Vancouver Price Drop

Documenting Vancouver real estate price movements

Drop From Peak Chart – May 2013

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.

Capture

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107 responses to “Drop From Peak Chart – May 2013

  1. Craig Sterling June 27, 2013 at 9:41 am

    Isn’t it likely that this upward curve is caused by fewer sales at a higher price? Volumes are plummeting,,,?

    • an observer June 27, 2013 at 9:44 am

      Could be but normally when there are fewer sales it is homes that have steeper discounts that do manage to sell – homes that you would expect would carry the HPI downward.

    • James July 7, 2013 at 2:32 am

      HPI is a complete BS.
      In real life: the prices may be not dropping fast, but, for sure they are not increasing at all

  2. Michael June 27, 2013 at 9:50 am

    The US cities used the Case-Shiller index, not some proprietary realtor index. I think it would be better to use the Teranet numbers.

  3. Dave June 27, 2013 at 10:03 am

    Cheers observer! Very interesting…

  4. Jeanette Wassung June 27, 2013 at 10:06 am

    Thank you so much for your information! So hard to get the truth out there (:

    I am interested in buying a condo downtown…..do you have any stats on the price drop in this area for condo’s that you could share please? People have been telling me to buy now but I think should wait a year, I would really appreciate any advice.

    Thanks again

    Jeanette

    • an observer June 27, 2013 at 10:28 am

      Downtown condo’s won’t go up faster than inflation and will probably not go up in real terms either so it isn’t an “investment” – most are cheaper now than they were 5 years ago.

      If you can find a condo that is less expensive to own than rent once you factor in property tax, maintenance fees, transaction fees to buy and sell divided by time you expect to stay there, repairs and appliances, opportunity cost on down payment etc then consider buying. Realistically though you can rent the same place for less than half the real cost of buying.

      I try not to offer too much definitive advice but I’d say it makes absolutely no sense to buy a downtown condo (or a condo anywhere) right now.

    • Michael June 27, 2013 at 10:47 am

      To get an idea of when it is better to buy or rent, look at the price-to-rent ratio. Take the asking price of whatever condo you are considering and divide it by the annual cost of renting an equivalent unit. If the ratio is 15 or less, it’s probably better to buy. If the ratio is over 20, it’s almost always better to rent. The majority of downtown condos have ratios well over 20, so in most cases renting is better.

      • Rupert Bear July 2, 2013 at 12:03 am

        N00b question here, but isn’t resale/equity a concern? Rental money is gone forever, but mortgage payments get one closer to ‘freedom’ from monthly charges. And aren’t we going to be making more in 10-15-20 years than we are now? So if we can afford the mortgage now, surely in 20 years it will be chump change, but rent will go up?

    • Real Estate Tsunami June 27, 2013 at 11:37 am

      With the glut of condos coming on stream within a year in Richmond,
      I’d wait to see what will happen to the Condo market in Vancouver.
      The potential buyers in Richmond have pretty much the same profile as those who would buy in Downtown Vancouver.

  5. Real Estate Tsunami June 27, 2013 at 12:05 pm

    As a former owner of a Condo in Downtown Vancouver (bought in 02, sold in 11 just after the Olympics), I would not touch the current Condo market with a ten foot pole.
    Most of the condos are owned by offshore investors, the Strata councils are controlled by a few council members who rule by proxy vote.
    Very frustrating to get anything done. The emphasis is not on maintaining the strata, but to make a quick buck and then move on.
    The new strata depreciation reports which will be mandatory by the end of this year, should make the financial state of the strata more transparent to owners and buyers.

  6. bullwhip29 June 27, 2013 at 1:34 pm

    @ RET

    Those mandatory depreciation reports can be deferred indefinitely as long the 3/4 vote keeps getting passed. My sources tell me that a significant % of strata corps will not be proceeding with these. It remains to be seen, however, if there will be any useful information for buyers contained in the pages of these documents anyway. The fact that a report is done should not be considered as an endorsement or seal of approval for a given property, but I am afraid many will interpret it this way.

    @ an observer

    I think you’ll be proven correct in due course. After some deep thought, I think these modest price increases were effectively a dead cat bounce of sorts. While some naive cool aid drinkers probably think otherwise, many people I’ve talked to are not buying into the idea that the market has bottomed and is now poised for another rocket launch. Some have used this window of apparent price stability to lighten up the portfolio. Having said this, the two or three individuals that did pursue this route had quite a difficult time in getting these deal done, much more difficult than meets the eye. I’d say by end of this year/early 2014 listings will spike considerably and Vanc will be tracking LA and Vegas price declines once again. Anyone that bought recently with the intention of doing yet another quick flip to make some “easy” money will be regretting this decision big time. As I mentioned in a couple of previous posts, the powers that be appear to be having a much tougher time keeping global financial markets stitched together in recent weeks. This situation is more complex, fluid and volatile than most believe. I do not believe the second half of 2013 will be a repeat of the snore fest we witnessed over the last 6 months.

    • Real Estate Tsunami June 27, 2013 at 4:04 pm

      Bullwhip, I agree it will be interesting to see how prospective buyers will react if there is no depreciation report.
      I guess if they have a choice buying a strata with a depreciation report over one with none, they’ll go with the one with.
      As for the usefulness of the information contained, I believe it will give the buyer extra protection beyond the home inspection report.
      After a few successful lawsuits from mislead buyers, I think compliance with and accuracy of these reports will greatly improve.

