Vancouver Condo Info

Well the official stats are out for December 2008.  How did our local Vancouver real estate market fare?  You can probably detect the general direction of Vancouver house prices in the following graph:

The drop was slightly less than November ‘08, falling $18,104 to a benchmark price of $648,421.  So far the benchmark has dropped $122,900 from the market peak last spring.

UPDATE: Bubble lad just posted a link to this story in today’s Sun: Metro Vancouver to see deepest property price dip.

Metro Vancouver’s home prices rose the highest in Canada’s property boom and will fall the furthest in its correction, real estate firm Royal LePage has forecast.  Royal LePage Real Estate Services, in its 2009 market survey forecast released Tuesday, predicted that Metro’s average home price will decline nine per cent in 2009 to $540,100 from a 2008 forecast of $593,500.

That will be almost three times deeper than the national average decline for 2009 of three per cent, which should bring the average home price down to $295,000 nationally.

Royal LePage CEO Phil Soper said that over the long term, home-price appreciation should rise in line with the rate that a city’s incomes rise.  “Over the last seven years, Vancouver prices increased at a rate significantly above the underlying appreciation of people’s incomes,” Soper said in an interview.

Don’t listen to the negativity.  Local incomes are irrelevant.  OUR market is different,it’s fueled by a special blend of upbeat naivety and magic pony-power.

Besides, it’s only money.

Well 2008 has come to a close, and if you’re counting on Vancouver real estate as a ticket to riches it hasn’t been the best of years.  But DO NOT FRET, for I have discovered a simple way for investors to feel a little bit better about the direction house prices took in 2008. Do not look directly at a chart or graph of house prices, instead only view them through a rear view mirror:

There! That’s not quite so bad now is it?

(Yes, we used this same trick when comparing the Vancouver BC / Syndey Australia markets.)

Happy New Year Everyone!

Now that’s progress!  Click the image to view the full-size original.

-Arit

Now that the correction has started, the only questions that remain are its depth and when we get there. Or more simply, when does one buy?

There are a lot of different ways of evaluating real estate prices and many of us are aware of the traditional metrics. I won’t repeat this analysis because it has been said before and is readily available. Most results would place fair value anywhere from current levels to another 20 to 30% on the downside (and even more by some).

Another way of evaluating expected prices is technical analysis, which is simply looking at past trends and assuming history will repeat itself. Real estate has appreciated at approximately 5.5% per year over the long term. Using 1983 prices (the bottom of the last crash) as a baseline, this would give an expected bottom of $630k for the average Greater Vancouver SFH. Using a similar approach, fair value was estimated at $730k, not accounting that markets tend to overshoot fair value. Considering this, I think $630k is a reasonable expectation for the bottom (based on technical analysis).

Based on the November 2008 average SFH prices of $750k, I think we have another $120k to go on the downside, or roughly another 15% drop on top of what we had to date. Considering the rate of the correction, it shouldn’t take long for us to get there. It might only take another 6 months.

But with all that said… who cares? Why are so many people consumed with buying at the absolute bottom? I think we are asking ourselves the wrong questions because none of us really know where the market will go (a known unknown). I think the following three questions are more important, partly because they can be answered (known knowns):

1. Can I afford it?

2. Do I like the product and the location?

3. Will I live there for a reasonable period of time (at least 5 years)?

If the answer to all these questions is yes, then it just might be the right time for you to buy.

Dave

The headline is ‘sales drop forces realtors to cancel 09 conference‘.

The Real Estate Board of Greater Vancouver (REBGV) held a version of the conference in the spring, but in a letter to prospective attendees and exhibitors, board president Dave Watt said a careful review of its sponsorship model led the executive to postpone the next edition until 2010.

“With REBGV members and prospective sponsors/exhi-bitors currently facing economic challenges, we believe forgoing the 2009 edition of our event is a prudent and responsible measure at this time,” Watt said in the e-mail.

When contacted, Watt declined to offer further comment on the cancellation.

Lower Mainland real estate markets hit the down stroke of their cycle this year, which has meant declining sales and falling prices.

