April 8 Market Update: Vancouver buyers dry up
The board’s first quarter report on buyer origin (where buyers moved from when they bought) was released and although I’ve recently reported that out of town buyers were back to nearly normal levels, the Q1 update shows us that Vancouver buyers in particular have taken a further substantial dive since the same quarter a year ago. What’s interesting is that local buyers were still buying in numbers little changed (down 9%) from the first quarter of 2018, but all categories of out of town buyers took much more substantial dives. Note the absolute numbers below the percentage drops, so some categories like buyers from other provinces and outside Canada which were small to start with didn’t see large changes in absolute numbers despite the seemingly large drops in percentage.
Like I said a while back, Vancouver owners can still sell and cash out in large numbers but they won’t. Even after the drops in that market (MLS HPI indicates 13% drop so far), their prices are still way in excess of ours. The problem is that it’s human nature to value losses disproportionately highly and owners are loathe to sell into a declining market. Don’t be fooled by their low sales volumes either. Anyone that wants to sell in Vancouver can do so in a week but of course most sellers are not willing to list their homes at the price required to do so. Selling in Vancouver and buying here has become more like work and less like winning the lottery so it has lost much of the appeal it had just a couple years ago. I don’t have quarterly data from 2016 but estimating from full year numbers, Vancouver buyers are now down by some two thirds from that peak.
Also weekly sales courtesy of the VREB:
| April 2019 |
Apr
2018
|
||||
|---|---|---|---|---|---|
| Wk 1 | Wk 2 | Wk 3 | Wk 4 | ||
| Sales | 136 | 774 | |||
| New Listings | 346 | 1291 | |||
| Active Listings | 2517 | 2002 | |||
| Sales to New Listings | 40% | 60% | |||
| Sales Projection | — | ||||
| Months of Inventory | 2.6 | ||||
For the first week, sales are coming in a little slower than the most recent weeks. Not much point comparing to this week last year since Easter fell on the 1st last year and distorted the picture a bit. We’ll need another week to see how the market is shaping up. However April is do or die for the spring market and so far the start is middling at best.
For the one percenters in the readership, here also some updated numbers from the luxury market.
Sales are coming in roughly in line with last year, but with about 20% more inventory. The years of inventory at nearly two sounds high but is actually not unusual for high end properties. The problem is that the current data is not directly comparable with that from 2015 because back then the $2M captured only truly high end properties while now that includes some high end but still “normal” homes which tend to sell much more quickly than the true luxury $4+ million dollar level.
The luxury market was the first to slow down, and that lead to many dismissing it here and in Vancouver as a correction that would have no real world impact on any normal buyers. However as we know nothing moves in a vacuum. Market segments are connected and when one takes a sudden dive it’s usually a sign that others are to follow. What we don’t know yet is whether the slowdown will remain gentle and orderly as it has so far or if it will become more significant like is happening in Vancouver. Stay tuned.
If anyone needs a good surgeon I can refer you to several who never wasted no time reading stinking textbooks and research papers. They like to just grab a scalpel and get things done.
I spent four years in Jubilee/VGH ICUs intubating, doing arterial lines, and running ventilators and I read my share of mechanical ventilation textbooks.
If I want to frame a shed in my back yard yea I’ll probably crack open a book/instructions, but at the same time I have enough common sense to know the only people getting rich from personal finance books are the ones selling the books.
I wasn’t clear. I meant so-called amateur landlords usually don’t claim it (that is, the ones who know what they’re doing).
Precisely.
Oops
I have an excellent accountant and we don’t claim CCA. I’m sure he has a good reason for it.
One of our neighbors has been air bnb-ing their place. The constant stream of strangers – sometimes many of them at once – is annoying.
Commercial landlords, e.g. REIT’s, certainly do claim it. Read their financial statements. But a great many amateur landlords don’t, because CCA can’t be used to create or increase an operating loss on rental property. Also claiming CCA on a suite will make it subject to capital gains irrespective of other considerations.
Otherwise, it makes perfect sense to claim it. $X less taxable income now in return for $X/2 more taxable income when you sell is a pretty good deal.
Seriously? That’s just 3 in 3 seconds. I’m sure I can come up with more but you get the point.
You can’t see my point?
I’m sure you do love airbnb. Way better than staying in hotels except for the part where you have to lie to the neighbours and contribute to breaking those pesky rules.
Well, many here constantly insinuate that it’s
gonnagoing to.You’re obviously irritated that house prices aren’t nosediving.
I don’t know. You can check that if you want.
You forgot Lambrick Park and Arbutus. They’re also part of GH.
Playing devils advocate.. what’s the beef here? You have different people coming and going, which impacts the neighbors, how exactly? If it’s a noise concern, I’d guess the overwhelming majority of renters are not going to be a bunch of party animals or shit disturbers. The business model would fall apart otherwise. Plus you have the same risk with any regular neighbor, and same recourse too. Airbnb also hosts a neighbor complaint department on their website. https://www.airbnb.ca/neighbors
What’s your point Anna? We love airbnb, we’ve used it in Canada, US, France, Italy, Netherlands, etc. Way better than staying in hotels.
21 pending sales right now in Gordon Head / Mnt Doug.
Median sale at 3% under most recent asking price and 3.5% over assessed.
Seems about right given single family prices since last July (flat) and right in line with overall market.
How long did it take for those 8 properties to actually sell introvert?
So 213k over assessed but 7% under ask.
The Thursday effect is still alive and well on my PCS account.
Surge of new listing on PCS every Thursday recently.
Someone should tell these sellers that bidding wars are long gone. The peak days of listing on Thursday, open house on Saturday, bidding war until Monday 5pm is history, most properties now just languish on the market for many weeks (unless their kitchen and bathrooms are fully renovated and modernized such as the reno at 1623 Dougall Ave that Introvert neglected to mention in his list).
Cherry picking data these days can ‘prove’ the market is going up, down, or sideways. The overall trend is clear though.
The building and/or municipalities should offer a bounty. I’m sure disgruntled neighbors wouldn’t mind a little extra $$ for reporting.
@guest_58441
Who’s been saying that the Victoria market is crashing?
Prices have definitely dropped in GH. Not going to spend the time going through your whole list but the one James Soper posted gives a better feel for where the market is currently at.
DOM:81
Original ask:$999k
Sold: $930k
Still crazy overpriced IMO but the market decides the price.
Also didn’t you used to go around correcting peoples spelling? Is that worse that making up words? Crashy, Amirite
Seems a little bizarre that a house that’s double the size of the one I’m in, and in better condition, is assessed at less.
Grant says ” I pointed it out to my wife and she said “yeah the airbnb host said ‘if anyone asks, we’re supposed to say we’re staying with Andy.’ So this host is clearly violating the rules”
Um, okay.
Recent sales in Gordon Head:
1543 Mt. Douglas Cross Rd
Sold: $1.4M ($82K above assessment)
1742 Jefferson Ave
Sold: $920K ($101K above assessment)
4181 Buckingham Pl
Sold: $800K ($26K above assessment)
1824 Dunnett Cres
Sold: $780 ($66K below assessment)
1817 Laval Ave
Sold: $765K ($68K above assessment)
4358 Elnido Cres
Sold: $927K ($39K above assessment)
1623 Dougall Ave
Sold: $930 ($213K above assessment)
1815 Teakwood Rd
Sold: $877.5K ($12.5K above assessment)
Hmmm, this market doesn’t look too crashy to me. Maybe next spring will be different, amirite, bears?