      • bullwhip29 June 28, 2013 at 11:43 am

        Sure, I agree in principal that having a report is likely better than not from a buyer’s perspective. My worry is that these reports give some owners/buyers a false sense of security much like the standard boiler plate reports that many home inspectors churn out OR even those supposedly bullet proof new home warranties. I think the emphasis should be placed on what’s not (or what doesn’t have to be) in the reports. It’s not a question of being misleading or inaccurate IMHO, but I could be entirely wrong. Look at all the shenanigans involved in the home appraisal game. Worst case is that this winds up being like the investment banking industry where ratings agencies give glowing endorsements to investments that are being sold by the very same firms that are paying them. If I am not mistaken, there are no specific guidelines as to who is/isn’t qualified to prepare these reports in the first place, so the opportunity is there for those bold enough to exploit it. Much like inspection reports, I expect these documents to contain all sorts of complicated, flowery language and loosey-goosey legal jargon that the average human won’t understand but must sign off on if they want to proceed with the purchase. At the end of the day, this may all turn out to be a useless make work program designed to line the pockets (and cover the asses) of certain parties at the expense of strata property owners. If this initiative winds up being what you describe (and what it should be quite frankly), I expect there to be all sorts of blow back from countless industry players who will cite this as being unnecessary red tape and so forth.

    • Alexcanuck June 27, 2013 at 4:38 pm

      The depreciation reports aren’t nearly as good as requiring the strata to actually follow the recommendations for the size on contingency fund they should have. It’s still an open invitation to vote down all strata increases, defer maintenance, build no contingency fund, enter into contracts to short-term benefit but long-term pain and so on. Leaving armed timebombs behind if they do manage to flip the leaky albatross and escape poorer and wiser, otherwise the inevitable special assessments will bite they who deserve it most.

      • Real Estate Tsunami June 27, 2013 at 7:12 pm

        I realize that bad Stratas won’t give a hoot about the Depreciation Reports.
        But the intent is to give buyers better information about what they are actually buying.
        This is actually about protecting the buyer from unscrupulous sellers and neglectfull strata councils.
        The days were idiot buyers bought leaky condos without inspection, because they were afraid to be priced out forever are over.
        There is a glut of condos coming on the market and the buyer will be king.
        Developers, sellers and Stratas will have to adapt to this new reality.

      • overthepond June 27, 2013 at 8:04 pm

        We are seeing a shade over half of stratas opting to have depreciation reports conducted. Obviously many very small strata corporations are opting away from them.

        The next couple of years will be telling with regards to how depreciation reports will be seen. At present a chunk of stratas who have opted to waiver, have done so with the intent of seeing how many industry wide opt out and the effects on financial institutions who are granting mortgages.

        Time will tell – they have the potential to do a lot of good for the strata community in BC, where typical long term maintenance funding is about half of that seen in Ontario.

      • Natalie June 30, 2013 at 11:13 pm

        Overthepond: I understand small stratas (I think 4 units or less) are not required to do the deficiency reports under the Act. I think the reports, in time, could well become impossible to waive if lending institutions require them as a condition to finance on any units. I also don’t see them as just a benefit to the buyer, they are a benefit to the owners that the councils represent, who are diligent in accruing enough funds to properly maintain the building. A unit in a well run strata building will certainly be more desirable to buyers as well as to the realtors doing their best for a client. Currently, we require two years of strata meeting minutes including AGM’s and any special meetings along with financials and budgets to get a good scope of the condition and management of the property. The building is generally not inspected by a buyer. I look forward to the addition of these reports. However, from what I am hearing, the inspectors offering this service vary greatly in their pricing.

        Depreciation report
        94 (1) In this section, “qualified person” has the meaning set out in the regulations.

        (2) Subject to subsection (3), a strata corporation must obtain from a qualified person, on or before the following dates, a depreciation report estimating the repair and replacement cost for major items in the strata corporation and the expected life of those items:

        (a) for the first time,

        (i) December 14, 2013, in the case of a strata corporation that existed on December 14, 2011, or

        (ii) the prescribed date, in all other cases;

        (b) if the strata corporation has, before or after the coming into force of this section, obtained a depreciation report that complies with the requirements of this section, the date that is the prescribed period after the date on which that report was obtained;

        (c) if the strata corporation has, under subsection (3) (a), waived the requirement under this subsection to obtain a depreciation report, the date that is the prescribed period after the date on which the resolution waiving the requirement was passed.

        (3) A strata corporation need not comply with the requirement under subsection (2) to obtain a depreciation report on or before a certain date if

        (a) the strata corporation, by a resolution passed by a 3/4 vote at an annual or special general meeting within the prescribed period, waives that requirement, or

        (b) the strata corporation is a member of a prescribed class of strata corporations.

        (4) A depreciation report referred to in subsection (2) must contain the information set out in the regulations.

      • Real Estate Tsunami July 1, 2013 at 12:32 pm

        Thank Natalie for your perspective.
        I, too believe that the depreciation reports will benefit the strata owners and the buyers.

  7. Curious June 27, 2013 at 4:43 pm

    why didn’t you compare with canadian cities? (just curious)

  8. FATHER June 27, 2013 at 6:46 pm

    houses selling again, could it not have been because of the house hornies wanting the cheap rates before they rise?

    • bullwhip29 June 28, 2013 at 10:50 am

      The same could be said for those clever (or so they thought) folks who thought it would be prudent to snatch up some RE just before Flaherty stepped in and tightened the screws. Hmmm, I better buy now because I won’t qualify under the new guidelines. Alrighty then, you go ahead and do that. LOL….It goes to show you that way too much emphasis is placed on the size of the mortgage “payment” vs the purchase price (incl taxes, fees, interest etc) itself. This is precisely the reason the auto co’s advertise those “bi-weekly” lease and car loan pmts now.

      • Real Estate Tsunami June 28, 2013 at 7:01 pm

        Bullwhip,
        You’re right about the car companies.
        I think the car loans will be the next shoe to drop.
        You hear about record car sales in the last few months.
        Well, you can own a shiny new car with 0 down, first 3 months no payments, and 0 percent financing for 6 years.
        The buyers of these cars are probably the same people who bought overpriced RE at record high prices, with record low mortgage payments.
        A whole generation that grew up with record low interest, and who believe the party will never end.
        Well, the good news is, once the rates are rising and they have to sell their property because they no longer can make the mortgage payments, they can always live in their car.
        At least, until the car get’s repossessed.