Also in the news today, Richmond is the latest area of the lower mainland to see real estate prices drop lower than they were this time last year:

But it could be worse. You could be trying to sell a house on Vancouver’s west side where detached, attached and apartment properties are being sold respectively for 18.5, 19 and 19.6 per cent less than 2007.

Coun. Derek Dang, a Richmond realtor of 23 years, said it was only a matter of time before the city’s real estate bubble burst.

“It’s not that surprising as we were always going to get caught up like the rest of the world,” Dang said.

“Ultimately, we’re all part of the one big worldwide crisis. We’re good, but we’re not immune.

“It’s an international market we’re dealing in these days and when the global financial market gets into trouble it’s bound to affect us.”

YLTNboomerang sent in this updated snapshot of the townhouse market in Coal Harbour & False Creek North, along with a chart showing days on market vs. sales price reductions. You can download the XLS here and here’s the price change over time chart:

I’ve started a new submarket tracker in the wiki and encourage anyone tracking specific Vancouver sub markets to share their information there. Email me if you add information there and I’ll create a blog post about it.

The benchmark price for a Single Family Home in greater Vancouver is now $666,525. Vancouver West is seeing the biggest drops in detached house and town homes.  Both of those benchmark prices are now down at least 18.5% year over year.  Overall the benchmark house price for Greater Vancouver has dropped $104,725 since May of 2008.  That’s a few free cars worth for those keeping track.  Thanks to cashisking and gadwin for pointing out these numbers.

Post any other interesting things you find in the stats package in the comments section below and I’ll update this post when I get a chance.

Benjamin Tal of CIBC World Markets is saying that we’re currently in a recession and is predicting a 20% drop in BC house prices, and a smaller 10% drop in house prices nationally.

He said Canada’s recession was sparked by slowing growth in the wake of the meltdown of U.S. housing markets. The economy will not begin to recover until American real estate bottoms out, the financial sector stabilizes and until government economic stimulus packages take hold.

Tal said that could be sometime around May next year.

He cautioned that recovery will not be a robust “V-shaped” bounce-back. Rather it will take more of a “U-shape” and will take some time.

Tal said Canada’s housing downturn is a recession-led correction rather than the kind of meltdown that brought U.S. markets low when large numbers of high-risk borrowers defaulted on their loans.

Tal said B.C. is likely to see deeper corrections in real estate prices, largely because values here shot up so much higher and more quickly that in other parts of the country.

“When you double the value of your real estate over the course of breakfast, then you pay the price,” Tal said.

He said the recession still has to run its course, and was in the equivalent of “the sixth or seventh inning” of a baseball game.

I notice that we don’t have any quotes from Tal in the Wiki Quote-tracker, anyone feel like adding some? Thanks to Re-diculous for the link!

This bit of news courtesy of local Realtor Paul Boenisch who shares market statistics on his website. November 2008 just saw a very sharp drop in the average sales price of single family homes:

Prices are falling sharply. Believe it or not the average SFH price fell 10% this month. Yes in 1 month. $745,778 for November v. $825,206 for October. The average has dipped 19% since March. It will be interesting to see if the benchmarks also make a dramatic drop.

According to the Organization for Economic Cooperation and Development, Canada is in a recession and heading for a deficit. And who’s to blame? Ontario and BC.

Across Canada EI claims actually dropped month over month, except for in Ontario and BC where they surged 14% over the year in Ontario and 11.5% in BC. Ontario has the auto manufacturing sector to blame for the downturn, while here at home we’re seeing an alarming decline in forestry revenues not to mention the sharp downturn in the housing market where prospects are looking more grim with each passing month, particularly when it comes to downtown Vancouver condos.

Meanwhile in the financial sector Canadian banks have started asking Ottawa for a major cash injection to help stem a rising tide of bad loans.  BMO figures show bad loans have already exceeded the peak reached in 2001 after the dot com crash, and are well on their way to levels seen in the last recession almost 20 years ago.

The bright side? If you’re looking for temporary office space to sublease in Vancouver, it looks like you have lots of options right now.