“Person two said that the apparent downturn in sales and values in Vancouver is largely illusionary because it is only real estate at the top end of the spectrum that has slowed, which is artificially skewing the statistics in the mid-range.”

“Last night I was listening to the following discussion about the Vancouver housing market. It went basically like this. Person one said that real estate is coming down in Vancouver. Person two said that the apparent downturn in sales and values in Vancouver is largely illusionary because it is only real estate at the top end of the spectrum that has slowed, which is artificially skewing the statistics in the mid-range, and that homes in the midrange and below are still selling well and have not slowed. Is this accurate? Personally, I was going to say that he was not correct but I did not have the exact statistics to back up my claim. Where are the statistics on each market price segment?”
Mark W at greaterfool.ca on 18 Jan 2013 at 10:25 pm

Not so long ago we heard the reverse argument: that the high end market was special, and resilient to price drops.
Each sector of the market, whether categorized by price range or by geographical area, may take different price trajectories peak to trough. Condos or SFH, Richmond or West Vancouver, Central or Peripheral – price paths will have different shapes.
Regardless, in the end, each sector will have lost very similar large percentages. No subgroup will be spared.
We continue to anticipate 50%-66% drops in real prices peak to trough, across all property types.
– vreaa

36 responses to ““Person two said that the apparent downturn in sales and values in Vancouver is largely illusionary because it is only real estate at the top end of the spectrum that has slowed, which is artificially skewing the statistics in the mid-range.”

  1. I am from Toronto and I wonder about the reality about its RE. There is so much misinformation, and common people of this city need a blog like this one to create a forum of truth and healthy discussion.

    • No worries Archer. Just drop by here. All bubbles are the same.

      • hahaha
        Funny, … and true!
        Just change the names (places, streets, areas, people..), modulate the severity (income and rent ratios) and all this applies to TO.

      • Just out of curiosity, do you get a lot of internet traffic from back East looking for answers, advice and a little salvation, VREAA? Are they coming here to sort out their own markets?

  2. “The community/neighborhood/street/address where I own will never crash.” – virtually all Vancouver homeowners

  3. From the Dec 2012 REBGV report, it’s implied that lower priced properties have dropped more from their peak than higher priced properties. SFH home prices in Vancouver have for the most part not dropped and based on my observations over the past several years, it appears that the middle of the market is holding flat as list prices have continued to move up with the sales/list price ratio moving down slightly. HAM is apparently picking up again but local buyers have had to wind back since the new CMHC rules.

    http://www.rebgv.org/monthly-reports?month=December&year=2012

  4. For SFH on the east side the neighbourhoods I’m watching (main, the drive and mount pleasant) have next to no supply at this time, and prices have not come down much … yet. My recent property assessment on my east side house increased by about four percent over last year, well against the trend in Vancouver. I have long observed the MLS open house listings and when the market was balanced about 12 years ago, there were 250 open houses on the east side each week. When I bought my house in spring 2006, there were 25 to 30 open house listings each week, with every house in a bidding war. Open houses per week on the east side are over 100 per week today, but that is still far short of the level I would associate with a balanced market.
    BTW, in the stock market a bear market has been defined as a decline in excess of 20 percent from the stock market peak, with strong selling pressure. How is a bear market in real estate defined in technical terms?

    • We don’t have any particular thresholds for calling a ‘bear market’.
      You’ll know it when you see it.
      Significant, relentless price weakness; over years.

      The one thing we will say is that a 15% dip and recovery within 6 months is not a ‘bear market’.

    • 1) your property assessment was done July 2012, just before prices began to fall.
      2) average home sale prices tell half the story. What does that buy? If I can buy more for my money, prices have fallen, though the average sale price hasn’t.
      3) average home prices have fallen and are falling. There’s a blog called whispers from the edge of the rain forest or something like that. Documents every day’s average home sale price.
      4) don’t believe a word the news or those with a vested interest say. At best they skew data, at worst they outright lie.

  5. Its true though. Only high end properties in Van west, west Richmond, and West Van are dropping in price at this time. Although all area’s has experienced stalled sales and ridding listings, prices are stable. Let’s see how long this stability lasts for.

    • Real Estate Tsunami

      My research indicates that properties on the lower end are asking below assessment, and the higher end is asking well above assessment.
      Which tells me that the richer folks are in for an nasty reality check.

      • It’s important to note that houses above assessment are still selling at prices above assessment. The spread between the low end and high end continues to increase without interruption.

      • Evidence, please? I know first-hand that high-end Vancouver properties are now selling below assessment.

    • When people have their house for sale 9-12 months without a bite, prices are not stable because if they were these people would’ve sold by then.
      Prices have come down but many sellers didn’t get the memo.

  6. It amazes me that people do not want to have an open mind as to what is happening to Canadian Real Estate. 70% own homes today with the change to Mortgage rules we have lost another 15% of potential buyers, so can one not at least ask the question where will the buyers come from? It is so obvious and if you add to this the boomer demographics which will just add more pressure to an already crippled market how could anyone use the argument that its just the expensive home sales that are skewing the numbers. This so reminds me of a stock going no bid and when that happens fear sets in but unfortunately it is too late for those holding the paper. I had a friend lose $650,000 in his RRSP using the same logic and that is don’t worry it will come back next month.

    • The change in mortgage rules effect local income dependent buyers only. The HAM bid is alive and well.

      • Is that conjecture or based on evidence?