      • Bao Li July 3, 2013 at 12:44 pm

        Real Estate Tsunami,

        I got a car back in 2011 on a 0%, 0 down 84 month financing. It would’ve cost me about $40k if I paid in full. Reason why I took that route was because I didn’t want to lose the earning power of $40k. I have it invested mainly in high income funds and at the time was bringing me about $350/month. Fast forward 2 years worth of dividend reinvestment, I’m up almost $10k. That’s money I wouldn’t have if I paid cash for my car. I’m also reluctant to throw my money on a big downpayment on real estate for the same reason.

      • bullwhip29 July 4, 2013 at 3:53 pm

        @ Bao Li

        If you had paid cash, the total price of the vehicle would likely have been much lower (and a finite amt). In many cases those zero % deals are purely gimmicks as the dealerships find other ways to nickel and dime you at the end of the day. Those “sure thing”, bullet proof high yielding investments got obliterated in the last month with many down as much as 20% or more, which effectively brings you back to the breakeven point before taxes on monthly distributions are factored in. IMHO, if something is yielding 10% or so, you are taking on significant risk in owning it. In the worst case scenario, interest rates spike further, and your portfolio drops well below the value of what is owing on your loan, which you are likely upside down on now (ie. the balance owing exceeds the value of the car).

  9. Real Estate Tsunami June 27, 2013 at 9:42 pm

    Over the pond,
    Exactly, how the FI will view these reports will be crucial.
    My opinion is, given that we’re going to be in a buyer’s market for a long time,
    that they we will require a depreciation report.

  10. José June 28, 2013 at 11:41 am

    I’m not sure what this graph tells us. But, if you want to extrapolate what it seems to be indicating, Vancouver isn’t crashing just yet.

    • bullwhip29 June 28, 2013 at 12:04 pm

      FWIW, price declines in cities like Boston, Portland, Seattle and Minneapolis briefly reversed course (around month 20 or so on this chart) before heading back downwards. Nothing moves in a straight line. IMHO, we are experiencing the very same right now (minus all the unprecedented stimulus, of course). There is nothing out there to suggest this market is back in RISK ON mode in any shape or form. Unless Christy and co are planning on blowing a few billion to keep this RE market propped up, market forces will ultimately win out and drive this market much lower. There is simply too much inventory and other new product out there and not enough buyers willing (and able) to jump in at these idiotic price levels.

      • José June 28, 2013 at 12:20 pm

        You may be right. It’s not indicating risk on but it’s not indicating a decline either. Only the rearview mirror will tell us in the future. You are absolutely right when you state that prices are idiotic and all fundamentals point to a precipitous decline. We’ve all got our opinions. Mine is that Vancouver prices will decline only slightly and a flattish market will persist for years.

      • Seeking knowledge... June 28, 2013 at 12:43 pm

        I can’t see it remain flat if you believe interest rates will return to historic levels. I think the bulls are hoping for some deus ex machina from overseas to continue the bubble (which all it will do is to make the crash that much worse). If you think HAM will give RE a shot of adrenalin, take a closer look at the Chinese economy. The rich and corrupt have already bought RE.

  11. Julia June 28, 2013 at 2:05 pm

    is it possible to adjust your chart so Vancouver is one of the more dominant colours. I am finding it very hard to read.

  12. FATHER June 28, 2013 at 7:33 pm

    I think we r in crash mode, only reason it has not gone straight downhill is the msm, realtors, mortgage rates and the hope of it going back up more. I purchased a house and 1 year later realized that I was sitting in a 1 million dollar old house and wondered how stupid it was so I sold it . 1000000 that is a lot of hard earned money.

    • bullwhip29 July 4, 2013 at 4:07 pm

      We aren’t in crash mode yet. Too many with a vested interest in keeping the party going for as long as possible are reluctant to flick the lights back on and shut down the music at this stage. Too many people I know are long RE up the ying-yang and have not been able to deleverage in a meaningful way over the last few years. It is only natural for them to continue sipping the free cool aid and say the right things (while keeping one foot close to the exit doors and eyes peeled for any new for sale signs in the neighborhood).

      • father July 4, 2013 at 4:23 pm

        (crash mode) My meaning is getting ready 1 buyers drying up 2 mortgage rates 3 harder to find tenants, longer vacancy, rents for rentals going down because too much supply 4 no more ham

  13. FATHER June 30, 2013 at 7:39 pm

    HAPPY CANADA DAY TO YOU ALL

  14. RFM July 3, 2013 at 6:18 pm

    The VANCOUVER REALTOR HUNGER INDEX for June 2013 was 60.

    Details and comparison data for the last 14 years at: http://vancouverpeak.com/Thread-Vancouver-Realtor-Hunger-Index

    • punnoval July 6, 2013 at 12:55 pm

      bail: nice info. Was it very hard to obtain and move into Excel format? I would like to see this done for other areas

      • bailinginbc July 10, 2013 at 8:54 am

        Thanks punnoval. I just get my info from the mls and then paste to the spread sheet and add hyperlinks and photos in the comments. It is quite time consuming and takes a while before you have any useful data but once you do (I’ve been going for almost a year) it is quite useful and satisfying

  15. Mike July 6, 2013 at 10:43 am

    Living in Chicago IL – this is what I think of Vancouver housing – WHAT THE HECK ARE RESIDENTS OVER THERE SMOKING!!

    Rathole homes(?) selling for million plus in an area with crappy public schools. Somebody on another forum tried to justify the pricing by giving example of Tokyo, SF, New York, Chicago – definitely the guy have never been to those cities. They are financial and tech hubs with hundreds of multi-bullion companies based there..Vancouver is definitely a hub of rain and clouds…been there few times now..