The Airbnb factor is really interesting, especially for touristy destinations like Victoria and Vancouver. There’s the impact to local RE market, to hotels and neighborhood issues.
This last week we picked up family at YVR and stayed at an AirBnB in downtown Vancouver – my wife had booked it and it wasn’t until I was standing in the condo’s lobby waiting at the elevator that I read the big sign next to the elevator saying short term rentals less than 6 months were not permitted and to report violations. I pointed it out to my wife and she said “yeah the airbnb host said ‘if anyone asks, we’re supposed to say we’re staying with Andy.’ So this host is clearly violating the rules but it’s obviously too lucrative to stop. For us, the 2bed 2bath condo on the 33rd floor with amazing views was going for just over $300/night with taxes and cleaning included. But that was still cheaper, more convenient, cozier and nicer than getting 2 tiny rooms at an upscale hotel.
Apparently Victoria has similar rules and I know there’s tons of listings for Victoria, we stayed at them last year when we were house hunting. AirBnB says average occupancy rates vary from mid 30s to high 60s – so assuming a 50% occupancy rate these hosts are bringing in more than enough $ to cover high mortgages, insurance, repairs and still have profit.
I just buy my own surgery supplies from amazon. Order through Prime and gets here the next day. YouTube videos generally describe the surgical procedure well enough. You can learn to fix almost anything through YouTube…
All the financial advice you’ll ever need fits on a single index card
https://www.youtube.com/watch?v=JdUKhgW1gOo
Entirely depends on the wait times. Can i see them before the end of the year?
Yup this is CYA at its finest. Don’t blame the realtors though, it was mandated by the newly government controlled Real Estate Council.
Little known fact: You as the consumer do not need to sign this form if you don’t want to. However the paranoia around the new council rules is at an all time high within the industry so don’t be surprised if the listing agent won’t help you write an offer if you refuse to sign.
https://knowledge.recbc.ca/resource/disclosure-of-risks-to-unrepresented-parties-a-guide-for-licensees
If anyone needs a good surgeon I can refer you to several who never wasted no time reading stinking textbooks and research papers. They like to just grab a scalpel and get things done.
I don’t sign those forms because if I don’t have an agreement with someone, I shouldn’t be signing anything. Why should I have to sign something to say I’m not in an agreement with them? And what am I supposed to do if I’m talking to 10 different selling Realtors, sign 10 different forms?
I chopped out that sentence afterwards, Leo. 😛
Funny thing is, in a particular moment and context they are actually correct, but it’s a slippery and circular argument. It goes like this:
What they neglect to mention is that when number 3 backs off, the list then looks like this:
Begin again at the top list. I suspect Vancouver is already oversupplied, possibly substantially. We’ll see, the data to date does heighten my suspicion.
That’s really funny—and probably true!
As I see it, the trouble with unrepresented buyers and sellers is that these individuals tend to have an inflated perception of their own abilities and/or are colossal cheapskates, so working with them in any capacity ends up being a total nightmare.
This is true, Marko.
But when I need a realtor I’m still probably going with you at 638 lifetime sales vs. Joe Blow at 26 lifetime sales, because why not?
Yes, and don’t forget about other expenses that are partially deductible such as:
• Bank charges
• Insurance
• Office expenses
• Professional fees (legal, accounting, etc.)
• Management and administration fees
• Repairs and maintenance
• Property taxes
• Utilities
And that’s why in most cases landlords don’t claim CCA.
Well I wasn’t agreeing with it 🙂
Obviously the basic premise of “developers need presales” is correct but the idea that Canada cannot build without foreign purchasing of condos is laughable. Bit of the “that’s a nice condo tower you have there, it would be a shame if something happened to it” approach.
Haha. This is the same tired thing Juwai says over and over, not to mention their frequent, “We’re seeing enormous surges in interest in the XX RE market, measured by our search queries!” You might as well be quoting a source at Genworth.
I remember an Australian article from about 2017 that said the same thing; they even had some local developers chime in to support the assertion. There’s no question that it can enhance building activity especially at higher price levels, but to say nothing would be built without 10% FB buyout is just ridiculous.
Among other things, it fundamentally begs the question of how we ever housed the population in the first place without that degree of influence. It’s like 15 years ago, when the RIAA was arguing that without them enforcing copyright on those pesky Napster or Kazaa users, there’d be few musical artists and no creativity in music.
Statement from Juwai on foreign buying:
“Canada is like Australia in that it just doesn’t have the capital to fund the construction of all the new housing it needs.
Foreign buyers, and especially those from mainland China and Hong Kong, are more willing to buy in the pre-construction phase. Those early sales enable developments to move forward. Without selling 10% of units to non-residents they wouldn’t be able to build anything at all. To prevent foreign buyers from getting any homes, you would also be depriving locals of the other 90% of homes.
Vancouver and Toronto should be celebrating the participation of foreign buyers in their housing markets. It’s a very good thing that non-residents are concentrated in the new construction sector. That’s where they deliver the biggest benefit to Canada.”
https://twitter.com/goldiein604/status/1116365036614643713?s=21
I’m in agreement with many of the reasons already stated.
For me, I’m happy to fork over $20K to a pro who will look out for my interests and ensure any transaction is smooth. This keeps my stress low and probably improves all aspects of decision-making.
Whether the service rendered merits $20K is a different discussion, and my feeling is that it does not.
Well, I don’t consider “success” to be all about money. Hopefully you don’t either.
Best ways to earn money in descending order:
Huh? Applying some sound principles won’t or can’t help you improve at something? You lost me there.
https://youtu.be/AOe2Dbk53Nw
Really worth watching. Large companies buying up lots of homes and turning them into Airbnb to compete with hotels. Lot of cities around the world facing the issue.
Great story on it.
Yeah, that’s why nothing is selling.
Never said it would, just saying you’re misconstruing how he invests. I didn’t read his books (in my teens) because I wanted to be a better investor. I was just interested in how he did it. That being said, when I want to learn something new, I generally try to get advice from an expert, learning technique is often helpful for getting shit done.
In general yes but it’s still up to each individual. If you are going unrepresented I would always recommend having the offer written up yourself rather than asking the listing realtor to help. You get a lawyer to review for your protection and they by the rules are forced to present written offers to their clients. No endless negotiation with them to present an offer
So if the market cools and the realtors don’t have multiple deals on the table will their opinion of not wanting to deal with an unrepresented party change?
From Zolo for West Van.
March 11 to April 8.
1 condo sale.
118 active condo listings.
Does anybody know when the spring market begins?
It should be noted that only the interest part of mortgage payments is deductible against rental income. On the other hand, capital cost allowance (depreciation) is deductible. However it decreases the adjusted cost base of the property which results in a larger capital gain upon sale.
I’ve only sold one place and I’m very happy I had a realtor. I got the biggest shark and within 3 days he had an offer of 195 (asking was 199) and I said « I’ll take it! » and he said « hold on I can get better » and in came a second offer at 198, and I said « I’ll take it » and then another offer that I again said I would take, and so on until eventually it was up to 206. This was in a declining market (not here). What would I have done without him? Sold it in more time for less money – that’s what! I personally know I’m no good at selling.
and this is why commission are massive….people believe non-sense. You priced your home attractively and had multiple parties interested which took it over asking and your shark agent sharked you by spinning it that he was getting you all these better offers.
