Vancouver Price Drop

Documenting Vancouver real estate price movements

Drop From Peak Chart – February 2013

Here is an updated chart showing the pace of the Lower Mainlands detached home price drop from peak compared to other regions.   In this chart I have combined the data from Vancouver West, Vancouver East, North Vancouver, West Vancouver, Richmond and Burnaby.  HPI data is being grabbed from MLS HPI

As you can see, after 9 months we are still only above Miami.  Our HPI drop from single family homes is now 7.38% after an increase in February of 0.19%.    This is the first monthly increase since descending from the peak back in May of 2012 and mainly due to seasonal pricing it is quite possible we’ll see a couple more months of small increases or flat levels in the HPI before, I believe, we begin to show signs of the Year 2 death drop that so many american markets saw.  One thing to note is that 9 of the 14 American markets being tracked here did see at least 1 month of gains during the first 12 months dropping from the peak and 4 markets (San Diego, San Francisco, Chicago and Boston) had multiple positive months in the first year.

Click the image to see the full size image

ChartFeb

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27 responses to “Drop From Peak Chart – February 2013

  1. punnoval March 8, 2013 at 9:31 am

    Looks like it’s going to be more like Seattle which is not too surprising

    • Exurban March 10, 2013 at 3:50 pm

      Yes, that makes some sense. We’re unlikely to implode as badly as Vegas/Miami/Phoenix, but we actually don’t have as strong a local economy as Seattle (Boeing Microsoft yadda), and our hot money inflows were proportionately greater. I see us doing a slide somewhere in between that of Seattle and Phoenix, but then staying down there for a long time.

  2. Real Estate Tsunami March 8, 2013 at 9:33 am

    Whoever buys # 4 will be minundated with noise and dust for the next 2 years.

  3. davers March 8, 2013 at 11:29 am

    Many thanks for this. Probably the best single graph to show people that think Vancouver is just off a tiny bit and not crashing by any means.

    • Real Estate Tsunami March 8, 2013 at 12:01 pm

      Davers, keep on dreaming.
      January and February have always been months where markets appear to move upwards, see the current Stock markets. There’s always some optimism in the air. And there is also the Chinese New Year effect.
      But once the harsh reality sinks in, the downward spiral will continue.
      Remember, sell in May and go away!

    • an observer March 8, 2013 at 12:28 pm

      I think you misunderstood his comment RET, he’s saying that this is graph to show those people who think everything is fine

    • moloko March 10, 2013 at 6:57 pm

      @davers.

      totally agree, it’s graphs like this that I wish the media reported

  4. Weindango March 8, 2013 at 11:32 am

    “it is quite possible we’ll see a couple more months of small increases or flat levels in the HPI before”

    That’s what used to think, but now I the death drop starts this month. *crosses-fingers*

  5. yupkime March 8, 2013 at 12:46 pm

    In the legend would you be able to indicate the start month/year for each respective city? Vancouver is May 2012, I suspect all the other ones are close to each other but different times during the year? I guess I am interested in looking at the seasonal differences …

  6. Anon March 8, 2013 at 2:42 pm

    Can anyone shed light on numbers mentioned here at about 1 minute mark:

    Says 21000 sales average $970,000—$20.37B
    Top 4200 sales(20%) average $2.7M—-$11.34B
    Says remaining 17000 sales average $670,000.

    But 20.37B less 11.34B = 9.03B over 17000 homes is average $531,176.

    We are all waiting for the crash but I’m not in the $2.7M price range. Between $531176 and $670000 do you think there will be a major drop? With 20% down, mortgage payment would be around $2,000, something I can live with.

    • Real Estate Tsunami March 8, 2013 at 3:08 pm

      Sorry, Anon.
      I’ve long ago stopped listening to Bob Rennie.

    • an observer March 8, 2013 at 3:18 pm

      Bob Rennie’s math never works out if you spend 2 seconds to verify it but unfortunately nobody in the media calls him on it.

      Buying a home is a big decision but if you can hold off for just 1 year (which should be enough to get a better picture on how things are going to go) then you definitely should.

      • Anon March 8, 2013 at 3:39 pm

        Thanks. When I posted the link I did not know the picture would show up! I don’t think he has a lot of friends on this site but I try to look at all angles.

      • Real Estate Tsunami March 8, 2013 at 4:22 pm

        Totally agree with you Anon.
        This is the biggest investment that anyone will make in their life time.
        So, it pays to do your research.

      • Advoc8 March 8, 2013 at 6:02 pm

        How much cheaper is it to rent a place comparable to what you would be looking to buy now?

        Most of the posters here and on other real estate bear-blogs think we are in a bubble. One of the reasons is why would someone pay a substantial amount over rental – comparing monthly mortgage servicing costs plus all the taxes, fees etc – unless they were very positive home prices will keep rising and rising to offset the amount saved by renting more cheaply.

        Yes, we know that most will prefer the emotional satisfaction of home ownership and thus there probably will be a premium for ownership over renting, but when property gets really, really expensive compared to rents and incomes, as it is here, then there’s a huge risk that any otherwise minor economic downturn, or rate rise, or change in momentum-investment sentiment will cause real estate prices to go back to historical norms.