    I also looked at schools ranking in Vancover area – although not a rule, but general trend if you have to send your kid to Ivy league University – you have to send to private school. Here in Chicago, public schools in good area has good chances to send you to a Ivy league University…and you can buy a decent 3B3B updated house with around 500k in a quiet crime free area…

    Good luck Canucks!! I hope the next generation of Canadian kids can afford these homes, but looking at their average incomes, it is a definitely not looking good…

    • Finally July 8, 2013 at 4:51 pm

      I 100% agree with you. Been living in raincouver for awhile now, it does rain from Sept to June. Only reason I stay is I have family here, but if they weren’t I’d be out of here. 500K is like an average 1 bedroom DT condo in Vancouver. 2 bedroom luxery condos cost around 1 million. Take a look here: http://vancouverflippersintrouble.wordpress.com/

      • bullwhip29 July 9, 2013 at 8:32 am

        @ Finally: No, these are just the pie in the sky fantasy asking prices delusional sellers are hoping to get. You can start off by chopping 25% off these prices and work from there. Ultimately, prices of these so called “investment” properties have got to come down much more as they are bleeding away tonnes of cash every month. I’m pretty sure this is not what most of these owners signed up for.

        @ Mike: good luck with those Ivy League schools which will require you to take out another mortgage on your home (in Chicago that is) assuming your kids actually get accepted. Why would someone from Chicago be ripping the rainy season in Vancouver anyway? Don’t get me wrong, Chicago is a great city (been there 3 times) but the “weather” is way down there on the list of its best attributes.

  16. Elme July 9, 2013 at 10:41 am

    Bottom out.
    Tenant or landlord, your choice…

  17. Real Estate Tsunami July 14, 2013 at 9:21 pm

    Arnold Shuchart on his blog pointed out a price drop of 700k (37%) for
    3208 – 1111 Alberni Street.

    • an observer July 14, 2013 at 11:10 pm

      I’m not seeing that drop for that unit…

      Originally listed June 13 for $1.388 million and dropped to $1.268 million yesterday

      Biggest % drop in asking price for that building is currently 12% for unit 2801

      • Arnold Shuchat July 22, 2013 at 1:40 am

        Gents, I reviewed the spreadsheet and do note that there was a glitch in how it ended up being printed. For some reason the price drop got attributed to the Alberni residence, when it should have been attributed to; 5772 Rhodes St. Unfortunately, it must also have been an error on the part of the listing Realtor as the price drop of $700k which came out on July 10, was rectified by a corrected price on July 11th. In the end, it only ended up being a price drop of $8,000. But my hotsheet system would generally not know that at the time of “going to press”… So for just one day, 5772 Rhodes should have gotten a flash of fame… turns out to be a tempest in a teapot. I edited the blogchart to reflect the right address as at July 13, but left it at the no. 1 spot…. I can’t start going back to correct input errors from others.
        AS

  18. Avril July 15, 2013 at 2:05 pm

    Where is Vancouverpricedrop? No update since June 27???

  19. Bull! Bull! Bull! July 16, 2013 at 10:58 pm

    looks like prices are headed up! up! up!

  20. Kelly July 17, 2013 at 9:29 pm

    Missing your stats!!!!!especially for South Surrey where I believe you were looking. Amazing what high prices the realtors are throwing out there for houses that aren’t selling because they are overpriced. The FVREA stats are very interesting for June; Average price is down from 2012 by 9.4 % and from May 14.5%. Most selling prices are way below asking, i.e. 13277 Woodcrest(listed for 1798000 s.p. l,600,000) 13795 18A (l.p. 1,438,000 s.p. 1,290,000)14081 28 Ave( l.p. l,998,000 s.p. l,800,000). What are the realtors thinking?????

    • Natalie July 18, 2013 at 4:40 pm

      Kelly, my guess is that the Realtors are thinking they wish the sellers would listen to them and price their properties where they will sell. Just my guess.

      • Real Estate Tsunami July 18, 2013 at 6:04 pm

        Natalie,
        Get your sarcasm.
        I guess it must be tough working with sellers who have been conditioned to believe that RE in Vancouver can only go up.
        But, judging from the number of daily price reductions, it appears that reality is slowly sinking in.

      • Natalie July 19, 2013 at 7:11 am

        RET: It is probably more truth than sarcasm. It is difficult to work with sellers that don’t want to listen to reality, for sure. I hear more and more from Realtors refusing to take listings that are over priced. Its difficult for us in that they want us to pull out all the stops and spend copious amounts of money to market the over priced home. Then, when the over priced listing doesn’t sell, they want to blame us. The listing expires and we are out lots of money. I personally won’t do it. I think often people want to “just try” at their price, which I can’t blame them for, as long as they agree to reduce the price after specific periods of time. My real point for Kelly being its not so much the Realtor, but the seller. The seller is the boss. I know few Realtors who will willingly over price a home. Although I have listed (and sold) homes at a price higher than what a seller feels they can get it for when I know they can likely get higher. Its part of what you pay us for 🙂

  21. Elme July 18, 2013 at 10:31 am

    I think the market has bottomed out, that’s why this blog hasn’t been updated for 3 weeks.

    The party is over…

    • bullwhip29 July 18, 2013 at 11:54 am

      Actually, peak selling season is almost over. Back to school in less than 2 months. Not much time to move your families, find tenants etc before the market shuts down for the next 6 months.

      What party are you referring to BTW?

      • Arnold Shuchat July 22, 2013 at 1:48 am

        Since I just noticed this discussion, I thought I’d bring to your attention my most recent Vancouver Price-Drop blogpost where this last week’s stats were briefly analyzed. Here is the extract. One has to keep an open mind when reading all of the posts and the sentiment of those responding. From http://www.shuchatgroup.com/Blog.php:
        Well this last week saw 312 (384) new listings and 215 (201) sales for a total absorption rate of 68.9% (52%) (42.2%), a huge increase and an indicator that although one might pontificate that a correction is not over, buyers are still behaving otherwise!