I have 7 accepted offers on my desk right now and negotiating 3 others for a total of 10 different REALTORS® on the other end. If the REALTOR® on the other end is a shark it doesn’t help his or her client whatsoever. Even if they are a great salesperson what are they going to do? Try to sell me on the house so I can get my buyers to pay more or try to talk me into getting my clients to accept a lower price? I literally don’t have time to listen to non-sense from the other agent and I don’t…and none of them can talk to my 10 clients directly so their sales skills are completely useless anyway. Today I completely tuned one when a REALTOR® tried to sell me on her listing….”great house, only a few minutes from Uptown,” ohhh yea…..would have never known it was only a few minutes from Uptown if you didn’t tell me. I told my clients I thought the home was overpriced and we moved on.
The key is too have a shark representing the party you are negotiating against; however, that is beyond your control.
A selling realtor doesn’t have to deal with an unrepresented party if they don’t want to, and it seems like a lot of them don’t want to.
Honestly, I hate it when unrepresented parties contact me. 1/5 don’t show up for the appointment at all which is a huge waste of my time. 2/5 show up and immediately the property doesn’t work for them, but the issue could have easily been identified ahead of time if they had a REALTORS® representing them. 1/5 haven’t been properly qualified to buy what they are looking at. 1/5 are super complicated and then if you have a difficult seller it’s a fun time. If you do end up with an accepted offer with an unrepresented party then you have to deal with all the BS there too….”can my contractor uncle Bob inspect the house instead of hiring a licenced inspector,” ohhhh yea….would be awesome if Bob fell off the three story roof.
On the other hand if I am working with 30-40 buyers per year maybe I’ll have one no show all year and the buyer will text me that they can’t make it.
I am actually really enjoying the new rules. I email unrepresented parties the forms and ask them to sign them before we book a showing and 90% of people don’t get back to me. The few that read the forms, sign, and send back actually show up for the showings and are somewhat normal.
You’ve clearly read none of them then Marko.
He doesn’t try to time bottoms. His plan has always been, buy great companies at a reasonable price. So he basically finds what he thinks are a great companies, that he understands, and just waits until they get to a price that is reasonable. Normally that’s when the stock market is dropping, but not at a bottom. For instance when the price of oil started dropping in 2014, it settled for a bit in the 50-60 dollar range. That’s when he bought some energy companies. It quickly went down into the low 30s, but he’d already bought the companies he wanted.
No I have not…..I also haven’t read Michael Jordan’s 10 strategies to being an amazing basketball player. Despite that I managed to hit a crazy fade-way tonight in my Wednesday night basketball league 🙂
I am not going to read any of these books as typically people suggesting I read “The Wealthy Barber,” or “Rich Dad,” or “The Intelligent Investor,” or anything by Buffett are never better off than I…..and the people I do meet that are more successful than I don’t suggest this non-sense. Successful people go out and get **** done….they aren’t sitting around reading “The Wealthy Barber.”
There is one Michael Jordan and there is one Buffett…..if you think reading a book will make you better at ball or investing, good luck.
20 G’s is definitely a bunch, which anyone would rather save. I’m just not convinced the trade-off would actually end up saving me that much. $750k is also a hell of an amount for a first-time buyer, is it not?
I’m not arguing that there’s no value. I’m saying nearly 20 grand isn’t peanuts for most of us plebs.
I’ve only sold one place and I’m very happy I had a realtor. I got the biggest shark and within 3 days he had an offer of 195 (asking was 199) and I said « I’ll take it! » and he said « hold on I can get better » and in came a second offer at 198, and I said « I’ll take it » and then another offer that I again said I would take, and so on until eventually it was up to 206. This was in a declining market (not here). What would I have done without him? Sold it in more time for less money – that’s what! I personally know I’m no good at selling. I just sold a car for significantly less than it was worth. I’m good at spotting deals and negotiating. Even then, I like a realtor that will bring me listings, open the door, and, perhaps most importantly, speak on my behalf in a negotiation (and negotiate hard if needed). I would never go to a legal matter without a lawyer (assuming I could afford one), likewise I wouldn’t do real estate without a professional working in that area. I also don’t bother trying to fix my own car. It’s about knowing ones own strengths and limitations, I suppose.
You could just as easily offer 97.5% of asking and save the same amount. It’s likely the only way that would be turned down is if they already have another higher offer and you wouldn’t get it anyways. The bigger shame would be a losing a property you find very desirable because the selling realtor would rather talk to someone represented. That’s my 2 cents anyways. It’s also just a lot easier to get screwed if you’re a first-time buyer and haven’t been through the process before.
Well, I was being a bit flippant. A good realtor will be able to advise the seller on market conditions in their area and will thoughtfully challenge the seller if the seller has beliefs/aspirations that could reduce the chances of a sale. A seller who wants to ask 1M for their 700k house in a declining market stands to lose more than that if they do what most do, and chase the market down.
A good realtor for a buyer on the other hand will do the same thing but will also keep track of new listings that match the client’s interests, explain and complete the paperwork etc. Just make the whole process less stressful and intimidating. I’m sure there’s plenty of other reasons, but regardless there’s no substitute for thoughtful and effective customer service.
@ Local Fool
I haven’t found realtors to be of much use except to open the door to let you in. Other than that, it seems like the client has to do the leg work. It’s really quite amazing that they get paid what they do, to do what they do. I still scratch my head about it.
2.5% of a $750,000 house is $18750, not whatever. It’s likely around 10% of your down payment as a first time home buyer.
I was on the not-getting-a-realtor train till recently. The reason I decided to get represented was that the benefit of not being represented didn’t seem worth it. A selling realtor doesn’t have to deal with an unrepresented party if they don’t want to, and it seems like a lot of them don’t want to. The whole point would be to get that 1.5-2.5% discount but it’s not guaranteed that they’ll agree to that, and when the price of the property is already being negotiated, an extra couple % is whatever.
While Steve offers us his thoughts on the market I highly doubt that he tries to dissuade individual clients who want to buy or sell from doing so.
Generally assistance in buying or selling a house, or for an agent that specializes in that, also property management.
Here is the definition if you were actually unclear: https://dictionary.cambridge.org/dictionary/english/real-estate-agent.
IMO it would be idiotic to assume that a realtor could usefully advise YOU whether it is a good time for YOU to buy or sell a house. That said a competent realtor should be able to describe to you the current market conditions for the type of property you want to buy or sell.
If Purplebricks has their way, not much.
What should people go to a realtor for?
Further to this, in his latest annual report he states:
Sounds a bit like the housing market as a whole. Most of the time using massive amounts of debt to finance your home just raises your net worth, however…
Surely this wisdom doesn’t apply to sexy realtor-pseudoeconomist Steve Saretsky.
I know that place….
By Quadra standards that place is pretty close to a “busy” road. Negligible traffic between 10 PM and 7 AM though.
Until you posted that link I was thinking you wanted to live on Quadra St.
People should not go to a realtor for advice on whether it is a good time to buy or sell. A realtor’s job is not to offer their likely useless prognostications on the future direction of the market.
You’ve clearly read none of them then Marko.
He doesn’t try to time bottoms. His plan has always been, buy great companies at a reasonable price. So he basically finds what he thinks are a great companies, that he understands, and just waits until they get to a price that is reasonable. Normally that’s when the stock market is dropping, but not at a bottom. For instance when the price of oil started dropping in 2014, it settled for a bit in the 50-60 dollar range. That’s when he bought some energy companies. It quickly went down into the low 30s, but he’d already bought the companies he wanted.
