Tag Archives: news

No sign of bubble bursting

This Vancouver Sun article used to have the headline “Vancouver housing market in bubble, new house price index claims.

That version of the article apparently included the following:

“While foreign investors are no doubt playing some role, we think this explanation is overblown. Low interest rates and self-fulfilling expectations of higher prices continue to inflate actual prices independently of fundamentals,” reads a press release from the creators of the index.

“Over the longer-term, we still believe that these housing markets will experience major price reversals.”

But that has since been updated to “Vancouver’s ‘housing bubble’ shows no sign of bursting” and we’re having a hard time finding the above quote. The article now says:

According to Davidoff, it is impossible to judge Vancouver’s real estate market on the same bases as that in other cities. In the Prairies and the U.S. Midwest, where space is plentiful, the value of a home is essentially what it costs to build. Vancouver, on the other hand, is almost out of new land to build on. “The house, that means, is worth whatever people are willing to pay,” he said.

We can’t quite put our finger on it, but it feels like there’s been a subtle shift in the tone of this article.

Read whatever the article currently says here.

What will the CMHC announce?

Who wants to play ‘guess the future’?

Apparently the CMHC is holding a conference call at 10 am EST on Feb 27th.

Some rumours are saying privatization, though it looks like most everyone agrees that would extreeeeemely unlikely at this point for a few reasons:

Privatization would require the finance department
No one in their right mind would take on the debt

But that doesn’t mean you can’t guess at what is going to be revealed tomorrow!

So what do you think the CMHC will announce? Privatization? Tougher underwriting standards? Branching out into commemorative figurines? A new special expert task force comprised of Brad Lamb, Bob Rennie and Angelo Mozilo?

What’s your best guess at what the CMHC will announce tomorrow?

Crumbling real estate markets in BC

Ben Rabidoux over at The Economic Analyst has a post focusing on the falling markets in Vancouver and Victoria.

As VHB points out the last two years saw 2 & 3 days in February with daily sales under 100.  We’re now 5 sales days in and we’ve seen 3 sales days under 100.

Sales better pick up in the remaining 15 business days or the market is at risk of having a worse february that 2009, the worst year in recent memory.

We’re not hearing much about it in the local media, but the real estate market in Vancouver is seeing rising listings, sagging sales and dropping prices.

Over at Vancouver Peak 604x points out the lack of reasonable reporting on this topic in the local media and brings up the topic of conflict of interest.

He’s put together a form letter with contact info for the broadcast standards council.  Here’s an excerpt:

We all remember the false and misleading behaviour of the news media during the technology “bubble” of the late 1990s and early 2000s. In both the US and Canada many people lost substantial sums of money due to the cheerleading of certain media outlets. After the dust settled it was found that many of these media outlets and “economic correspondents” had conflicting interests – owning the stock of companies they were actively reporting on and actively pumping.

The same is happening today in Canada with news reporting of the current real estate market. Many reporters and news organizations, most notably Vancouver’s branch of Global TV (CTV network), are delivering hyped up media and false/misleading reports on the status of the real estate market in BC. I believe this is also true for CTV’s Toronto reporting. A defining characteristics of such coverage is (i) one-sided reporting (i.e. “prices are about to take off”), and (ii) interviews with real estate agents and staff of real estate companies who have a clear conflict of interest in the current market. The behaviour goes beyond sensationalist headlines designed to boost circulation and sell ads – these news correspondents appear to be actively pumping the market for personal gain.

Read the full post here.




Market moves for August 2012

Another month has come and gone.

The Real Estate Board of Greater Vancouver (REBGV) should release their market update for August any day now, buy in the interim we have the always entertaining GVREB and their news release.

The GVREB uses factual statistics, numbers and market data in their press releases just like the REBGV, but I think you’ll find the spin is a little different

Motivated Sellers Move Prices Downward in Extended Weak Market.


VANCOUVER, B.C. –September 4, 2012 – The extended weakness of the Greater Vancouver Property market has forced many motivated sellers to reduce prices significantly from their spring listing prices in order to sell their property. Sales volumes continued to languish at near record lows and daily sales volumes continue to decrease. Counteracting the low sales is the impact that market weakness has discouraged new sellers from listing their properties. This reduction in the pace of new listings has resulted in an overall decrease in the number of active listings compared to the number at the end of June 2012. Daily sales volumes continued to deteriorate first to 82 units per day in the first half of the month then to 71 units per day in the last half of the month. The lack of buyers has resulted in sellers taking significant discounts in order to complete their sale transaction and the majority of sales are now at prices below their July 2011 property tax assessed values.