        Apartments registered 114 (114) sales against new listings of 154 (191) for an Absorption ratio of:75% (59%) (47.5%)
        Townhouses registered 22 (18) sales against new listings of 20 (35) for an Absorption ratio of: 110% (51%)(37.1%)
        Houses registered 75 (63) sales against new listings of 122 (142) for an Absorption ratio of: 61.4% (44%)(36%).
        Duplexes registered 4(5) sales out of 13 (16) new listings for an absorption ratio of 30.7% (31%)

        The above numbers are striking when examined against the same numbers reported week in and week out on this blog. Firstly, I have mentioned that the townhouse market is gaining steam for weeks now. This week saw a huge demonstration of this in the townhouse market with the absorption rate for townhouses of 110%.

        Also, check out the next blog post which will highlight the 36% price reduction on the top house on this week’s price reduction list. Do you think it is now fairly priced?

        From a common sense point of view, townhouses are supposed to be less expensive than houses. That usually being so would make it the more affordable alternative for home buyers reaching to be able to move out of their condos to larger living space. On the other hand, there is a major market force of older homeowners who missed the 2011 high and who wish to make the move to downsize to more manageable living space that a townhouse affords and which would also enable them to travel more etc… This is what I believe is causing the pressure on townhouses right now. All of the absorption rates for the different products points to a strong market, although the total numbers might not be what they once were.

  22. Real Estate Tsunami July 18, 2013 at 1:58 pm

    We have on average about 80 discontinued listings everyday.
    I think many of these sellers will re-list in autumn, causing oversupply and lower prices.
    get ready for a hot fall (pun intended).

  23. JimH July 18, 2013 at 2:58 pm

    Hi! Thanks for your work!
    Brian Ripley’s data shows a Vancouver SFD price drop of 13.6% from peak.
    http://www.chpc.biz/plunge-o-meter.html

    What would you say explains he discrepancy?

  24. Seeking Knowledge... July 18, 2013 at 11:23 pm

    I miss the ‘drops’. Observer: I hope you are just taking some well deserved time off to enjoy the summer.

  25. Real Estate Tsunami July 19, 2013 at 3:28 pm

    Check this crazy situation out:
    New listing in Steveston:
    V1017906
    14-4388 Bayview St.
    Listed for 1,295,000, Assessed at 933,000
    Older listing in same complex
    V1014696
    16-4388 Bayview St.
    Listed for 689,000, assessed at 715,000.
    Natalie, can you make sense of this.

  26. Natalie July 19, 2013 at 7:18 pm

    Its not my area, but at a glance….#16 is not water front, #14 is. #13 sold in 2011 for 1,075,000 (currently assessed at 932,000) also water front. Its worth it to some to pay that much more for waterfront. All depends on the amount of available water front vs. the amount of willing and able buyers looking for it. The last one (#13) sold in two weeks…lets wait and see.

    • bullwhip29 July 22, 2013 at 12:00 pm

      Unit #14 is also 25% more sq footage, but it is overpriced by at least 250k IMHO. Pretty familiar with the area and typically see the odd listing like this with a fantasy asking price. Either they are completely delusional or they have nothing better to do. Houses like this one in Terra Nova (@ lower asking price of $1.18M….lol) are being offered for way less than assessed and have been simply collecting dust for the entire year.
      http://www.realtylink.org/prop_search/Detail.cfm?MLS=V973580&REBoards=All&From=MLS

      • Natalie July 22, 2013 at 2:11 pm

        I don’t know, bullwhip…from Arnold’s post above, maybe this unit will get competing offers 🙂 Sounds like Richmond’s townhome market is hot!

      • Arnold Shuchat July 22, 2013 at 3:32 pm

        Even Vancouver’s townhouse market cooked last week with the absorption ratio running at 110% of last week’s new listings!
        I figure it’s both sides of the market: move ups and down sizers.

      • bullwhip29 July 22, 2013 at 8:00 pm

        @ Natalie

        Sure, activity levels have picked up in recent months. This shouldn’t be a surprise to anyone. I believe things will begin to quiet down in a meaningful way in the coming weeks. I also think Arnold is correct in that many are downsizing in this market.

        Having said all this, there is not a snowball’s chance in Hades that #14 sells for anywhere near asking. Perhaps these folks are simply throwing a price out there to see if anything sticks but aren’t really serious about selling? I suppose there is also a chance that this is a bold attempt at a high priced flip in which too much was spent on renos, decorating, staging not to mention original purchase price. (kudos on the impeccable staging job though…nicely done).

        IMHO, there are plenty of better options (in terms of “detached” homes in good areas) all over Rmd for sale in this price range or lower. Perhaps this is exactly the type of property these sellers have in mind if $1.295M were to just fall out of the sky and land in their laps? Well, good luck with that…

  27. Natalie July 22, 2013 at 5:48 pm

    Arnold, just curious, what’s your absorption rate of all active listings vs sales for Richmond? I’d like to compare it to my market area in the FVREB.

    • Real Estate Tsunami July 22, 2013 at 7:23 pm

      Arnold,
      Richmond is your backyard.
      What’s your take on V1017906?

      • Arnold Shuchat July 22, 2013 at 9:10 pm

        While other areas in Richmond retreated substantially since February 2011, the heart of Steveston has to a much greater degree than other areas, withstood the downtrend. What I sold in October 2011 Ewen for $875k just sold in March 2013 for $870k. There is just not sufficient inventory to satisfy many downsizers and those looking for the perceived small town charm. Were it to sell now it would likely surpass the March sale price.
        As for the particular listing, I have not seen it. Direct waterfront views will attract a premium but not having seen it I am not sure I would pay the asking price on it.

    • Arnold Shuchat July 22, 2013 at 8:55 pm

      From the 14 day hotsheet, 187/352 or 53.12%
      From the 7 day hotsheet, 103/183 or 56.2%
      all property types Richmond.