RIP
REW/insights
@Barrister – i have a price for my house in mind, which is 1 million. If someone offered me that now, I’d take it. But, such a person would be a fool because it’s worth about 500k right now. The plan is to keep it and keep paying down the mortgage, so that when I’m ready to retire (youngish) and buy that place on Quadra, it will be paid off and I can either sell it and get my 1 million, or keep renting it out and live off that money (plus my pension). It’s a very long term goal. I never used to think so long term until the years started passing and I noticed the world doesn’t end and nothing too fantastic seems to happen and in the long run it all just keeps repeating and going on and on. So, I think it’s safest to assume that one day I will be pretty happy that I kept it because everything will just keep on keeping on. I also am cynical in the sense that I think capitalism (with very little socialist intervention) will be the preferred method of doing things so that means that properties will become harder and harder to get/keep. Capitalism increases the divide, eats the middle, pushes wealth ever upwards. Land is where that war happens. For me personally I think what it would take for the whole thing to go belly up is an act of God (like a major earthquake) or for Trump to invade and take over Van Isle. Can’t bet on those happening. Of course there will be downturns but in the long run, it will trend up.
Here’s my ideal house on Quadra, admittedly it’s not a shack:
https://www.realtor.ca/real-estate/20382623/4-bedroom-single-family-house-1662-hyacinthe-bay-road-quadra-island-10-quadra-island-zone-1
Does anyone know, do increases almost always (or invariably) happen after flat periods? I wonder if there’s a graph on that. Because, if so, then waiting out the flat period would be strategically not a good move.
Is there anywhere that one can query to see the sales information for a property that is more than 3 years out ala Zillow? I thought that was something coming soon.
It’s not really a matter of outsmarting people or timing anything. It’s the reality that not buying usually imposes no obligation upon that buyer (the effect on them is null or they can substitute for their shelter needs). A seller on the other hand has inalienable carrying costs associated with the asset and may be forced to sell regardless of whatever the market conditions are.
I would actually argue that’s what we’re seeing in Vancouver now: many sellers are “on strike”…but not all of them have that luxury. It’s the not all part that sets the new benchmark downwards.
Peak in U.S. during downturns I experienced was actually characterized by low inventory (or at least non-peak). Bought my place in ’93 that way. FOMO gone. Most sellers were forced to sell (divorce, death, job location change, job loss.) Patience and realizing that no home is absolutely perfect meant that one could pick up a really good deal.
What I’m observing now is that home sellers are doing the work that wasn’t done in the last few years. Furnaces replaced, roofs replaced, freshly painted, etc. The quality of what is hitting the market now is much better and that means that one has to do less (if anything) after purchase. That is significant for many potential buyers.
Thank you, Leo. I read the data as more dire that you paint it. A % is a %, and referring to absolute numbers defeats the purpose of a statistical %. Second, your charts re luxury homes do not include the Q1 for 2019 [no burgundy line]. I like your comment about the $2M market – what used to be true luxury [$2M] in 2015 has become distorted by the 2016-17 bubble to the point where $2M is or was pocket / chump change for the luxury segment. That, of course, has reversed as inventory reaches 2 years. Reversion to the mean for all to see. It is, as you say, all connected and the lower segments will adjust the same way and, in fact, are doing just that.
Actually it’s the opposite.
The bottom is where you have peak or close to peak inventory. So objectively there will be good selection. It’s not about whether people want to sell, its wherever they are.
Please do, Leo.
And please pardon my nosiness, but could you please give us an idea as to what kind of numbers you’re looking at in terms of down payment, purchase price, how long you plan to hold, capital gains implications, ROI net of everything, to name a few.
Every time you mention it, I’m always curious as to how you intend to make this work (and, because you’re Leo, I’m certain you’ve given it a great deal of thought).
Who’s been here, wanting to buy, since 2015? (Hawk is one, but he’s been gone a few months now). Well, that would have been buying on the way up. Didn’t like it? Too many bidding wars/frenzy/stress/no time to do inspections/emotional involvement cases? Oops, you missed the big chance for cap. gains and buying (relatively) cheap.
It sounds like the past 6-12 months have been pretty flat. So that’s a flat market – if you didn’t like it, why not?
That leaves buying on the way down. Prices getting slightly better each month, time to actually check out properties a few times on your own (ie, without the bustle of an open house). Maybe the appeal is a bit clearer now?
I’m not sure what people think actually buying a property involves. I’ve bought 3 times, so I’m no expert, but have at least been there a bit. Each time it took months of looking, converting assets to cash for the DP, getting a sense of different neighborhoods, and finally pulling the trigger. If you think you can time the bottom – go for it, but you probably can’t. And chances are your ideal property won’t be available at the time even if you do, because who wants to sell at the bottom? (Oh, you’re trying to outsmart the sellers? You can time the market but they can’t – got it.)
Some of the comments from the wannabe Warren Buffets here are great – sell everything and buy penny stocks, WTF.
Viola P: Not to pry but I am assuming you are making about 600 pre-tax. So the general question becomes how much is the house worth. I will also assume that it is mortgage free so if the house is worth 1 mil then a 2.75 one year GIC will pay you 2291 per month and if the house is worth 500k then the same GIC will pay 1145 per month.
But the likelihood is that the house has a mortgage (you noted mortgage payments) so the rent is paying off the mortgage and the calculation becomes very different.
For what little it is worth one of my neighbours had inherited four rental houses a number of years back and they figured out that they would be way ahead selling them all and they put them on the market about a year back.
Generally true, but as I’ve pointed out in the past, there is a pocket of GH (south of Feltham, east of Shelbourne, west of Gordon Head Rd) that is extremely walkable (close to UVic, 3 banks, 3 grocery stores, 3 coffee shops, a public library, GH Rec Centre, Home Depot, Tuscany Village, Torquay Village, and University Heights).
11x may not be sustainable long-term, but Victoria is never going back to 4x, IMO. Anyone who’s waiting for that is never going to buy.
I own a rental property and after everything is paid – utilities, insurance, mortgage, property taxes – I make ~400/month. Obviously I declare the income so that 400/month is minus income taxes.
I have a relative who made a lot of money flipping houses when he was younger. I told him about my rental and he’s of the opinion that I should keep it for sure. He owns a few houses now and is doing a redevelopment on one. He knows a lot about money and real estate so hearing him say that I should keep mine was quite reassuring.
Im hoping he will want to partner with me to try doing a flip here. He’s out of town and I stalk the market here so it could work!
@LeoM
I have rented a one bedroom main floor apartment in James Bay, quiet street. I left it just over a year ago but I paid $1350. It included utilities and internet.
LeoM I would be interested in knowing what you conclude about the value of owning a rental house. I did a quick on the back of a napkin calculation and ones ROI on a million dollar house seems to be around what a GIC would get, But maybe a few people who actually own rental properties can give you a better insight.
Keying is not nice. At least wait until the realtor is off the ferry and then just hit the car with a hellfire. At least that way no one has to get a paint job.
Alright which of you was it, fess up.
Local Realtor’s car gets keyed on BC Ferry and it’s all caught on video. Now the hunt is on for the vandal.
http://www.victoriabuzz.com/2019/04/victoria-realtor-searches-for-suspect-who-keyed-his-vehicle-on-bc-ferries-trip-photos/
Can anyone tell me how much people are paying for rent on the main floor of a house with two bedrooms and one bathroom, in a nice quiet neighbourhood within 30 minute walking distance to downtown, near Beacon Hill Park? Also, I’m wondering about the rent in the same type of house for a one bedroom basement suite? I don’t trust the asking rents on UsedVictoria because many ads keep getting reposted.
