Drop From Peak Chart – May 2013
June 27, 2013
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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
Vancouver is clearly acting differently than the US cities in the sample. It started off with a very fast drop rivaled only by Miami but now we are at 4 consecutive months of increases. San Diego increased in 4 out of 5 months at one point during the first year and Boston hit 5 in a row in its second year but it definitely isn’t the norm. The MLS HPI shows an increase of 2.8% in those 4 months while the Teranet HPI for Vancouver shows an increase of 1.4% for those same months – something still seems fishy about the HPI calculations and manual adjustments that are made.
Regardless, although I did expect the standard seasonal small increases or flat results, these results were not expected. That being said, I think the perfect storm is still rolling along and gaining even more steam. Interest rates are increasing, the Chinese economy is showing a lot of weakness and demand for homes above $1 million is dwindling. We’ll see what the coming months bring but personally I expect a double digit drop over the next 12 months in the HPI. In fact, in year 2 of their drops (which we have officially entered), the average US city saw their index drop 19% followed by another 15% over the next 7 months.