      • Real Estate Tsunami July 22, 2013 at 9:23 pm

        Arnold,
        Thanks for your invaluable comments on Richmond RE matters.
        What puzzles me is Westwind, the Shaughnessy of Richmond.
        A year ago, every property for sale would have been snapped up within days.
        But now they lanquish for months. Very strange for these prime RE properties in Richmond.
        Any ideas why this would be?
        Thanks

      • bullwhip29 July 23, 2013 at 8:15 am

        @ RET

        At the risk of sounding like more of a troll than I normally do, I’m not sure your labeling of Westwind as the “Shaughnessy” of Rmd is entirely accurate. Terra Nova, Quilchena, Seafair and even Granville are widely regarded as more desireable areas by many, but homes in these neighborhoods have been sitting on the market for months and months too. Carl Chu just sold a place on Francis Rd (just steps to the dyke) a few days ago that had been on the market for a couple of years, had gone through countless relistings, new agents, price adjustments and so forth. As far as I could tell, there was nothing really wrong with this home (other than maybe the price). Perhaps the appetite for moderately upscale homes with above ave sq footage is not what it used to be. Many families are opting for something more modest while the uber wealthy are taking a pass on these cookie cutter homes that don’t offer enough of a wow factor to impress their friends and family. Those island kitchens with granite and stainless steel area a dime a dozen these days.

  28. Real Estate Tsunami July 22, 2013 at 7:32 pm

    Interesting comment, Arnold!
    Move ups and downsizers.
    So in each case the seller is also a buyer. So every two sales are actually just one sale.
    So, the dog is chasing his own tail.
    Without new buyers entering the market, this mini rally cannot be sustained.

    • bullwhip29 July 22, 2013 at 8:18 pm

      A number of people that I know who downsized/traded down did it specifically for financial reasons. ie. $1.2M det home (with 500k mortgage) sold —> $500-600k used to buy t/h with the rest of the cash going to bill collectors. So, not exactly a dog chasing its tail as overall value (and appetite for) RE is significantly reduced. For market to stay afloat, both a buyer for the $1.2M det home AND another $500k t/h would be req’d to counterbalance this one seller.

    • Arnold Shuchat July 22, 2013 at 9:15 pm

      as always. But what I am thinking is that we are going through a market compression where the spread to the higher end is less than it used to be. I also think there is the tail end of the rate hold applicants vying to capitalize on their 2.89%. For some, fear of loss of a deal bears more strongly than the possibility of gain.

      • bullwhip29 July 23, 2013 at 8:28 am

        Regarding rates, we’ve been through this exercise before. I think this is what the powers that be want you to think. Buy now, this is a limited time offer that you will not be able to get in the coming weeks/months. LOL… The primary goal of the banks is to sell you product, not look out for your financial well being. Always has been, always will be. IMHO, rates won’t be doing much in the short to medium term unless some black swan event were to occur resulting in the loss of control of the system by the bankster crooks. Obviously, if the latter were to occur, buying anything with credit (regardless of how attractive the financing pkg may look) at today’s inflated prices would be a big mistake.

  29. Jan Truman July 23, 2013 at 11:17 am

    Well I know u find the increases unexpected but I didn’t. I had expected with the change in the cmhc policy of not insuring homes over 1 mil there would be an increase in homes under 1 mil. And a decline of sales in the over a million, a lot of those being outside the “benchmark” calculations. This has driven the “average price up” Also there is pressure on buyers who are maxing out their credit to get in before interest rates rise or their pre-approved mortgage expires and they need to re-qualify at a higher rate. All in all these types of pressures were not seen in the US crash. This is a made in Canada style decline. Be ready for more surprises as our politicians try to manipulate this. People still have equity that they have made over the last ten years that they are continuing to try to use as leverage to purchase one more upgrade home before they won’t qualify any longer. I expect that when prices slowly but finally deflat by 30% there will be a rapid deflation as the upgraders will not have enough equity left. But then again, I’m prepared for more surprises.

    • Elme July 25, 2013 at 12:20 am

      Have we prepared for the drop? the province and the people?

      Guys you have no idea how much this province’s economy relies on real estate market, not only the government, but also the private sectors. People are not happy about the pipeline and natural gas, then what do we have? manufacturing, movie, tech…? Sorry, not even one in BC now.

      We have nothing, but real estate, so be realistic!

      When this market drop, government may go bankrupt like some cities and states in the south, a lot of people will lose their jobs or get a shrunk pay cheque. Don’t gamble you will be the luckiest one who can have the same pay cheque and buy at the bottom.

      Home can’t be more AFFORDABLE there in Detroit, but would you a home and live there?

      That’s the reality check of this province!

      Be careful for what you wish for.

      • Finally July 30, 2013 at 7:37 am

        Elme, pesonally I’ve prepared for the drop. In the past 3 years, I’ve sold all 3 of my properties: 2 condo’s and 1 townhouse, which include my principle residence. I have cash in hand for anything that can happen. I’m ready for a possible Detroit bankrupcy, but very unlikely it will happen. Bring it on though. My job is in the software industry and does not rely on the canadian economy doing well or not. I guess I’m thinking of a micro point of view, but it’s a dog eat dog world out there, sorry.

  30. liujoan July 25, 2013 at 6:59 pm

    Hi,Does anyone see the July’s post?

  31. Elme July 30, 2013 at 9:40 pm

    Finally,

    Wish u good luck…

  32. anonymous July 31, 2013 at 4:53 am

    I guess youo all need to revisit this chart

  33. Sammy July 31, 2013 at 10:08 am

    Anyone know the sale price for V1001643?

  34. José August 2, 2013 at 11:30 am

    Look’s like this market has recovered and confidence is back for now. I guess the coffin door on this blog is shut.

    • Real Estate Tsunami August 2, 2013 at 1:06 pm

      Josef,
      Remember, the one who laughs last, laughs best.
      The rate holds will soon expire, and the down turn spiral will continue, albeit faster.
      I pity all these buyers, who thought that they bought at the bottom.