Perhaps I’m mistaken, but it seems that a rental house as described would only generate enough rent to service a $450,000 mortgage, at best, with no profit for the landlord.
That’s the danger alright. I watched this happen in 2009 as well in the housing market. It’s a dead cat bounce, false recovery, won’t last, etc. Will be very interesting to see what happens at the next bottom and how many people manage to time it. I’ll take a stab at it and will be sure to announce if we buy anything.
There are only 3 possible times to buy: when the market is up, down, or flat. Are they all bad? To me I think if the plan is to hold for a longer period probably any of them is fine. But, if there’s uncertainty about how long the relationship will last, the runaway market makes me most uneasy.
@ Marko: There is reading one of Warren Buffet’s books and then there is reality.
So what should an intelligent buyer do in a falling market, Marko? What’s the reality? Should we ignore all the indicators, throw caution to the wind, and buy, buy, buy? Even though RE is selling for 11 times the average person’s income (whereas the historic norm is 4 x income), it’s still a great time to buy, is it? Even though sales are at an historic 33 year low in the big city of Vancouver just 100 kms away (which is an indicator of a possible serious price correction in the offing) we should still buy right now? Even though it is very difficult to get a bank loan to complete a purchase (credit tightening is another sign of a failing market), it’s still a great time to buy? Even though two levels of Gov’t have imposed onerous tax consequences in an (open) effort to drive prices down (and it’s working), now is a good time to buy?
You said on a previous thread “nobody has a crystal ball”. What did you mean by this Realtor jargon? Nobody knows for sure what’s going to happen (which is factually correct), so don’t even bother looking at the indicators of where this market is probably going, just do what feels good, listen to your inner monkey, be a man and show your hand. Is that your advice?
It’s also the case that individual properties will have quite a range of declines that are fairly far outside the average decline. Poor buy in the peak mania period + forced sale in slow period can mean declines much bigger than the average. Of course that kind of thing is mostly a curiousity just like examples on the other end.
The counterpoint to this is that Vancouver prices accelerated much quicker than ours in recent years:
https://househuntvictoria.ca/2019/01/17/the-vancouver-connection/ and https://househuntvictoria.ca/2018/10/15/october-15-market-update-and-the-vancouver-ratio/
So if they can out-accelerate us on the way up, they can also out-accelerate us on the way down. Falling Vancouver prices definitely affect us (as we can see already due to reduction in demand from people coming), but it’s not a 1:1 ratio.
Sorry, had to edit a few posts, not a debate I want to get into here.
“Intelligent buyers do not buy in a falling market. They don’t want to catch a falling knife”.
yeah wrong, that would be exactly when intelligent buyers buy, as WB would say be greedy when others are fearful, trying to time the markets and buy just as you think the market is going up is a fools game, if you happen to catch it right it will be pure luck, look for value and in the long run you won’t care if you didn’t exactly catch the market bottom, I can’t begin to tell you how many clients refused to enter the stock market in 2008 and 2009, then once it started rising they said it wasn’t real and then it kept going up and they sat on the sidelines for years in denial all because they were trying to catch the illusive bottom
No, I don’t like partisan politics. I find the debating purposely myopic, intended for the consumption of the ignorant. That one below was pretty out there though, given the context. And yes, “Minister of Failure” is a bit goofy. I’d be impressed by Eby aside from whatever his politics were. Seems to have an openness, genuine heart and caring for society. John Horgan…eh, whatever. Seems like he has closet rage issues. Vibe.
“I personally don’t see much of a difference between Gordon head Rockland as far as neighborhoods go. ”
Seriously, GH is the home of the stucco box with absolutely no charm. Living in Rockland means you can walk or ride your bike pretty much anywhere, in GH you pretty much need a car to get anywhere.
@LF “Minster of Failure” – a little harsh, don’t you think? Man I would never want to go in to politics!
From the BC Liberal Party facebook page. Definition of “irony”…?
https://www.facebook.com/BCLiberals/photos/a.10150149569645483/10161593466120483/?type=3&theater
Debatable. I think the dropping in interest rates certainly had an impact but the actual recovery didn’t happen until the bottom was in for the financial markets and some confidence had returned. Returning employment and optimism was likely the bigger factor.
Anyway, from what I have read, an intelligent buyer waits until the market bottoms out, and then they wait 2 or 3 more months after that for evidence of price improvement (to be sure they have properly identified the market bottom), and then they buy. It’s all a part of the real estate correction (or crash) cycle.
There is reading one of Warren Buffet’s books and then there is reality.
Well, I tried…
Testing…a new photo that hopefully no one will find offensive.
I like it here. But, I’d prefer a shack on a large property on Quadra Island.
Canada, Aus, NZ are all great choices. If you’re not sure where you’ll be living for the next five to ten years, IMO it doesn’t make much sense to buy a house anywhere. If you buy in Victoria and then decide you want to live in NZ in 3 years, you’ll likely lose time and money buying and selling in Victoria (vs renting).
nope, but I sure as hell have certain prejudices against certain groups of people and I am not afraid to admit it.
Barrister, I think as far as neighborhoods are concerned, I would argue that there are very little difference between Gordon Head, Oak bay, Fairfield, Rockland or Broadmead. They are all nice neighborhoods with nice schools with very expensive pockets within them.
[edited, race discussion removed – admin]
@ LeoS
Might be of interest:
https://www.bloomberg.com/news/articles/2019-04-09/chinese-real-estate-investors-wary-of-vancouver-head-to-toronto?fbclid=IwAR0uFUpKiVbu7C-gxi6HSsW5pEVnDqdlcLgvblGeNwv2tgq1WBFZQvX9_Ig
ks 112 I dont see any advantage to being in Rockland for most people. There is a substantial cost to moving. You seem to be approaching it in a sensible way.
Personally I am not looking to forward to the disruption of a move.
By June I’ll have been renting this place for 2 years, so it’s not like i’ve been sitting in this property forever.
James, that math works for you because you are paying under market for rent, which means your landlord is the one getting screwed because he is making a cap rate of less than 3.00%. So yes, in you particular situation renting works out for you unless prices keep appreciate.
I am in a similar situation but on the other side of the table as I am the landlord that is charging below market rent, although my cap rate is a little higher than your landlord’s.
Now, the actual prudent thing for me to do is to sell my house asap and invest all the proceeds into a balanced equity and fixed income portfolio as I think the returns on that over the next couple of years will be significantly greater than the appreciation (most likely depreciation) on my house. However, in reality that is a hard trigger for me to pull because of the risks involved, because as we know no market acts rationally in the short-term.
Just checked.
Based on a 3.19% mortgage, over 3 years you pay about $64000 in interest, + 3360 to CMHC (if i did that right) + 11000 in taxes – 1710 for home owners grant = $76650
vs. $70,000 in rent.
For the Additional outlay of $1600(mortgage cost per month more than rent) + $93.33(cmhc) + 305.56(taxes) – 47.50(grant) = 1951.29 a month, over 3 years you end up owning $58,000 of principal of your house.
Saving that 1951.29 instead nets me $70250.04.
So pay over double my rent for saving $12250 less.
In a flat market it makes sense to not buy. In a decreasing market, it’s a no-brainer.
I was just quoting someone elses cherry picked stats.
I don’t actually go to mls and look at actual homes in Victoria area. I’m just interested in the market. At this point a mortgage for the same house I’m living in is $1500 more a month than I pay in rent. (I pay just under 2 grand for a place assessed at just under $800,000) Couple it with CMHC mortgage insurance, and costs of repairs on the place, I’d say I’m probably coming out ahead by just waiting. If the price of homes don’t decrease, I leave. Pretty easy equation on my side.
