Here is an updated chart showing the pace of the Lower Mainland’s 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
We had a fairly large increase in March in the HPI at 0.83% bringing the increase from the last 2 months up to 0.96%. Like I mentioned last month, I’d expect 1 more month of flat or slight increases to the HPI before the MOI, public sentiment shifts, a likely government change, another month of poor employment and economic growth, unaffordability etc etc start to make their impact. Out of the 15 cities being profiled on the chart, Vancouver is now in 4th spot.
Here are the results for each city in the calculation since May 2012. Note that Richmond and Vancouver West peaked a month earlier and Burnaby and Vancouver East peaked a month later
| City |
Drop since May 2012 |
| Burnaby |
5.5% (5.8% from June 2012) |
| North Vancouver |
4.8% |
| Richmond |
7.9% (8.6% from April 2012) |
| Vancouver East |
4.5% (4.8% from June 2012) |
| Vancouver West |
9.9% (10.2% from April 2012) |
| West Vancouver |
7.1% |
Click to expand
Vancouver Price Drop 
The HPI is more like a 6-month moving average than a true snapshot of average prices. The data series for the US cities are not smoothed in the same way as the HPI is, so take a grain of salt with the comparisons.
Lower Mainland is probably doing worse right now than HPI lets on.
While two months certainly doesn’t make a trend, one might (?) have to take another look at the methodology used in creating this chart if we see both gains in the HPI next month as well as a further increase in the rate of change. I believe it is possible (not suggesting likely by any means) that the HPI for Vancouver does not fall off a cliff like we witnessed in various US cities during the financial crisis of a few years ago and instead churns away for many more months, maybe years. Perhaps a replay of springs 2011, 2012 is in the works as we speak? I expect the bulls to continue to argue that any decline in Vanc will undoubtedly be less severe given that general market conditions all around seem to be better than they were in 2008-09 (or at least appear to be). While this very well may be the case, I believe that a return to the 10, 20, 30% YOY gains we’ve become so accustomed to isn’t in the cards anytime soon (if ever again). The efforts of the powers that be in Canada to both halt the slide in RE prices a few ago and provide the fuel necessary to reignite the market were effective in the short term, but have only made the problem worse over the long run. The big reset that occurred in the US never happened here, which is unfortunate. Many Cdns who should not have entered (or returned to) the market ended up doubling down and piling on the debt once again in hopes of making some more easy money and retiring early. With the market being so quiet now, many have given up on the quick flip and trading RE as a sport and are now trying to rent out space in their homes to stem the bleeding (as they were in it for the long term right from the beginning, right?). Ah, life as a real estate “investor”…
The other shoe will drop when they can’t rent their real estate out, but what do I know. Looking on craigslist and typing vancouver I see 1600 rental ads for $1000 to $1200, 1587 rental ads from $1201 to $1500, 1593 ads from $1501 to $2000, 884 from $2001 to $2500, 1100 from $2501 to $5000, 204 from $5001 to $10000. Could be lots of repeat ads but still that’s a lot of empty real estate.
It will be interesting to see how this plays out but I do expect that we’ll be down over 20% by next May.
Around 8% from May ’12 to May ’13 and at least another 12% from May ’13 to May ’14. I also wouldn’t be surprised by 30% cumulative by May ’15
Yes, when you think about it for a couple of minutes:
-no one with jobs can afford to buy at current prices
-fed. gov’t signalling they will raise interest rates
-new provincial gov’t is going to tax the rich, the very people that are buying re.
-China growth slowing
-re prices much higher relative to almost any other place on earth
-lots of empty re so no income to pay for mortgage
Would be interesting to see how much of a mortgage some of these places have.
Anyway, an observer will be right.
Observer, awesome chart and I think you are right on the mark with your assessment.
With the recent levelling, aside from Miami it looks like almost all markets in the US did the exact same thing and then a little further along in time a cliff or long downhill slope arrives. The bursting of the bubble becomes real. 2014 – 15? This spring market seems done here and the rest of 2013 I imagine will be a big disappointment.
Think the higher end will see more severe decline than the lower and middle end.
> 1.5 mill. 60%
> 1. mill. to 1.5 mill. 50%
> 500 k to 1 mill . 40%
< 500 k. 30%.
The majority of the sales will probably be below 1 mill, therefore I think the aggregate drop will be around 40%, over the next 2 years.
I think the thing people need to remember is when prices started going down in the US for the most part there was no stimulus or ZIRP, and credit was unavailable. What we have here, and you could say in China as well with the clear deceleration in growth, is that the government has pulled out all the stops with low interest rates and stimulus, and credit is still easily available by historical standards, and not only is the economy is contracting but RE is hanging off a cliff. That is very concerning. Quoting Krugman a bit here there aren’t many policy bullets left other then injecting an enormous amount of money (debt) into the economy.
I tend to agree. The conditions today are not the same as they were when the housing market was in meltdown mode south of the border. Does this mean all will be well forever? Of course not. Does this mean the music will come to an abrupt end tomorrow? I am thinking no, but it will eventually after the volume is gradually reduced. IMHO, still too many stories of people conflicted about buying this dip or whether to wait for steeper discounts while simultaneously struggling with the issue of potentially higher rates down the road (which I don’t see coming anytime soon despite the ongoing “threats” from TPTB). Stories like this will serve as additional fodder for RE insiders and MSM schllls as the year plays itself out.