    • an observer August 2, 2013 at 2:22 pm

      Why not login with your other aliases from the same IP address adding “yeah, Jose is smart and totally awesome and I agree with everything this wonderful person has to say!” like last time!

      I haven’t been active with the blog mainly due to lack of time and interest during the summer but I’m still collecting the info and the drops are coming in fast. July was a very unexpected month in terms of sales but I’m pretty confident we’ll see at least 6 consecutive months of HPI price declines bringing us down over 10% from the peak. I also expect next year to be very weak with a cumulative 20+% drop by the end of 2014 but timing these things is difficult.

      • José August 2, 2013 at 9:19 pm

        “Aliases” – really, that’s all you got Mr. an observer?

        So far, the facts disagree with your desire for the Vancouver real estate market to fall, in order to help out your children.

        As incredulous as this may sound to you, I’m also hoping for a marketed decline in values to preserve the region. I just disagree, with you, about how severe of a correction is coming.

        Your comments hypothesizing about the precise degree of a correction smacks of desperation. And so far, you’ve been completely wrong. It’s interesting to read of all the greedy property owners/speculators who have listed their properties at ridiculously lofty levels, much higher than their assessment. However, to draw a conclusion that somehow these properties are representative of the entire Vancouver market is incorrect and irresponsible.

      • an observer August 2, 2013 at 9:51 pm

        You logged in as three different accounts trying to backup your opinion in a previous post – it’s pretty funny and pathetic so I just wanted to remind you that I hadn’t forgot!

          “It’s been interesting watching you guys argue about the meaning behind each other’s comments. But I have to agree with Jose.” LOL!!!

        As far as a precise degree of correction, I said I expect a 20%+ drop by the end of 2014 but timing these things is difficult – Is that “hypothesizing about the precise degree of correction” to you? Let’s add to the fact that I own what I am predicting long term drops for, is that your definition of desperate! And finally, none of my thoughts on real estate pricing as a whole in this region are based on the overpriced listings that currently make their way into my site – I’ve made that clear many times.

        Jose can you see that you are hilarious?

      • José August 3, 2013 at 6:28 am

        ” I believe a lot of builders are going to be wiped out in the next 6 to 9 months or so.” – July 3, 2012

        ” I’ve said before here that I think over leveraged builders are going to get creamed and be a primary reason this market is going to go down shockingly fast” – Aug 29th, 2012

        ” I do believe there will be a large real drop in prices in the 40% range and potentially higher” – Sept 1, 2012

        Just a few of your insightful prognostications Mr. an observer

      • an observer August 3, 2013 at 8:30 am

        Have you seen how many new homes have been sitting on the market for the last year unsold after numerous price drops? Lots of these are now listed at what must be below lot + building cost and still not selling. I know many builders and there is panic in the industry. You also realize that in the 6 to 9 months following my comment in July we had one of the worst periods of real estate sales we have ever seen in the region especially with higher priced and newer homes? Thanks for pointing this out for me!

        Regarding the 40% drop, an intelligent person like yourself should realize that a drop like this does not happen over night. Additionally, you must realize that real pricing (as in “a real drop in prices”) is inflation adjusted so a 25% drop over 6 years is a real drop of roughly 40%. And look at this, on September 1, 2012 you said ” I don’t disagree that a 40% price drop would be out of line at all” LOL! Come on Jose, you’re a bit of a joke.

        Jose, your intentions are transparent and you provide nothing of value to this blog through your comments or the affirming comments of your aliases. Your passive aggressive flip flopping comments are hilarious so at least I can enjoy laughing at you. At least Bull! Bull! Bull! has a real opinion.

        Also, for a blog that you feel has no purpose, you sure do spend a lot of time here telling me this blog is useless:

        “state some of the good news – when it happens. Especially if you want this blog to be taken seriously.”

        “I am questioning the usefulness of this blog”

        “Observer – I guess I was missing the point of the blog”

        “I guess the coffin door on this blog is shut.”

        Wishful thinking!

      • Real Estate Tsunami August 3, 2013 at 8:14 am

        Josef, give it time.
        The best (worst) is yet to come.

      • José August 3, 2013 at 8:34 am

        RET – you may be right. Just how deep we’ll see.

  35. Arnold Shuchat August 2, 2013 at 2:46 pm

    Good afternoon Gents;
    I read something about the “coffin” for this blog. In my mind, if the administrator takes an unbiased view of the market and reports what he/she sees without searching the stats to prove or confirm a hypothesis, your blog can continue indefinitely and will always be an interesting source of information. It should not matter whether there is a blip in the market. Another educated view is always a worthwhile read.
    However, I have wondered about the heavy negative attitude and opinions about our local market. We can discuss the negatives, but what would be more worthwhile would be to discuss a strategy for dealing with a negative view: Is the writer suggesting we all sell now? What if we did already, is there another suggested strategy for investing in the direction of the market in the mean time? Or, do we just wait it out…?
    In the past, I have advised clients to refinance at what I thought was the high around February 2011 and to max out the allowable Home Equity Line of Credit so that it could be employed after a correction for a possible profitable buy. Some of my clients did that.
    I would love to hear some suggestions. Renting could be one, but what about the horizon? Markets do not crash as fast as they frenzy up; it’s human nature not to sell your “losers” but just to take profits on gains. Realizing losses takes market discipline that regular homeowners don’t really exhibit or are concerned with, given that they live there.
    So, how then do we profit from the decline in our local real estate. We can’t buy puts on local real estate. Any suggestions? Would love to hear.

    • an observer August 2, 2013 at 4:01 pm

      Hi Arnold, I’m actually a home owner myself and chose not to sell and rent which may sound odd given my view of the market.