Barrister, I guess where I am coming from is that I personally don’t see much of a difference between Gordon head Rockland as far as neighborhoods go. Meaning all things being the same (same house, same sized lot, no ocean view, not on a ridge etc..), I would be hesitant to pay more to live in Rockland than Gordon Head. I say this from the perspective of living in that house long-term and not from the perspective of a flipper.
Where I live is a fluid thing Gwac.
I have dual citizenship, so I can go live in Australia/NZ if I want, or anywhere across this country. I’m happy enough where I am for the moment, but that can change.
ks: Just mentioned Rockland because you asked about Fairfield. Actually you are often better off doing renos if you like you neighbourhood. Particularly if you can manage to do it without raising your tax assessment.
Not the two properties I mentioned but there are a number of houses in Rockland with great ocean views that are on the ridge.
Barrister, I am still holding out hope that I can buy something decent with water views for $1.3M (my max budget) in the core. To me, it doesn’t make much sense to sell in gordon head and buy in rockland. I might as well just reno the crap out of my exisiting house in gordon head for half the price difference.
Actually I don’t even want to spend $1.3M, $1.1M would be ideal. But I doubt that is going to happen
Viola: back to the angry bitter photo?
Why do they call it cherry picking anyway as opposed to grapefruit picking?
ks112: I am not seeing much of a price drop in terms of asking in either Oak Bay or Fairfield. But I am not seeing things flying off the shelf either. If it was me I would wait until August unless you see a home you adore.
There are two houses in Rockland that you might want to consider. I have gone through both of them and each has things to recommend them, My preference would be 1751 Patly over 807 St Charles. The major factor for me is that St. Charles is often used by the fire department and is much busier and noisier than one much care for. St Charles is also a much older house; more character but also more maintenance. The Patly property has been on the market for a number of weeks and I have heard they are eager to sell.
St Charles, in my mind is definitely overpriced but I am not a real estate agent so dont take my opinion on it.
Victoria most important variable is not Vancouver but BC and to a lesser extent Federal spending and job creation.
I don’t know – I feel like that misses the point. None of the linkages are 1:1, but so what?
I have complete confidence in your data, Leo. If VicRE and VanRE trends are correlated, they’re correlated. What goes on in the luxury market in Vancouver absolutely affects the rest of the city which in turn eventually comes here.
Just looking at Vancouver, it’s fair to say that a beatdown on the top almost never translates into a simultaneous reaction in the condo market. But if the top-end weakness persists, the prices on the west side fall. That reduces the spread between the tiers, and eventually forces the lesser tiers down. Who would want to pay 1.6 for an east side home when a west side one is 1.7?
This is exactly what happened on the way up – huge amounts of capital went into luxury housing, pulling everything else under it, up. Business executives then couldn’t afford to live there anymore, so they took less expensive homes. The surgeons then in turn took less expensive ones, the managers in turn took….all the way down the line to condos. As that funny-money flooded the luxury market there and the substitution effect rippled across VanRE, guess what happened in Victoria? Now, all of that is occurring again, in reverse order. I guess we can then ask, what might happen to Victoria?
In some ways not at all, but it is an indicator of where our big brother is going and we are definitely connected to Vancouver. However luxury houses in Vancouver are several steps removed from ordinary houses in Victoria so while they are connected it is not an incredibly strong link. It seems the collapse in sales in Vancouver while Toronto has remained relatively stable shows that it’s not just prices at play here but also the reason behind those prices.
Gawc, come on! You know why James is cherry picking on Vancouver stats.
James, if you have the time, can you get some Victoria stats for me? I haven’t had much free time lately. I would like to know how the 700k – 800k gordon head market is doing and also how the $1M to $1.3M market is doing in Gordon head, Oak Bay, Fairfield and Broadmead. I would like to know the year over year price change in average and median price per sq/ft for homes on a lot that is between 6,000-8,000 sq/ft.
P.S. I am not a bull, just someone trying to upgrade.
Thanks!
« Sellers in any number can always sell at market price, by definition. The only question is how low that market price will have to go to obtain the required number of willing buyers.«
+1
Things are worth what people will pay for them. If a house is on the market for 3+ months, to me that means the seller thinks it’s worth more than it is.
James cherry picking expensive Vancouver listings. How does that help with your Victoria home purchase. Curious. Focus my friend on where you live.
Well sure, there is a practical limit to how many could sell at once. If all of them tried to sell in a day it wouldn’t go so well. But we are talking about the difference between 100 people selling in one quarter to come here vs 300 that we saw in 2016. Certainly an extra 200 people could have sold last quarter in Vancouver
Sellers in any number can always sell at market price, by definition. The only question is how low that market price will have to go to obtain the required number of willing buyers.
What’s the line again? Individual assessments aren’t accurate, but as a collective they’re good. 😉
No one who actually wants to buy a house thinks this way.
Interesting post, Matthew.
It’s definitely part of the RE cycle, but I found the more I studied them the more I saw the declines usually aren’t linear. On the way down, you will get small upticks, including ones that may be a few months long – only to fall back down again. This is especially true near the bottom where the market is “flat” for a period of time.
After a very large correction, there may be numerous stops and starts in this phase. All these head fakes is why most people eventually lose all hope and confidence at the bottom of the cycle (“it will never recover again”). In determining a genuine recovery, there are several other metrics to watch for (including rental data and other things not directly RE) which can help indicate that a recovery is taking place. But I think that anyone who in retrospect buys at the bottom, did so more due to luck than intelligence.
Some parts of the cycle are more suggestive. For instance, legions of people going out to “vulch” on VanRE detached thinking they’re getting a “deal” today doesn’t suggest a bottom. There are anecdotes from realtors swirling over there that a lot of people are going to open houses, some making “lowball” offers until they find a seller who will take it in the chops. Currently, most won’t. The point here is, if this was at or near the bottom, you probably wouldn’t be seeing many “vulchers” in the first place.
Leo: With respect, I wouldn’t be so quick to suggest that Vancouver sellers can cash out in LARGE NUMBERS any time they want, if only they’d drop their prices.
I say the above because I believe that real estate psychology works in two ways. That is, the minute Vancouver sellers lower their asking prices, that’s only going to encourage smart potential Vancouver buyers to hold out even longer for a better deal. This is the nature of the beast. Intelligent buyers do not buy in a falling market. They don’t want to catch a falling knife. Also, they might even be a bit mad at (or jealous of) greedy Vancouver sellers who have had their way (basically unilaterally) for a long time now. These buyers might wanna sit back and watch the sellers twist in the wind for a year or two while prices continue to falter. Anyway, from what I have read, an intelligent buyer waits until the market bottoms out, and then they wait 2 or 3 more months after that for evidence of price improvement (to be sure they have properly identified the market bottom), and then they buy. It’s all a part of the real estate correction (or crash) cycle.
Also, why would these Vancouver sellers want to purchase a home in Victoria? Victoria prices are at the highest they’ve ever been (or close), so there’s not exactly fabulous deals to be had here at this point in time. Yes, prices in Victoria are less than Vancouver, but that’s the way it’s always been. What I hear from most Vancouverites (I talk to) is that they are less for a reason. Victoria is too small, too isolated, too boring, to hard to get to, to hard to get away from, and the RE is not a whole lot less anyway. So, while there are some people who might relocate to Victoria upon selling their Vancouver homes, most do not as there are other good choices for less money. There’s all of the Gulf Islands, Nanaimo, Duncan, Sooke, the Okanagan, Kamloops, the Shuswaps, Vernon, etc. Actually, Calgary was recently rated as the most affordable city in North America. That is giving some people pause for consideration.
