Graphic – Degrees of Housing Overvaluation in Canada


– forwarded to vreaa via e-mail by ‘B’, 13 Apr 2013; original source of graphic as yet unknown to us.

29 responses to “Graphic – Degrees of Housing Overvaluation in Canada

    • UBCghettodweller

      Old detached homes in East Van, Richmond and Burnaby are supposedly going for $0.7M to $0.9M right now. Dropping them to the $0.4M – $0.5M range would put them in the Vancouver-premium-but-not-totally-insane-range.

      At the same time, consider what a half-million dollars will buy you in relatively nearby Seattle, Portland or even petroleum fuelled Calgary. You still can do the skiing/hiking/outdoorsy stuff AND afford your Gore-texed gear to go with it.

      … But hey, I’m preaching to the choir here.

      • LadyInWaiting

        Re-posting this question. I am curious about sales data broken out by price-point. I am seeing fairly modest drops in price and sales activity in the <$1 million market. Could some of the disagreements regarding market trends stem from RE activity that differs by price range. I think the forces that are acting might be different? Any thoughts? Anybody broken MLS or other data up by price category to see if price/volume response varies?

      • UBCghettodweller

        LadyInWaiting, excellent question.

        On my semi-daily runs I’ve noticed that houses in the premium communities on the Westside of Vancouver (i.e. Point Grey, Kerrisdale, Shaughnessy) just aren’t selling. There’s several intersections where you can stand and see five or six “for sale signs” in all compass directions, and none of those houses have moved in the last six months. I’m thinking that those ones represent places where the seller just won’t budge on price and the price is current above market trends. Because those sales aren’t happening, the apparent sale prices haven’t shifted much. This is probably why many observers look to months-of-inventory. Interestingly, there’s been a few houses where I’ve seen them re-listed with no less than three different agents at this time. I wonder how that affects the MOI calculations and new/expired listings number.

      • I cannot disagree that overall regional sales are very slow. While some areas will be stronger than others the overall picture is what I look at. The region is too interconnected to separate sales at price points and sub-regions and consider them in vacuums

      • bailinginbc

        Lady in Waiting- I’m not sure if this is the data that you are looking for but I find it very useful. The second page of each area gives a table that lists how many sales were made in each price range and whether they were attached, detached etc.

    • -44% Canada-wide…

      … while Vancouver keeps going up.

  1. 4SlicesofCheese

    I am assuming this is for Canada wide?

  2. I notice many analyses with a low figure, 10-20%, ignore possible second order effects from a mean reversion in the historic highs of housing to GDP and housing to employment. They also ignore the surplus of units built over the last decade versus household formation.

    The surplus probably wouldn’t be an issue except for the fact that so many are employed in construction industry!

    • Lifetime Renter

      Exactly and I would add other secondary effects. A collapse in spending based on appreciating property values, i.e. based on access to debt in the form of HELOC’s and a false sense of being wealthy. This collapse leads to unemployment and underemployment in retail and wholesale and transportation businesses. I remember travelling through the western U.S. by car in 2010 and seeing the results of that collapse in empty and near empty malls and boarded up storefronts in cities large and small. And later there is another secondary factor in the form of austerity imposed by governments. These all add to the decline in the demand for housing and an increase in those desperate to sell.

      • UBCghettodweller

        There still are a notable number of strip malls that are completely shut down in WA and OR these days. And I agree that it didn’t seem to be particular to large or small cities.

  3. 4SlicesofCheese

    The lower the correction prediction, the more biased the source, the more influence they have on the general public. Bizarro world.

  4. @LadyInWaiting – The market I look at the most, East Vancouver there is not nearly the inventory of other areas. Back in 2001, which is believed by many to be in the era of the balanced market there were about 250 – 300 open houses listed online with MLS. In 2006 when I bought my house, it was about 25 – 35 per week and every house went to a bidding war. In recent weeks the number of listings has gone back over 200 per week, and the trend is that inventory is clearly increasing.
    Well priced homes < 1 million in the Main, Mt Pleasand and Grandview areas are still selling well within one month of listing, so there still isn't a ton of choice out there for the buyers in these neighbourhoods. I don't watch condos very closely, but they are a much tougher sell already. I would like to see MOI broken down by neighbourhood and housing type which would highlight these differences.

    • LadyInWaiting

      Thanks all for the thoughts. My impression is that the higher priced areas and luxury homes are taking the largest hit, while there still seems to be plenty of activity (on fairly few decent listings) in the lower price ranges and in specific areas (e.g., East Van). I am getting the overall picture from VREAA and other sources, but it is confusing when you see different responses by area and price point. I am in the middle of this as a new arrival to Vancouver and, although the general trend seems clear, there is a lot of short-term variability in RE activity (by area and in the especially “lower” priced SFH market).

  5. LadyInWaiting

    Regarding the analysis of RE data by price or sub-region, buyers are fairly restricted by price (and hence by area) and so considering sub-analyses seems warranted, if only for short-term insight. I agree long-term there will be more consistent results. Though–full disclosure–I am a rookie.

  6. Vancouver, world class, cultural mecca:

  7. Seeking Knowledge...

    If you build it, they may not come:
    Seeing all the construction in Vancouver and Richmond, it does make you wonder. But this will never happen in the BPOE.

  8. anyone watching the stock market this morning? Gold has dropped considerably… so has oil, copper. All those things that has made Canada rich….

    • Ralph Cramdown

      Sooo last century. This year’s hot items are yoga pants, strip malls, smart phones and tee shirts. 🙂

      • gold fingerer

        what a wipe out… gold down how much the last two trading days? Mines will shut real fast at this rate. That will put Capex on full stop…


    Detailed analysis by neighbourhood.

  10. Is it any surprise where Royal Le Page stands. Their logic however can be applied to every market so there is no such thing as an overvalued market.

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