      One thing to consider is that it is very hard to time a top and bottom. If the market drops 30% I would estimate that the average person trying to time the market might benefit 15% – you are rarely going to sell on the peak and buy at the bottom. Additionally, if you are selling with the intention of rebuying something similar at a lower price then you are also adding transactional fees to the equation – PTT when you buy, legal fees, moving fees, commissions, inspections etc. This could be another 7 or 8% quite easily.

      So, with a 30% peak to valley I could make about 7 or 8% in profit. If the peak to valley is 20% then I barely make any profit at all unless I time it perfectly which is not likely. Weighing this against the trouble of moving my family and dealing with landlords and undoubtedly moving to a lesser quality home (not many nice homes for rent at least in the area I live in) I decided to stay. Additionally, the $ impact isn’t that significant for me in my situation. For many people a drop in prices can and will wipe them out. There are other people, particularly elderly people, who live month to month with almost nothing but live in a million dollar home – that is a horrible decision regardless of whether the market is going up, down or sideways.

      My main issue with the real estate market at a macro level is that it my opinion it is destroying the future of this region. The faster this comes down the more likely my kids will have some sort of opportunity here. At a micro level, the individual, it really depends. If you are not a home owner I believe now is a horrible time to buy – with low rates and some big discounts out there this isn’t true for all circumstances but in general if you don’t own now you really shouldn’t buy. If you own a condo / townhouse then you really need to think about selling because you could rent the same place for much, much less. If you own a home then it becomes much more situational – it is tough to time things.

      • Arnold Shuchat August 2, 2013 at 5:48 pm

        With a 25 year amorization period, roughly 50% of every monthly payment over the first 5 years applies to the principal. One would have to expect a decline of more than about 10% from today’s prices to begin to consider the rent vs buy scenario profitably.
        Some scenarios such as condos may work out better with that approach but it is hardly a sure thing now.
        More likely is a long period of more balance. In the mean time, other than a condo, do you want to live in someone else’s neglected house?

  36. Real Estate Tsunami August 2, 2013 at 3:20 pm

    Dear Mr. Shuchat,
    Thank you for your thoughtful remarks.
    When I eventually go back into RE in Richmond, I will certainly contact you.
    In the meantime, after having sold our house in 2010, my wife and I are renting.
    It has been suggested that renting is like buying a put on the RE market in Greater Vancouver, particularily in Richmond where rentals are much lower than ownership costs of comparable properties.
    We calculated that buying an average Townhouse in Richmond (around 600k) would cost us around one thousand more each month than renting our current place, which by the way is assessed at 1.1 million.
    While deep down we’d love to own a place, we just can’t ignore the reality that buying RE is not a good decision in the current environment.

    • Arnold Shuchat August 2, 2013 at 6:09 pm

      Well, I am taken aback! For all the times (which is not really that much) that I have ever been on a blog/board, I have never seen an entry beginning with “Dear” anybody! Too often the blogs have become a pissing contest between competing views, so I tip my hat to you and thank you for your courtesy. I have tried to be realistic about market conditions in my blog as you can attest if you check it out at: http://www.Shuchatgroup.com/Blog.php but what I think people have to learn is that it is quite difficult to make micro decisions about a house using macro opinions about the “general” real estate market.

      Even between neighbourhoods, say in Richmond, there is a huge difference between the price response over the last 2 years. One market neighbourhood may have moved close to 28% while another may have held its own with nary a decline. The trick is to know how to pick the right place that can sustain the general market fluctuations. This is similar to how Vancouver would have been rallying in the past 10 years far beyond other Canadian cities. Drilling down to specific neighbourhoods could have been just the insurance to protect against some of the declines.

      When I came here from Quebec in 1992, I too rented for some 7 years! We got in just in time around 9/11 and never looked back.

      There are two main issues which I see as challenges going forward:
      1. How do we help clients downsize both financially AND physically? Who wants a larger mortgage after 25-30 years of payments? So, many of my clients are staying put….despite the stairs.

      2. Where do we put our children? I am thinking that some of these new condos might be the answer… It is a crazy amount of debt to get into this market, but we need to put them somewhere and I am thinking that many parents will be using some of their equity from the windfall rise in market prices to assist their children to have their own homes…

      On a final note, I am a little choked at the thought of foreign money being stashed in my home market via empty houses and condos. It is unconscionable to allow homes and buildings to sit empty with so many people needing shelter and to have prices artificially driven higher by a demand by wealthy foreign owners to shelter their money from their own governments as opposed to our need to shelter our children…. but this is another conversation!
      .

  37. Real Estate Tsunami August 2, 2013 at 6:53 pm

    Mr. Shuchat.
    The reason why I call you Mr. is because you are using your real name, unlike many realtors who are trolling on this and other “bear blogs” using a moniker.
    I respect that.
    As for your point about vacant houses: V1020445 is now on the market.
    It has been empty for most of the last 4 years.
    IMHO, vacant houses add little economic value and should be taxed at a higher rate.

    • Arnold Shuchat August 2, 2013 at 7:26 pm

      Well, a vacant home on the market for 4 years is indicative of one of the two players in that listing scenario being misguided… they could in fact be the same person! As for using my real name…. my dad taught me that there is nothing more important in the world than having a good name…. so if it’s good, might as well use it!

  38. Real Estate Tsunami August 3, 2013 at 5:37 pm

    Arnold,
    How did your Open House go?

    • Arnold Shuchat August 3, 2013 at 7:47 pm

      Surprisingly, given that it is a long weekend, traffic was consistent throughout the 2 hours from 2-4. 65 people in all representing about 23 different group, in addition to private viewing starting at 1:15 and those who snuck in early. At lease 2-3 groups seemed very interested. So it seemed like a very good day. Huge upside on this property; tks for asking!

    • Arnold Shuchat August 14, 2013 at 11:44 pm

      turns out it proceeded to generate an accepted offer…. just waiting until subject removal… price is still confidential… bottom line is that the buyer will get what I think will have been a very prescient purchase in a few years time and what do you know… it all happened within about less than a week from the listing date!

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