Also, I believe in the RE “lag effect”. It may be described as this: Whatever happens in the big city happens to a lesser degree in the small nearby city about 6 months later. So, while prices escalated in Vancouver from 2013-2016, the same thing happened in Victoria (to a lesser degree) about 6 months later. Likewise, now that Vancouver prices are starting to experience a meaningful price correction, the same thing will happen in Victoria about 6 months time. So, in short, what I am suggesting is the price differential between Vancouver and Victoria (at this specific point in time) is not that much. Vancouver prices are dropping quicker than Victoria prices. So there’s not any great deals to be had at the moment (if you’re a Vancouver seller looking to buy in Victoria).
And maybe most importantly, Vancouver is at a 33 year low in sales. So, in any event, there’s not going to be a whole lot of people showing up on the shores of Victoria (from Vancouver) with boat loads of cash to purchase RE any time soon.
Why is there a sales drop off? Basically two reasons I believe: the average Canadian cannot afford to pay the asking price anymore, and the bank won’t lend them the money. This is the start of the problem, not the end. The buyers “adjust” very quickly because to them it’s a simple problem of not having the actual money required to buy. So they stop making offers.
The sellers, on the other hand, need more time to “adjust”. They have to go through several stages of realization (like a death in family) before they’re gonna move on prices. First it’s shock, then disbelief, then anger, then fear, then withdrawal, then remorse, then acceptance, then price adjustment. I’m not a seller in Vancouver today, but if I was, I imagine that I would probably be feeling a little remorse that I didn’t sell for maximum dollar at the 2016 peak prices, and I’d be worried about how many railway cars are involved in this present-day train wreck (with the lowest amount of sales in 33 years), and I’d be wondering what that black fluid is that’s pouring into the waterway beside me. I certainly wouldn’t be climbing back aboard the train and instructing the conductor to carry on as usual as though nothing happened.
KS112: The plan is to move to Lugano were my wife has a family estate. We are both finding Victoria less appealing with each passing year. Different strokes for different folks.
Andy,
I agree 100% with your statement, as it now doesn’t refer to the median prices of the overall market . I bolded the portions that I didn’t see present in the original posters comment. Yes, luxury side is getting hit hard. And I’m happy to leave it there.
Patriotz@ Twitter link
Just amazing. Recall what that market was like not too long ago.
I doubt it’s occurring to a degree that comes close to rivalling the last few years. If the government there wishes to retain a country, they have to maintain their FOREX reserves to some extent. Unchecked flight of their currency is potentially destabilizing. Funny, apparently they’ve recently started taking the step of throwing underground bankers in jail. To what extent that’s happening I have no idea, but I’m pretty sure after the 2015/2016 currency bleed-fest, they’re pretty serious. I would say to the author writing that piece, watch the VanRE sales volumes. You’d think that’d be end of story.
He has responded to my inquiry. Here it is (and CE, it clarifies your location question):
“This is from a deeper analysis using actual comparable sales. When housing markets correct volumes are very thin so it can distort average and median prices. Meanwhile, benchmark prices lag. We are seeing 35% declines on homes above $2M in Van West, West Van, and Richmond.”
It’s actually wider spread than I thought. Gulp.
https://mobile.twitter.com/mortimer_1/status/1103136620515975169
From VCI:
Three recent sales in WV around 1M UNDER assessment.
2588 Garden Court, West Vancouver
Sold 2011 $5,400,000
Sold 2014 $5,200,000
Just sold for $5,400,000
2018 Assessed: $6,359,000
2017 Assessed: $7,323,000
4797 THE GLEN, West Vancouver
Just sold for $3,172,000
2018 Assessed: $4,324,000
2017 Assessed: $4,709,000
3954 BAYRIDGE COURT, West Vancouver
Just sold for $3,904,762
2018 Assessed: $4,800,000
@ Patrick and Totoro
If I’m reading things correctly, LF mentioning up to 40% off peak prices for some detached prices (likely in the luxury market) is probably pretty close to bang on.
In summer 2018 a prominent West Van realtor was wishing ill will on the NDP as his house had lost 1.5M in the last 5 months:
https://www.straight.com/news/1088221/north-shore-mlas-take-exception-prominent-realtors-statement-ndp-should-be-shot-over
We know that the average house price point and $ drops don’t mean much as things fluctuate month to month. But if you want to go that route, let’s make some loose guesses and if someone can find hard data, by all means bring it forward. I have no issues with being wrong on this.
According to MacDonald realty, as of March 2019, in West Van detached, prices dropped 17.1% in the last year. So that’s 17% less than March 2018. I can’t view March 2018 and prior info.
http://macrealty.com/marketing-insights/greater-vancouver-real-estate-market-statistics-march-2019/
Now let’s look at March detached West Van sales:
March 2015: 101
March 2016: 146 *
March 2017: 59
March 2018: 26
March 2019: 23
Now let’s say it takes a year for prices to catch up to sales so that brings us to March 2017. Let’s say we saw a 10% average drop (this is a guess as I can’t find the numbers) in detached price from March 2017- March 2018, then you add on the 17% from March 2018-19, you’re at 27%, nearly 30% drop so far on average.
Or we could just follow some of the twitter guys like @mortimer_1 and others who are posting sale drops, some selling for less than 2015-2016 prices.
At the end of the day, I think what needs to be looked at is the trend — sales started slowing in the West side/West Van luxury market first and that seeped downwards through the rest of the market even though people said it wouldn’t happen. Then prices started slowing in the luxury market and that’s seeping downwards through the rest of the Van market.
P. S. Patrick – don’t take the “nuts” comment personally – more a phrase towards the content being said than a personal attack.
According to the agents working that particular market, a 40% haircut on the luxury end is accurate. On the bright side of things, the article indicates that the funny money spigots from China are flowing again, so apparently there is a happy ending to all of this…
https://www.vancourier.com/real-estate/are-foreign-bargain-hunters-fuelling-west-vancouver-luxury-real-estate-recovery-1.23664881
That’s the one, page 4. In his subsequent video he said it’s gone to about 40. At this point I think I’ve adequately constrained the definition, so if you don’t wish to accept it then toss it out like yesterday’s garbage. I’m perfectly confident what he’s saying about that particular segment is accurate.
It is a buyer’s market in Vancouver right now. That is part of the reported stats. The stats also show that the slowest segment of the market is the high-end, but do not show that the price declines are 40%, but rather 15%.
https://204124-615897-raikfcquaxqncofqfm.stackpathdns.com/wp-content/uploads/2019/04/Saretsky-Report-March-2019.pdf
We are talking about median selling prices in West Vancouver, and whether prices have crashed 40%, or 15%.
If you want to talk about median prices, go ahead. And if you want to change the subject to the market taking “a beating” in some metric other than median prices… that’s OK too, just make that change of topic clear. Otherwise, if you’re joining in, and calling someone “nuts”, it’s best to stay on topic. Falling sales may indicate future price drops, or they may indicate nothing. But collapsing sales don’t allow someone to declare that prices have collapsed too, if they haven’t.
@ Patrick
You’re nuts if you think West Van isn’t taking a beating right now. I’ve seen huge price/sale drops in West Van – Let me see if I can dig up some info. Let’s start with this and I’ll see what else I can find:
March 2019:
West Vancouver
The West Vancouver market had 23 sales and 503 active listings for detached homes.
