Tag Archives: benchmark

BC, data, economy, hype, opinion, predictions, prices

Vancouver Market Summary so far for August 2016

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171 Comments

yvr2zrh wrote a good summary of what the market looks like currently, how media headlines can get it wrong and where we might go from here:

With about 9 market days remaining in the month, we can start to look forward to how the month will end up. During the past two weeks, we have seen so many numbers in the media which highlights not only is the market falling but also that the intricacies of the underlying data are not well-understood by so many people.

The message (although correct in that the market is bad) is so poorly explained and supported and thus the true state of the market is not clear to people. So – here is the summary of what is really happening.

1.) Sales volumes will be down around 25% for unit sales but 33% for dollar volume. My model predicts a 10% decrease in condo sales (which is not much).
2.) The decrease in average price across the entire market is driven primarily by mix at this stage. It is not known how much is driven by actual price movement. Likely little so far.
3. ) Detached home sales are down significantly. This is likely more than a 50% decrease from July volumes and could be more than 65% down from August 2015.
4.) It is not clear what the benchmark price will do but we would expect that the condo price is probably almost unchanged. This market is mainly suffering from supply issues which will take time to resolve. Detached benchmarks are likely to fall in the higher-priced markets. The reason is that there will be buyers but only low-ball buyers testing sellers.
5.) The stats will be partially supported by the month-end date cutoff issues at REBGV. They report sales based on the date they get paperwork. Many of the sales recorded to beat the tax will actually show as an August sale, while they are actually July sales. Since these are from a period with a “different regulatory and tax framework” they are not really comparable and should perhaps be shown separately for accuracy purposes.
6.) Inventory will be up a bit but we still have a supply shortage in condos. Detached house MOI will increase to 10 or more.

Ultimately, this tax is taking money out at the top. It will take a couple months to see how it all plays out but the top of the market will now need to rely on move-up buyers and bona fide immigrants who are permanent residents.

We can already see the headlines coming but some of the intricacies of the stats will not really be understood.

I also have some stories from the front lines which I will get more info on next month and then write a more detailed update.

And – let’s try to keep the discussion on topic as much as possible – we have started to waiver a bit in the past few weeks.

Posted by yvr2zrh on Friday August 19th 2016 in the comments section.

data, debt, equity, opinion, prices, renting

How much lost on a 2009 condo purchase?

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41 Comments

Previously we highlighted b5baxters comment on the 19 months that have elapsed since Vancouver home prices have peaked (according to the REBGV home price index)

Of course there are a lot of variables in the housing market, so lets look just at condos, which Crabman has ever so helpfully run the numbers on:

I calculated the bottom line if someone bought a benchmark condo 4 years ago with a 10% DP and a 4% 30-yr mortgage. I took into account all carrying costs, rent savings and principal pay down. I also assumed rent, prop tax and condo fees increased 4%/year.

Oct 2009:
Benchmark price: $380,975
Mortgage balance: $342,878
Equity: $38,098 (10%)
Est. Rent: $1,100
Mortgage: $1,637
Condo Fees: $200
Prop tax: $89
Monthly loss: $826 (extra costs of owning vs. renting)

Oct 2013:
Benchmark price: $365,600
Mortgage balance: $317,253
Equity: $48,347 (13.2%)
Est. Rent: $1,287
Mortgage: $1,637
Condo Fees: $234
Prop tax: $104
Monthly loss: $688

Over those 4 years, equity only increased $10,249. But the extra monthly costs of ownership over that same period were $45,498, so the owner would have saved $35,249 by renting.

So it looks like the current ‘ownership premium’ for someone who bought a Vancouver condo in 2009 is just over $35k.  Anybody see any problems with those numbers?

BC, Canada, data, hype, opinion, prices

Realtor: DO NOT PANIC about bubble.

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51 Comments

There’s an interesting read over at BCBusinessOnline about those crazy bubble bloggers and forum bears:

The “Bears” talk cover up which I always find so intriguing. Commenting on the September stats from the Real Estate Board of Greater Vancouver, Seth M. says:  “This will only make the conspiratorially minded angrier — most of them convinced that the so-called benchmark indices produced by organized real estate are covering up a major decline.” The reality is the numbers from behind the HPI are actuals.  They aren’t fabricated to prop up a cyclic market so that realtors can hang onto their markets.

Now there may be some of you that believe the ‘cover up’ angle on the HPI, but I think you’re maybe a little crazy.  There is nothing to be gained by massaging the numbers.  My feeling on the HPI is that there seems to have been no good reason to change the methodology for calculating it.  It used to be a very decent apples to apples historical comparison, but by changing the measurement and then recalculating it they’ve killed its value as a long term gauge.

I think any problems with the HPI come down to opacity and bad math, not any smoky back room conspirators whose only goal is to keep house prices high.

But what do I know?  I’m just a crazy anonymous bubble blogger.

BC, Budget, Canada, debt, economy, mortgage, prices

Housing Affordability deteriorates to new low

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98 Comments

Thank goodness we don’t have a housing bubble in Vancouver!

Otherwise one might start to worry about these latest numbers on housing affordability.

The housing affordability index takes local family income and then looks at what percent of it would would be required to service the debt on an average benchmark bungalow.

The entire province of BC is at 69.7% and blows away the rest of Canada for overpriced houses. Only Ontario starts to come close with an affordability index of 43.9%. Even Toronto can’t compete in the overvalued housing arena, coming in at 54.5%.


According to RBC Vancouver is the champion of overpriced houses. To buy the benchmark bungalow here it would take 91% of a local families pre-tax income to service the debt.

From Macleans magazine:

Nothing, of course, could persuade condo king Bob Rennie that the Vancouver housing market is in a bubble (or, worse yet, a bubble that’s starting to let the air out).

For everyone else, take a look at this chart RBC put out today with its latest survey of housing affordability in Canada (which is deteriorating in most provinces, by the way)

No problem, just arbitrarily knock 20% off those Vancouver numbers and we’re not much worse than Toronto.

If you look around the world, you may be able to find a few markets that have an even worse affordability index than Vancouver, with lower incomes or higher house prices. But for some reason, most of those places seem to be able to pull in higher rents than Vancouver.

advice, BC, prices

Sales plunge to 10 year low

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153 Comments

The June news release from the REBGV has been released and it looks like the market has turned a corner.

As all of you regular readers here know, sales have plunged to a 10 year low.

The HPI benchmark price has also dropped from the previous month in some areas.  Oddly enough it’s houses in the desirable west side and Richmond which have both dropped about 2% from May.

Best Place on Meth summarizes the total changes for all areas:

Summary of June HPI:

All -0.7%
SFH -0.6%
Apt -0.9%
T/H -0.3%

I was expecting no change for June and declines to start next month so this is a bit of a bonus.

Yes the hot summer market has turned out to be anything but.  As prices drop a few percentage points from their all time highs some are calling this a ‘buyers market‘.

Meanwhile at least one local realtor has sold his own house and says it’s time to cash out.