Category Archives: 09. Delaying Buying

Folks who could somehow buy now, but have decided to wait in the hope of price drops.

Renter Buys In West Van – “For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted. There is some value in staying in one place.”

“I am currently renting in West Van. It has been difficult to find decent, “affordable” rental accommodation on the North Shore. For a few hundred more per month, you could own the place. Which is what I will be doing as my offer for a place down the street has been accepted.
Went for 23% below the list price. Owner been in the place for 11 years, and over that time, the value of the property increased on average 5% a year. I negotiated hard, walked away twice, and eventually the seller caved, just like I knew he would.
I’ve been renting for 5 years now, ever since a health crisis with one of my young children moved me back here. I was the bear amongst all my peers who are all “owning”. I still think there will be a crash in the Lower Mainland – but I think it will be an uneven crash. Certain areas will crash worse than others. I don’t think the entry level house market in West Van will crash. I think it will take a 10-15% drop and then move sideways or at inflation for a generation.
There is some value in staying in one place.”

– chumpy le chump at VREAA, 2 Jun 2013 4:36pm

All the best with your purchase, chumpy.
Does the “few hundred more per month” include all expenses (and assume no downpayment?). Share the math if you care to.
That’s 70% increase over 11 years (5% p.a. compounded)? Is that representative of the price increases on similar properties?
As we’ve said before, we expect all property types to revert to long term means; we don’t expect any to somehow be exempt.
– vreaa

The Rare Individual With A Negative Ownership Premium

“I love moving. The longest I’ve ever lived in one apartment is 3 years. I usually move every year or two. Sometimes I move after only a few months. Some of my moves have been because I was renovicted by the landlord. Sometimes I move because the landlord never does repairs and I am sick of taking him to the RTB. But even if there are no problems with the apartment, I’ll start thinking about moving after one year. After two years in the same apartment, I start getting really antsy to move. Real estate bubble aside, I could never buy real estate because I could never commit to live somewhere long term. I don’t really understand how people do it? Don’t they get bored with their homes after a few years? Don’t they get tired of looking at the same view every day for years on end?”
perma-renter at VCI January 22nd, 2013 at 4:31 pm

Kits Notes – “I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen in the 5 years I’ve lived here that is priced below $700K.”

James writes [via e-mail to VREAA, 12 and 14 Mar 2013]:
“A couple of properties that I’ve been watching in my neighborhood with interest...

Unit #1 2482 W 8th Ave; 1132sqft; Ask $699K
Granted this is a garden suite (but a nice one at that), I’m pretty sure that this is the first 3+ bedroom property of any type that I’ve seen since I’ve lived here (5 years) priced below the 700K mark in Kits. MLS blurb states: “NO HST & PRICED $146K BELOW ASSESSED VALUE!”

Nov 2012 list price: $810K
Dec – price reduced: $799K
Today’s price: $699K -> -14% in 4 months! ouch!”

“Two other units in the same heritage-tear-down-and-subdivide Kits special..

Unit #2 2488 W 8th Ave; 1331 sqft; Ask $899K
This one is great because it’s a 2 bedroom and yet priced at a full $200K above the one above…but still “PRICED $106K BELOW ASSESSED VALUE & NO HST!”

Previous list price: $950K -> I wasn’t able to find a date on this…
Current list: $899K
Price Reduction: -5.4% in 4 months. Though I bet any money that the $950K price was an interim price drop given the obvious desperation on the other units.”

“Third still listed on one site but not which means that some poor sucker paid too much money or they are in the process of relisting it:

kits row houses
Unit #3 2486 W 8th Ave; 1197sqft; Ask $950K
3 bedrooms but $250K more than the “garden suite”. “PRICED $79K BELOW ASSESSED VALUE & NO HST!”