Condo sales were 8 and active listings were 115 at the end of the month.
In comparison, townhome market had 1 sale and 28 active listings.
It’s a buyer’s market in West Vancouver.
1 SALE IN MARCH FOR TOWNHOMES – 1 SALE!!!
I’m not sure what the March 2019 SS Report is, but you have not linked any data and the data I see does not reflect your assertion. Stating that some homes are selling for 40% less than 2016 requires a provable example, not to mention spring 2016 was not the peak of the market in Vancouver or West Vancouver.
You make a post declaring “price drops” approaching 40% and a “major housing crash” in West Vancouver, and when somebody calls you on it, you backtrack straightaway and say it is sales that are down “Regardless, the sales numbers are really what tells the tale and that market is in real trouble.”
Anyone interested in the actual numbers in West Van can look here… doesn’t look like a major housing price crash to me, more like down 15% with encouraging most recent trends.
https://www.zolo.ca/west-vancouver-real-estate/trends
Alice Kluge has a new video on her view of the Victoria market. Great commentary about how sellers have to make sure that their property is in top shape if they want a sale. She talks about how buyers are minding their pennies now and critical of properties that don’t tick all the boxes.
She also talks about debt in Canada and in particular boomers who are house rich and cash poor and having to take reverse mortgages just to cover debt and fund their retirement.
https://www.youtube.com/watch?v=8BLdwZZnCXw
Well misrepresenting wasn’t my intention and that’s why I came back and clarified it. It was a legitimate question and if I get more info on the data I’ll post that too. The average declines by housing segment are pretty much all over the place. Some to date are getting slaughtered and others are still relatively unmoved especially on the lower tiers, but that’s quickly changing as well. Regardless, the sales numbers are really what tells the tale and that market is in real trouble.
Even the ever-cheery ZeroHedge picked it up…
https://www.zerohedge.com/news/2019-04-08/ghastly-vancouver-home-sales-crash-46-lowest-1985
I knew it was you that robbed me. You MONSTER!
Fine – here goes:
LF, your post greatly overstated the price drops to date in West Vancouver (or was it Vancouver West – you still haven’t clarified) by picking the extremes and equating that with the average.
Of historical interest to long time blog readers we have seen that pattern displayed here before by your totally unrelated ursine predecessors. Cherry pick the largest drops they could find and equate that the average drop. Heaven help us if average prices drop by 30%. Hawk will be back claiming 90%.
Too bad not a lot of meat in the chapter of the phase 2 report released so far. Basically just that nothing is being done federally through RCMP but no more details about scope of problem https://news.gov.bc.ca/files/An_Independent_Review_of_Money_Laundering_in_BC.pdf
To be clear, it’s not an aggregate measure of all homes within the detached segment. My understanding is the amount of the price drops depend on the pricing segment being referred to. The most exclusive (ie expensive) homes in the market for VanRE are recording selling prices up to 40% lower than when measured from their spring 2016 peaks. These are the homes that were targeted by international capital, and also tend to be the ones that are posting losses in excess of 1M. Both that geographic area and that market segment is also the epicenter of the bubble, both the beginning and the end of it. Source was partly the March 2019 SS Report. I sent off a note earlier to see if there’s any more info on this, because I’m curious too. Thanks for the observation.
I’m wearing a dark blue shirt today with red piping in the collar. If you were sitting across from me at the table today having lunch, would you clutch your wallet next to you remembering that years ago, the last guy wearing a similar shirt tried to take it from you and steal your money? You have noted in the past that I tend to engage the substance of people’s posts – I don’t generally refute them by equating them with some amorphous group that they have no accountability for. A better option is to attack what I say, it’s more educational and probably more enjoyable for the readers too. It’s not like I don’t give you plenty of low hanging fruit.
Last time Victoria fell 10% on average the bears claimed 30%.
The bear narrative on HHV has always been that ONLY government intervention stopped an epic crash in Canada in 2008-2009. I always thought that was overdone, but I do think government stabilization of the banks played a role.
Not my argument. I am just refuting your argument that government is powerless. Of course, in extremis, a sufficiently interventionist government could make the housing market dance a jig. Thankfully most governments don’t go that way.
LF you realize they have been intervening to restrain the market for 10 years? Recent changes may to some extent be the straw that broke the camels back. Although I agree there are some global linkages.
What are you buying Barrister when you do sell?
40% drops in West van are few and far between. Average is 15% off peaks.
Seems just a little harsh.
That is a big drop. Are you confusing the decline in sales numbers vs. prices by any chance? If not, where are the stats?
CE,
10 years ago, government intervention didn’t do much, IMO. Monetary policy however, is another matter. That did have an effect, and the improvement in affordability (probably) had an effect on limiting price falls. But this is similar to our recent back-and-forth. Affordability tends to trend – look back on your timeframe for Victoria and you’ll see what I mean. Be wary of the transiently popular, “government drives/controls the housing market”…because they don’t.
Per above, be wary. This isn’t really about “the government”, unless that’s also true for every other coastal city in the commonwealth (and in some cases beyond) that are experiencing downturns or worse. Generally interventionist policies are amplifiers, not drivers. The best I think that can be said for “government” here is the previous administration’s blind eye to some of the dynamics occurring, but the link between foreign buying and laundering cash isn’t well known although it’s logical to presume it isn’t a null effect.
What we can be sure of is the RE roll-over is being driven by excessive household debt. Like I’ve always maintained, incomes matter and with housing, they’re foundational. The market turn was already visible in the data long before the first substantive policy was put into place. All you have to do is look and follow it. Because these interventionist policies are usually late to the party (as ours were) and substantive price changes occur in the latter stages of a correction, people tend to draw a correlation=causation regardless. That’s part of what they like to call, the “blame game”.
When are you selling Barrister? Made a decision yet?
LeoS: Thank you for the luxury chart since it is really helpful to know what type of market I am selling into. As you noted there has been a number of fairly ordinary new builds in particular that are listed at or just above the 2 million mark.Personally I am at a total loss why anyone would pay that for many of those properties. My guess is that most buyers dont even check the quality of the windows and flooring used. Throw a slab of granite and some high end kitchen appliances and they ignore the quality and materials used in the cabinets. God forbid that they inspect the quality of the heating units or inquire about the grade of singles on the roof. This is where my wife usually steps in and tells me to stop ranting since we all know that most people are idiots when it comes to houses.
Again thank you LeoS for all the great work.
A more accurate description would be that it is hard for policymakers to arrest a trend in motion, but not impossible. In 2008/2009 government intervention in Canada plausibly stopped a deeper drop in house prices. At present it is likely that the cumulative impact of national and provincial measures are precisely what caused the market to roll over.
West Vancouver or Vancouver West? The former is a snobby suburb of 40K people. The latter is more than half of the city of Vancouver including downtown – so likely 350K people.
What’s happening in Vancouver is the same thing as last year, just more intense. New listings are continuing to decline as sellers recoil and wait for greener pastures. The problem is, the sheer drop-off in buyers is overwhelming the seller pullback so inventory is growing anyways.
Once a trend is in place, it gets nigh impossible to reverse it. Remember on the upside, when people were in awe that none of the repressive policies appeared to be having any effect? It’s why you can say…policy makers can do what they like to try to arrest the reversal, the trend will do what the trend will do regardless.
Incidentally, price drops in West Van detached are apparently approaching 40%. Despite the relatively muted media, that segment is now suffering a major housing crash. And at the moment…it appears to be spreading.