GVREB reports that residential property sales of detached, attached and apartment properties reached 1,649 in August 2012. This total represents a 31 per cent decrease compared to the 2,378 sales in August 2011. August 2012 had the lowest average sales per market day for any August in the past 12 years at 76 sales per day compared to 78 sales per day in 2008, which was the most recent low.

August 2012 saw an increase in the sale of ultra-luxury properties as the summer travel season brought more foreign buyers than the previous few months. There were 3 sales in Greater Vancouver over $10 million during August 2012 and a large increase in properties over $5 million compared to the most recent months. The fact that these sales occurred in a month with very slow sales had a disproportionate effect of increasing the average price for the month with over $50,000 of the increase in the average selling price of detached properties coming from the 3 largest sales. The large increase in the average selling price compared to July 2012 should not be interpreted as a sign that the market is strengthening. Experienced local real estate professionals have noted that it is more important to focus on the high inventory levels and low sales volumes and the resulting inflated Months of Inventory (MOI) ratios than the average price which can be disproportionately affected by a small number of sales of very high value properties.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 3,988 in August 2012. This is slightly below the average listing rate for the past 12 years however the sales to new listing ratio of 41.8% was the second lowest of the past 12 years. Continued market weakness has resulted in a slowdown in new listings. However, experienced market players have noted that “sellers waiting for better selling conditions are not expected to see the current price levels for the foreseeable future and waiting to list their property should not be a strategy to obtain a higher selling price. Sellers must reduce their price expectations if they wish to complete their sale before the end of 2012.”

Active listings at the end of August 2012 were 17,652, down 3 per cent from July 2012. However, total MOI continued to increase for the sixth straight month and was 10.5 at the end of the month. MOI for detached increased to 12.5 months at August 2012 from 10.1 months at the end of July 2012. Attached and apartment inventory increased significantly to 9.3 months from 7.7 months. At these levels, there are significant downward pressures on selling prices and very few buyers are available for the number of active listings. MOI increased in nearly every sub-market during August 2012 from July 2012 with West Vancouver detached increasing from 12 to 21 months and Burnaby increasing to 15 from 11 months. Without a significant withdrawal of listings by current sellers in Greater Vancouver, these ratios are forecasted to deteriorate further during September.

The Residential Reference Price for all residential properties in Greater Vancouver over the last 12 months has increased only marginally to $614,000 in August 2012 from $612,600 in August 2011. We believe that in September, the annual price comparison will show the first annual decreases in this index since 2009.

Sales of detached properties in August slowed to 625 units, a decrease of 39 per cent from the 1,020 detached sales recorded in August 2011, and a 30 per cent decrease from the 893 units sold in August 2010. August 2012 was the second lowest sales volume of detached in the past 12 years. The reference price for detached properties increased 1.4 per cent from August 2011 to $945,000 but fell from $949,000 in the previous month.

Sales of apartment properties fell to the lowest level in 12 years at 727 units in August 2012, a 24 per cent decrease compared to the 955 sales in August 2011, and a decrease of 22 per cent compared to the 955 sales in August 2010. The reference price of an apartment property was equal to the level at the end of August 2011 at $372,000.

Attached property sales in August 2012 totalled 298, a 26 per cent decrease compared to the 403 sales in August 2011, and a 20 per cent decrease from the 374 attached properties sold in August 2010. The reference price of an attached unit decreased 0.5 per cent from August 2011 to $464,000.

Vancouver housing zeppelin

Even with all the recent warnings of a housing bubble that is no longer limited to just Vancouver and Toronto, you’ll still find lots of media coverage that dismisses bubble talk or explains it away as an ‘ownership premium’.

It’s not difficult to see why this is – there are thousands of people who’s incomes depend upon the housing market.

Whether its condo marketer Bob Rennie or a random realtor, they all have their day to day income tied to the health of the real estate
market and conveniently are given ‘expert’ status and quoted by the local media.

That makes an article opener like this all the more shocking to newspaper readers:

Is there a housing bubble in the Lower Mainland? Housing zeppelin is more like it. Bubbles, after all, are soft and cute and harmless. Zeppelins, conversely, hurtle into the ground, spewing flaming wreckage in all directions. And that’s precisely what we’re about to witness in Metro Vancouver.

That’s the intro to a rather dramatic editorial written by Gord Goble and published in a number of local papers.