La piece de resistance as they say.
Previous list price November: $1,050,000 (!)
Dec price reduction: $998,000
End of Feb price reduction: $950K
-9.5% haircut on a property that the city has deemed to be worth $1,030,000.
If it did sell, I would bet money it was NOT at $950K and therefore was probably -10% below assessed value at the time of sale. I’m sure all the other people on that street that are trying to sell , and there are a number of them, are not thrilled with this…”

“So, total $110K + $100K + $50K = $260K of assumed profit vaporized in 4 MONTHS.
Further, I managed to stumble across cached web pages with original purchase price of the property that was sold in May 2008 and subsequently torn down and replaced with the 3 “heritage style” Kits units above.
The original house looks like it was sold back in 2008 for $1.388M. Here it was then:

2486 w 8th 1.388M 2008

“I’m certainly not well versed in what it would cost to tear down to the foundations and then some, rebuild, subdivide and then flip a ~4K sq ft home like this, but an educated guess would be somewhere around ~$2-2.3M total for the 3 units once it’s all said and done including costs to sell each unit.
For the original list prices that WOULD have worked out to ~$500K profit. I didn’t consider cost of carrying the original mortgage since I’m not sure how these things work for developers, but 5 years of interest would be significant on a $1M+ mortgage.
Current list prices that profit drops to ~$200K.
And that’s with an assumed 1 out of 3 units sold and the nicest unit at that. No wonder they are getting desperate.”

Thanks to James for the above info and thoughts.
Anybody else got ideas on the math on a development such as this? -vreaa

Vancouver RE Crash On Track

Expected weakness continues, sales remain low. Things are playing out as we’d anticipate. Very significant price drops to come (all in all, 50% to 66%, peak to trough). :

“The flicker of optimism that sparked in Canada’s housing market when January sales outpaced December’s has died out, erased by a notable drop in February.
Last month’s declines were significant enough to prompt the Canadian Real Estate Association (CREA) to cut its sales outlook for 2013 on Friday for the third time since last summer. …
“Vancouver remains the clear weak spot, with sales down a seasonally adjusted 9.8 per cent in February and 29.2 per cent in the past year,” Bank of Montreal economist Robert Kavcic wrote in a research note.But some feel that much of Vancouver’s weakness has played out.”
[hahaha -ed.]
– from ‘Clouds gather over Canadian housing market’, Globe and Mail, 15 Mar 2013

“The average MLS residential price in BC was $514,134 … down 8.1 per cent from a year ago.”BCREA news release 14 Mar 2013

“I’m seeing big increases in New West, North Van, Burnaby SFH listings. Historical highs for this time of year. VW has stalled out; VE puttering along. Condos downtown nothing special on the inventory side. I don’t know what all that means except that our little crashlet is *not* a “Van has too many condos; it’s just condos; houses are safe from all this” thing. It is in fact inventory growth and sales declines are mostly a SFH thing, from what I see.” [price declines will effect all sub-sectors of the market. -ed.]
VHB at VCI 15 Mar 2013 12:22pm

RE Inventory Chart130313
chart care of b5baxter at

“The ratio of Canadian household debt to disposable income rose to another record last quarter, calling into question Bank of Canada Governor Mark Carney’s assertion that families are listening to his warnings about the risks of borrowing too much.
Credit-market debt such as mortgages rose to 165.0 percent of disposable income, compared with 164.7 percent in the prior three-month period, Statistics Canada said today in Ottawa.
In his previous two policy statements, Carney weakened language about the need to raise the central bank’s 1 percent policy interest rate, partly on evidence a housing boom was slowing and consumer debt burdens are stabilizing. Finance Minister Jim Flaherty tightened mortgage rules in July on concern some regional housing markets were overheating.
National net worth rose 1 percent to C$6.87 trillion ($6.73 trillion) in the fourth quarter, Statistics Canada said. On a per capita basis the increase was to C$195,900 from C$194,300.”
[Watch the per capita net-worth plunge with RE prices over coming years. -ed]
– from ‘Canadian Household Debt-to-Income Ratio Rises to Record 165%’, Bloomberg, 15 Mar 2013

“Global TV just ran two RE spots (within an hour of each other) on this morning’s news featuring Joannah Connolly, editor of the highly acclaimed BIV and holder of a BA in Eng Lit.
In segment one, she commented on the 0.1% rise in the Cdn new HPI (for Jan) and implied the housing market had “reversed a downtrend”. She also mentioned the Cdn$ and how “it rose five cents” yesterday. How sad. Colorful, animated bar graphs (a la CNBC) were used in the presentation to drive home the point that home prices are still way higher than they were in 2009. The year 2012 was conveniently omitted from graph #1 so as to mislead the public into believing the upward trajectory is still intact. graph #2 was equally laughable with price chg’s in Vanc, Vic, Wpg and Cda average all appearing to be gains with upward pointing bars.
In segment two, she talked about how hot the commercial RE was, that land was in limited supply and that investors were “snapping up anything and everything”.

