireplace to ensure enjoyment year round.

This information will hit MLS late this week so I wanted you to have an opportunity to take advantage of this offer first. If you would like to book an appointment or have any questions, please do not hesitate to call.

Prices up, prices down, who can keep track!

February saw a large number of listings and prices edge up yet again in Vancouver. Overall listings are up 26.2% compared to last February and sales are down 6.4%. The REBGV benchmark price for a single family home in Vancouver is now up to $761,342. The Townhouse benchmark price is $472.147 while the Condo benchmark is $387,032.

Get all the stats broken down by sub-area at Paul Boenisch’s site.

This certainly is an interesting market and one thing so far is true - it really is different here. A year ago other western markets were chugging along with Vancouver, but some of our neighbors are seeing some changes. Calgary, Victoria and Seattle markets have shown some weakness lately and even closer in its possible that the western blessing is fading. North Vancouver has seen a 2.38% price drop in the SFH benchmark and the Fraser Valley is looking less robust these days as well. Keep an eye on Mohicans blog for Fraser Valley analysis (not up at time of this posting)

There has been some news lately of fewer Canadians and fewer BC residents planning to buy in the next few years. Will this along with rising listings translate into downward pressure on prices as it has in other countries?

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After hosting the 2000 summer Olympics, Sydney Australia has seen some astounding losses on real estate speculation. The outer suburbs are seeing median price drops between $100 to $450 per week since early 2004. In Sydney property prices peaked three years after they hosted the games, will Vancouver’s market hold on that long?

One of the obvious differences between Vancouver and Sydney (asides from the summer / winter games hosting) is that their games took place at the beginning of a global credit boom, whereas ours seem to be happening at a time of contracting credit. This will likely have an effect on when our local market peaks.

The MVS Valuers analysis shows that anyone who has bought as long ago as January 2002 and resold recently in Sydney’s west and south west is likely to have copped a loss.

Prime Minister Kevin Rudd is today expected to unveil a plan to help families battling housing stress in a move designed to take the heat out of the latest Reserve Bank rate hike. Last month, on the day before the central bank increased rates to an 11-year high of 7 per cent, Mr Rudd announced the government’s $850 million first-home saver accounts scheme.

Mr Rudd’s announcement comes after new research shows 1.1 million low to middle income households are now spending more than 30 per cent of their income on housing. To present an accurate picture, anomalies such as upgraded homes, sales within families and vacant blocks that have been built on were removed from the analysis.

Among some of the worst losses studied, a home in New Cambridge St, Fairfield West bought for $780,000 in November 2004 sold in July last year for $415,000, a loss of 46.8 per cent.

At Bond Place, Oxley Park, a unit bought for $455,000 in August 2005 sold last May for $250,000.

At McAndrew Close, Lurnea, a house bought for $420,000 in December, 2004 sold last June for $267,000.

On average houses actually bought over the past five years and then resold have resulted in losses of $20,912 in Sydney’s west and $20,435 in the south west for their owners. MVS Valuers director Peter Raptis said there was little likelihood of a recovery in prices in the short term. He predicted more possible losses ahead, or at best nominal growth.

The full article can be found on news.com.au

There are some areas of eastern Sydney that are still booming, so this slump has not hit their entire market equally. There are some interesting comments on that article as well.

Thanks to Visio for the link.

update: a more positive interpretation from 2006 can be found here

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