Tag Archives: august

Second worst August since 1998

The REBGV has released their Vancouver stats package for August 2012 and it’s a bit of a downer for the true believer.

Sales down, prices down, lots of use of the term ‘buyers market’.

In fact the home sales plunge just made last month the second worst August since 1998.

The group’s composite benchmark price for all residential properties in Greater Vancouver is $609,500 which is down 0.5% from a year ago and 1.1% from July.

Supply seems to be slowing with new listings for detached, attached and apartment properties 4,044 in August for a 13.7% decline from a year ago. New listings were down 15.8% from July.

At 17,567, the total number of residential property listings on the MLS was up 13.8% from a year ago but down 2.8% from last month.

Courtesy of Good Format, here’s the month drops and what that number looks like annualized:

            MLS® Home Price Index  

           July 2012     Aug 2012   Chg(%)  Annualized(%)
Detached     950,200     942,100     0.86       10.32
Attached     468,700     462,300     1.38       16.61
Apartment    374,300     370,100     1.13       13.61

Scubasteve shares some of the worst hit areas for prices:

DETACHED
-3.7% = Richmond
-3.7% = Vancouver West
-1.3% = Maple Ridge

CONDOS
-8.0% = Burnaby South
-7.9% = Port Coquitlam
-6.4% = Burnaby East

TOWNHOUSE
-8.8% = Tsawwassen
-8.3% = Burnaby North
-4.5% = Maple Ridge

And the worst areas for sales:

1) West Vancouver (-65.6%)
Aug/12 = 34 sales
Aug/11 = 96 sales

2) Burnaby (-47.5%)
Aug/12 = 174 sales
Aug/11 = 331 sales

3) Coquitlam (-41.6%)
Aug/12 = 122 sales
Aug/11 = 209 sales

4) Richmond (-31.2%)
Aug/12 = 179 sales
Aug/11 = 260 sales

5) Vancouver West (-31.0%)
Aug/12 = 362 sales
Aug/11 = 524 sales

6) Vancouver East (-29.6%)
Aug/12 = 169 sales
Aug/11 = 240 sales

7) North Vancouver (-29.0%)
Aug/12 = 113 sales
Aug/11 = 159 sales

Read his full comment here.

If we don’t see a flood of listings in the Fall then that will help to let some of the downward pressure off the market, but there isn’t much looking up in the outlook.  We’re now a couple of months into the new mortgage rules that have taken out some first time buyers and put pressure on $1 million houses.

With housing affordability in Vancouver at a record low it’s only going to get trickier to find a buyer unless we get a new flood of credit or higher paying jobs.

 

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% (www.yattermatters.com) 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: vancouverpricedrop.wordpress.com )

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 ( http://vancouverpeak.com/groups/data-hounds/forum/topic/crash-curve-graphs/#post-2531 ) 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:

http://worldhousingbubble.blogspot.ca has estimated a decline of 41% and a time to bottom of 97 months (8 years).

The Economist magazine recently ( http://www.economist.com/node/21557731 ) stated that Canadian real estate is overvalued by 75% (this is an average for Canada, some markets like Vancouver may be higher).

http://alphahunt.ca has estimated a decline of “about 50%” from a March 2011 peak with a time-line of “5+” years

http://vreaa.wordpress.com/ has projected a decline of 50-66%

Pacific Partners estimates a 40% decline (http://pacificapartners.ca/blog/2012/07/18/canadian-real-estate-bubble-chart-book/#Table2 )

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%.