– from bullwhip29 at VCI 15 Mar 2013 9:55am

BTW, they changed the headline of the Tara Perkins article in the Globe from this…
Real estate market outlook cools as home sales plunge
To this…
Clouds gather over Canadian housing market
There….that’s better.”

– from kabloona at VCI 15 Mar 2013 11:01pm

“BC home sales continued at a modest pace in February,” said Cameron Muir, BCREA Chief Economist. “Despite improved affordability, many potential buyers and sellers remain in a holding pattern. With pent up demand now becoming latent in the market, it’s not a matter of if, but when home sales rise above their current pace.”
BCREA news release 14 Mar 2013

First Time Buyers – “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

“The biggest challenge I face is affordability,” said Dustin Strong, a 34-year-old Vancouver renter looking for a home in the $500,000 range. “I have spent several years saving up enough for a reasonable down payment, but have now determined that in the current market, it just makes more sense to rent.”

When the Globe and Mail asked readers in an online poll whether Ottawa should make it easier for first-time buyers to enter the real estate market, only 40 per cent of the nearly 2,500 respondents said yes, first-time buyers deserve a break.
“First-time buyers have all-time low rates, realistic 25-year terms, and minimum 5-per-cent down payments,” one reader wrote in our comments section. “If they can’t afford it, then the prices are too high. The hurdle is low enough for Canadians.”

Market uncertainty and bubble-talk are also holding buyers back, said James Ellis, a 26-year-old looking for a house in Kingston, Ont., with a $250,000 budget. His biggest challenge, he said, is “determining if the value of a house now is inflated or not, and whether resale value in a few years will reflect the current value once the housing market equalizes.”
“Our main challenge is beating the fear of home prices falling on us,” added Joseph, a 28-year-old looking for a detached house in Calgary. “That is what has kept us renting.”

– from ‘What first-time buyers really need: affordable housing prices’, Dianne Nice, Globe and Mail, 12 Mar 2013

There is absolutely no reason that anybody anywhere in Canada should be rushing to overextend themselves into RE, least of all First Time Buyers, and especially in Vancouver.
Prices are headed down.
Interesting statement from Joseph in Calgary: Instead of fearing being priced out, he is fearing buying and having prices drop.. this represents a change.
– vreaa

Realtor Tries To Sell Own Home But Can’t – “Buyers are very skeptical, very hesitant because they think prices may go down.”

Hoda Seraji is experiencing Vancouver’s housing slowdown firsthand. A real estate agent, she took her own family’s two- story house in Canada’s third-largest city off the market after failing to get a single bite for the C$2.39 million home overlooking the Pacific. Cutting the price for the five-bedroom, four-bathroom residence didn’t help.
“Buyers are very skeptical, very hesitant because they think prices may go down,” she says.
Seraji blames fading interest from foreign investors, especially in China. Changes to Canada’s mortgage rules designed to cool the market have accelerated the sales drop, she says.

– from ‘Canada Losing Debt Halo as Bull Market Housing Peaks With Carney’, Bloomberg, 26 Feb 2013 [hat-tip Nemesis]

Agreed, “buyers are hesitant because they anticipate prices are going to drop”.
The problem is not with the buyers, but with prices that are still very, very overinflated.
What was that “C$2.39 million home” selling for just ten years ago? Less than $500K, most likely.
Because of the very large speculative component to price in Vancouver, price drops will not draw in demand, but rather beget further drops.
– vreaa

“Where in the world would you pay $888,000 to live in this beauty?”