        Comparing our prices to other places like the States, makes the over-valuation look even worse.

      • HowLowCanYouGo March 11, 2013 at 9:43 am

        Hopefully this shows below Advoc:
        I made a little excel sheet myself to make sure all variables were accounted for since the apps banks have all seem to forget something (% return on investment, mortgage %, taxes and fees etc etc etc) and can tell you this about Vancouver rent/buying costs, if three things happen, it is worth buying, if any single one of these is not true, do not buy and just fill RRSP/TFSA till full and then keep on investing: 1) prices do not go down (haha), 2) you live in the same spot for a minimum of 8 years, 3) you are looking in the less than a million price range.

      • an observer March 11, 2013 at 10:19 am

        Well I actually disagree. It’s usually as simple as figuring out where you want to live and doing a rent / buy comparison.

        On the buy side make sure you include transactional costs on selling which is where your #2 comes in. If it will cost you $30K to buy and then sell the home (property transfer, commissions, other fees) and you plan on living there for 5 years then divide $30K by 60 months = $500/month to add to your calculation along with property tax, maintenance, condo fees, opportunity cost on the down payment and interest. If you plan on living there 10 years then that drops to $250/month and if it is 2 years then add $1250/month etc.

        Compare that with your rent for the same place and then, depending on your circumstances, make the decision. If you are single then you really want to see the monthly rent be quite a bit higher to warrant buying – freedom and flexibility are usually so much more important if you are single. If you are married with a family then it’s often ok to buy even if the buy side of the equation is quite a bit higher than the rent side because there is a premium for stability and ownership when those things become more important.

        Prices will need to come down quite a bit to make the math make sense for most people even with these ultra low interest rates – OR – rents need to increase dramatically. Since rents are generally based on income in the area and follow inflation pretty closely I just can’t see that happening.

        The $1 million price range isn’t really meaningful. For some people $1 million+ homes make sense, for most others they don’t. I believe that once this all works itself out, a $1 million home here will still seem like a bit of a joke compared to just about everywhere else in the world but it will be MUCH, MUCH better than the crap that passes for million dollar homes at the moment!

  7. Brian Ripley March 8, 2013 at 5:35 pm

    RE: “This is the first monthly increase since descending from the peak back in May of 2012”

    I get the same ‘pause’ on my chart as well: http://www.chpc.biz/vancouver_chart.html
    But there is a disconnect between SFDs and Strata units; average strata are back to 2Q 2007 on a rounded dome top. SFDs have an Eiffel Tower look to their topping pattern.

    The spirits have certainly not been quelled in other Canadian Markets; Toronto and Calgary are zoomng to new highs:
    http://www.chpc.biz/toronto_chart.html
    http://www.chpc.biz/calgary_chart.html

    Is the ebulliance east of the Rockies a continuing speculation? Or is it some sort of weird flight to the “safety” of real estate by the remaining credit worthy who fear inflation?

    For sure, real rates have been rising for the past 12 months: http://www.chpc.biz/real_rate_chart.html
    …. but the last time we saw that was in the fall of 2008 going into the spring of 2009, the pit of despair. I guess we have to wait and see how far prices can waft up on declining Y/Y sales.

    • Real Estate Tsunami March 8, 2013 at 9:16 pm

      Ripley,
      Please simplify so that Joe the Plumber can understand.
      Thank you.

      • Brian Ripley March 11, 2013 at 1:49 pm

        Sorry, I’m just a monkey with a key board.

        If your plumbing business depends on an inflating real estate market, I would check your debt levels before going all in, there may be some deflation on the horizon. According to charts taken from Stats-Can, IPPI (Producer Prices), CPI, Wages and National Housing prices are in a downtrend since the blow out in 2008: http://www.chpc.biz/2/post/2013/02/canadian-deflation-update.html

        See also the OECD contraction-expansion chart: http://www.chpc.biz/2/post/2013/03/canadian-gdp-update.html as well as Canadian GDP and Trade Balance also on that page.

        Mr Flaherty knows what is behind the curtain, and he says the hit to Federal revenue is going to be “significant”

        So my recommendation to Canadian plumbers is to keep adding on skill sets and be prepared to travel to where the work is.

    • J Truman March 9, 2013 at 3:17 pm

      Ripley, do you think that the Toronto and Calgary may still be climbing because they have fewer homes sales over the 1 million mark? Thus they will still be selling CMHC insured mortgages?

  8. J levine March 8, 2013 at 10:54 pm

    Its all about the banks and the Canadian mortgage and housing corporation (CMHC) . Canada has far to much personal and government debt. We need the 25% correction just to help ease our debt going forward. So please CHMC leave things exactly as you have now implemented. No mortgage guarantee for banks on over $1 million.

  9. kelly March 11, 2013 at 11:32 am

    The million dollar question – are we going to be New York, Boston? or Phoenix, Las Vegas, San Diego?

    • Avril March 26, 2013 at 8:11 pm

      Check out the Garth Turner online blog on RE, also Whispers from the edge of the Rainforest. I wouldn’t buy anything for a good while yet… long way down to go.

  10. linda May 30, 2013 at 5:08 pm

    Interesting blog – thank you – will be following for sure.

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