A lot of couples in China even get divorced just to avoid the restrictions on buying second home in major big cities. There is no sign the housing bubble in Chine will go burst any soon. Go figure why Vancouver’s price is still hanging there, even though more and more people predict it will see a significant correction say 30-40%.
Hi from Toronto
Check this our: T.O. bidding wars debunked – updated daily. I need daily sales data for Vancouver to created a similar map for your city. If you are willing to anonymously share the data please leave me a message on my site.
http://recharts.blogspot.ca/2013/04/to-bidding-wars-debunked.html
Nice site – unfortunately I don’t have any sales data for Vancouver, just listing prices
Carney is just weeks away from his Bank of England’s job, and already he is shooting his mouth like a politician. Last week, he pondered at raising the interest rate, and this week he fears lowering the rates will cause another housing boom. Why has the foreign workers program got to do with Bank of Canada?!
The price drops have stopped! Bull market to QE-Infinity and BEYOND!
Sounds like a desperate realtor…
This chart is based on the HPI? If so, it is manipulated heavily by the real estate cartel. If it is based on average price you should see an uptick as a result of fewer sales and higher sale prices due to the fact that it is the lower end of the market that is affected first. Higher priced homes may have dropped from $2M -> 1.6M but that is tough to reflect in either measure. Sales volume and listing inventory are probably better indicators.
The HPI is the closest thing we have to an index. There may be some inconsistency – for example in a sales pair where it initially sold for $500K and then sells for $600K that would be counted as a gain even if the owner put in $150K in updates over the last couple of years.
I had sales going back over 10 years for downtown condo’s and tried to show that the HPI was wrong but the end result was that it matched my results extremely closely. I posted the results a while back on this blog.
Sales volume and inventory tell you nothing about how much a property has likely gained or dropped over a period of time – it is a leading indicator of prices. Right now we have incredibly high inventory and horrible sales for April and this means that we are likely going to see HPI drops over the coming months. Check this site for more information on the relationship between MOI and projected HPI change: http://housing-analysis.blogspot.ca/
The HPI is far from perfect but it is the best thing we have to measure typical price movement for a region over a given period of time.
Why did you stop to update this site?
Sparky: “If so, it is manipulated heavily by the real estate cartel” Can you qualify that statement? How is it being manipulated and by who, exactly?
Natalie,
Then why does the RE board not simply release the sales data?
This way everybody could draw their own conclusions.
Until this happens, people will be suspicious about the numbers coming from the RE Board.
You are talking sales prices again, RET? I think I have pointed you in a direction where you can find that on your own. You are wanting the boards to collect the data and publish it for you, then I can’t help you there. Another independent source could possibly do that here in Canada, like Zillow or Trulia from the source I already pointed you to. I believe that’s how its done it the States, but I am not sure. I don’t believe the States MLS system reports the sales numbers either. The boards here do release the data by way of stats to the public already, but you want individual sales because you don’t trust the boards. I’m thinking the onus would then be on you to collect the data and compare what the board is saying to what is shown on the assessment site. So you see, you can draw your own, qualified conclusion…you just want it done for you, for free. Maybe there’s a business opportunity here for someone to start a website to accomplish this 😉
Natalie, sure there would be business opportunity. it seems to be a no brainer.
But it were that easy, I’m sure someone would have started on long time ago.
How about you, obviously you have access to the sales data? 🙂
That I do 🙂 The issue with using the MLS data is that the sale information can’t be made public until after the sale completes. Until then its a privacy issue for the sellers. Its protected in case the sale doesn’t complete.The MLS data does not record completion date or any other terms of the contract. So for me to use the MLS system to populate a chart would be wrong, legally. This is why the assessment info is a better tool. The sale info doesn’t show on the assessment info until after the property transaction is finished and the new owner registered on title. Also, all property transfers/sales are recorded including FSBO sales. Its a more accurate source that way. You are right, the process from my view is not easy…but that’s also kind of my point. Someone has to be paid by “us” to give you free information that we already give you…you just want it differently. Don’t get me wrong, I am all for it being available, I am just not willing to pay more than I already do to prove to you that what we give you is accurate. If someone has some kind of proof that the real estate “cartel” is falsifying information, then I would be pissed, frankly, and would want it fixed….and the offending people outed. I rely on the stats and I pay for them to be handled correctly.
No more updates?
Update today – been extra busy with some other things this past month
woo hoo!!!
The realtor is too busy to check the spelling.
V1003242:
Be:autifhl house in Prime Killarney area. IThis 3 lev 1 home features 9 bedrooms, 7 bathroom, spacious living, dining &famiily room. :Main floor is 9′ ceiling. A/-1 , HRV, v cuum system, security system, radiant heat, laminated flooring, granite countertops, aple kite en & 2 GAS fireplaces. Excellent location. Very quiet street. Short walkto Victoria Drive, Killarney Community Centre. B th levels of school & transportation. LANE home, rented for$1000+utilitie:s. L~gal suite was rented$ 00-+utiliti s has another one bt::droom suite potential ($650) plus rec rm for upstairsuse. Total rentals in suites is poteNtial of $2450/mo th. House is priced very well for quick sale.
If I’d be the seller, I’d fire this realtor.
Speling? You expect proper spelling?!? The commission on this listing would be a measly $75,000. How can you possibly expect an agent to spend an extra 5 minutes to type up a listing properly for such a paltry sum.
If you notice spelling and grammer errors in this listing then you are not the intended target market.
Apologies, I thought this was your typical 4M westside listing. I’d fire the realtor too, ad is just weird.
C’mon give the guy a break – this sounds just like Norman Rockwell always painted it.