242 E 48th Ave, East Vancouver
2619 sqft
[really? -ed] Old-timer SFH, 33×140 lot
For Sale: Ask price $888,000

MLS®: V988743. Blurb: ‘Amazing property including legal basement suite. Some updating to electrical, and plumbing. Over 2600 sq ft of living space. Some hardwood floors, wood burning fireplace, newer deck, garage, 9 bedrooms [surely not! -ed.], 5 baths on 3 levels. ***close to all amenities and all levels of school including Langara College. All these on a great southern exposed, oversized lot. Well Priced,ASSESSED VALUE $865K.GREAT INVESTMENT WITH REVENUE POTENTIAL****NEEDS A LITTLE TLC’

Hat-tip to ‘Pretzels…thirsty’ for popping this example up in a recent thread and who added: “I think there should be an open web survey for this.
“Where in the world would you pay $888,000 to live in this beauty?”

This entire house looks like a bad basement.
One can only imagine the threat to one’s morale if you ended up an occupant of one of those 9 bedrooms.
– vreaa

South China Morning Post Headlines MAC Marketing Deceit – “Bogus Buyers”; “Scam”; “Teetering Market”; “Steadily Falling Prices”.

Supposed homebuyers Chris and Amanda Lee were exposed as employees of MAC Marketing Solutions in Vancouver [image and caption accompanying the SCMP article]

“A senior executive at a Vancouver marketing firm was forced to resign after employees of the company were caught posing as the daughters of rich Chinese property buyers in interviews with TV reporters.
The deception was intended to create the impression that Chinese buyers were still queuing up to buy into Vancouver’s teetering real estate market, which has long been fuelled by money from China and is now rated as the second least-affordable city in the world, behind Hong Kong, according to the Demographia consultancy.”

“The scandal erupted after a series of news reports this month, sourced to MAC Marketing, suggested that an influx of Chinese buyers would give the Vancouver property market a boost over the Lunar New Year period. That would have been in contrast to statistics from the local real estate board showing that prices have been steadily falling in Vancouver for the past eight months.”

“TV news crews at an open house for the new Maddox apartments in downtown Vancouver on February 9 were introduced to two buyers supposedly from China to support the notion of a Lunar New Year boost, who identified themselves as sisters Chris and Amanda Lee. In an interview with CTV, Chris Lee said: “I’m from China, and that is my sister, Amanda. So, we are looking for a place together.”
She told the reporter their parents were visiting Vancouver for Lunar New Year and were bankrolling the sisters’ purchase of an apartment. “So, if we like this place, we have to tell them and they make the decision. Yes, really, Chinese people like to buy at this time [Lunar New Year].”
A similar story was carried by CBC, featuring Chinese house hunters Chris and Amanda Lee.
Two days earlier, a story predicting a Lunar New Year boost in property sales was carried by The Vancouver Sun newspaper, quoting McNeill.
However, an anonymous local real estate blogger known as the Rainforest Whisperer last week questioned whether the sisters were authentic Chinese buyers, after another internet posting showed that an “Amanda Lee” worked for MAC on the Maddox project.”

“MAC was eventually forced to admit that both the “Lee sisters” were its employees, and that they weren’t even sisters. MAC hasn’t revealed the true identity of “Chris Lee”.
“We regret we did not do a better job at ensuring full transparency with those interviewed and apologise for any misunderstanding this may have caused,” MAC said last week.
McNeill told the newspaper : “I don’t know if it was an overzealous employee or if this happened in a formalised way.”
In announcing the resignation on Wednesday, McNeill refused to reveal the identity of the executive who quit.
“McNeill owes an explanation to the media [whom MAC duped], to the broader real estate community [whose reputation MAC has irrevocably damaged], and to the general public [the ultimate targets of this fraud],” the Rainforest Whisperer wrote.”

“The average price of a detached house in the core district of Vancouver West topped out at C$2.25 million (HK$17.13 million) last May. It has since fallen by more than 11 per cent.”