      • Real Estate Tsunami

        Airedales,
        If the HAM bid is alive and well, I believe we’d see it in Ditchmond first.
        Not according to my research. Listings are way up, especially Townhouses. Asking prices are declining. Nothing is selling.
        Show me your evidence and I’ll show you mine.
        Otherwise butt out.

      • I was thinking that the fact sales have declined so sharply (particularly those over one million) is evidence that the so-called HAM buyers are more myth that reality.

        What has happened is that Canadians themselves who represent the majority of first time buyers have been frozen out of the market due to regulatory changes while Canadians who might move up to the 1m dollar plus homes in Vancouver are therefore unable to do so.

        The chill is on domestic buyers.

        The HAM buyers who were supposedly holding up the high end seem to have vanished. We know this because of both the sales crash and large price declines that are being witnessed. Is this situation happening because there was less HAM money participating to begin with or has the message gotten out and they all fled en-masse?

        Capital does not flee opportunity. Declining prices should rope more in.

        Lets think it through. If you have money you are not constrained by regulation, are you? In theory CMHC rule changes, modifications to HELOCs and reductions in the number of years qualifying for CMHC insured mortgages are all changes that impact the purchasing ability of buyers who can not buy low-ratio.

        Do you not need to be a Canadian citizen or landed immigrant to use CMHC? It seems to me that the changes have hit their mark. It is Canadians themselves who are the movers of the market and it is they who have stopped buying.

        HAM talk was just a Red Herring and a sideshow.

      • We’ve always believed that all buyers through the mania have been speculating on future price gains; they have all been momentum investors, local and foreign.
        The mortgage rule changes may have moderated local buyers (limits on properties over $1M; generally less lax lending all round; etc) but the price drops themselves are what’s really going to then put a chill on both local and foreign buyers.
        Momentum speculators hate falling markets, and, in the initial stages of a descent from a multigenerational high, they are absolutely correct to feel that way.
        For the foreseeable future, price drops will beget price drops.

      • Real Estate Tsunami

        Farmer, agree if we talk about Canada as a whole.
        Don’t agree if we talk about Lower Mainland.

      • Tsunami – the Ditch is dead to HAM after the Japanese earthquake. They’ve simply moved to higher ground. My evidence is only second hand from general conversations with folks that make their living off of HAM investment / immigration to Vancouver/Canada. It seems to line up well with my own experience and observation.

        Even here in Calgary, for instance, why would so many more inner-city properties be listed with Sotheby’s these days. What percent of local buyers can afford to pay over half million for the lot and then build a million dollar home when Alberta oil and nat gas has hit the skids and everybody I know is selling down to pocket cash? It is what it is.

      • Townhouses? HAM doesn’t buy no stinkin’ townhouses!

      • Real Estate Tsunami

        Airedales,
        Glad you agree with me on Richmond.
        I think Vancouver West will go the same way.
        What do you think?

      • Which is why the Richmond market has suffered the worst drop in total sales of any district right?

      • Tsunami – there’s no doubt that westside prices will evenutally drop when China enters it’s own credit crisis and the flow of HAM moves to a trickle but the spread between westside and eastside will continue to go up unless full-fledged socialism breaks out in Canada.

  7. Many units for sale are, in real terms, for sale well below their peaks. The headline price drops are mostly off areas that had gone gonzo since 2010, the reality for many is their equity is barely treading water. If 2013 turns out to be worse than 2010, that will put a whole schwackload of people into negative nominal returns (based on purchase price), possibly dating back to 2007 (which would encompass six years of buying activity).

    Just saying, in terms of the vintage of an elusive “soft landing”, I think we’re closer to the ten year waypoint than zero.

  8. Talking to a friend of mine the other day, commenting on how he lucked out by selling at the right time in 2011, on the west side, before the slowdown. He’s like, I didn’t sell in 2011, but in 2012, and got approx $300k less!!

  9. …”We continue to anticipate 50%-66% drops in real prices peak to trough, across all property types.”

    Try 90% – if you own a SoundStage…

    “This is the most serious situation I think that we’ve faced in the 25 years that I’ve been in the business.” – Peter Leitch, Chair Motion Picture Production Industry Association of British Columbia and President North Shore Studios and Mammoth Studios.

    [G&M] – The Fight To Salvage BC’s Film Industry

    …”Some insist the rate of unemployment in the industry locally has reached, or is about to reach, 90 per cent. “If you say there are between 24,000 to 25,000 people who are directly in this industry ranging from every department …, well there’s enough shows right now on the books to support about 1,000 to 1,500 people employed,” says Markowitz. “So if you do the math, it works out to we’re over 90 per cent unemployed right now.”

    Anecdotally, there are many stories such as Cleary’s. Despite his track record and 32 years of experience on franchises such as X-Men and Fantastic Four, he had three weeks of work in B.C. last year, on a pilot that ended up leaving town and shooting elsewhere.”…

    http://tinyurl.com/b46erun

  10. ooopsie! Curses! RoboRedaktor strikes again (right here, ED).

  11. Show me a position and I’ll find you stats to back it up.
    There’s only one true unbiases FACT. The Case-Shiller index or Teranet. (matched sales pairs). Anything else is just STATS.

  12. Just talked to my mom and her friend has been trying to sell their 1500sq foot apartment at Marketsquare for $600K+, has been on the market for over 6 months and only has ONE view in the last 6 months.

    • We are hearing more and more stories like this all the time. Whereas before everyone knew somebody who struck it rich with a bidding war on their property, now we are only hearing about folks who are stuck and can’t get out.

  13. Still lots of free money being handed out:
    http://www.yorksoncreek.com/10000-bonus/

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