– from ‘Bogus buyers exposed in scam to boost property market in Vancouver’, South China Morning Post, 22 Feb 2013 [hat tip to numerous readers who alerted us to this via comments or e-mails]

The SCMP article carries some big messages, regardless of veracity:
1. The Vancouver RE market is falling.
2. Sellers are desperate enough to attempt subterfuge.
3. Buyer beware (moreso than usual).
This fiasco is turning out to be a spectacular back-fire for MAC Marketing and will quite probably have deleterious effects on the entire Vancouver RE industry.
Ongoing kudos to Whisperer for detecting the blatant deceit.
Regular readers know that we have always maintained that off-shore buyers of Vancouver RE, along with the vast majority of local buyers, have been buying on the premise of ever rising prices.
Now news is getting out that prices are falling.
And the knowledge of the seller desperation implied by this marketing deceit could have a more profound negative effect on buyer sentiment than any of us had initially guessed.
Do you see why we maintain that falling prices will beget falling prices?
– vreaa

Original story covered here:
CTV TV News Featured ‘Condo Buyers’ Actually Marketers Of Very Same Condos!
VREAA 13 Feb 2013

“Just came back from Miami. Quite shocked when I saw ok-looking houses go for $150K-$300K. I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently.”

“Just came back from Miami, Florida, I was quite shocked when I saw ok-looking houses in Coral Gables that resembled what you see Commercial Dr to go for $150K-$300K. It’s 30 C degrees in February, city is not as nearly congested as Vancovuer is (hello North Shore), and in all honesty, there were much less signs of homelessness and poverty that you’ll see in your average lower mainland neighbourhood. … I used to be the kind of guy who would not stop talking about BPOE, but my mindset has definitely changed recently…”
Knight at VREAA 22 Feb 2013 9:02am

Thanks, Knight, for the story. If you like, tell us more about the mindset change.
Why should it change now? First time in Miami? Traveling changed your perspective? Economic comparisons?
Or something changing for you here in Vancouver? Has the stalling market influenced you?
– vreaa

New High – “Inventory is now at the highest point it has been in the last 8 years for this time of year.”

RE Inventory Chart130221

“Inventory is now at the highest point it has been in the last 8 years for this time of year.”
– chart and observation care of b5baxter at 21 Feb 2013, created with numbers from PaulB.

“These things are obvious when viewed from the outside.”

“Had a nice talk with a doctor department head tonight. He moved here from Chicago where he’s still paying the mortgage on an underwater property. He looks at the prices here and he can see that it doesn’t add up. He was wondering when the tipping point would come for Vancouver. In any case, he has no intention of buying here for now. These things are obvious when viewed from the outside.”
N at VCI February 8th, 2013 at 12:18 am

When a group is trapped in the jaws of an asset bubble, the vast majority of participants don’t have the capacity to ‘view’ it ‘from the outside’.
With perspective, the speculative mania can be seen very clearly for what it is.
– vreaa

“Our landlords are booting us out. My wife has been onside until now, but with the threat of homelessness she’s wavering. I feel that buying now is akin to climbing out of the lifeboat and back onto the Titanic.”

“Our landlords are booting us out of the house we’ve been in for 5 years. (She’s divorcing him and booted him out, and we’re next down the eviction chain as he’s moving in when our lease expires in a few months.) So we’re desperately looking for rentals in the same neighbourhood (Cambie) due to schools and work. Or we’ll buy somewhere like North Van and uproot everyone but only once.
After being around these boards for 5+ years I feel that buying now is akin to climbing out of the lifeboat and back onto the Titanic. The wife has been onside until now, but with the threat of homelessness she’s wavering. So I’m trying to decide how big the potential downsides are. Pay $3k in rent for 1-2 years then buy (and deal with 2 moves) or bite the bullet and buy now and pay that much for the mortgage (until rates go up). The potential savings by renting and delaying a purchase is what I’m trying to estimate.”

/dev/null at VCI 22 Jan 2013 11:21am

“Sorry to hear that. Here is my view. We (a family with 2 kids) are renting half-a-duplex in Burnaby for $2000/month for about 5 years. Good area, decent schools, commute is ok. The landlord is a nice person, but has (and always had) thoughts about splitting the place into two units and rent them for $1500+$800 (this trick worked for a while for the neighbour landlord, until last year when they have started having problems with finding good tenants for the downstairs unit). I am tracking the rental pool in the area pretty closely and found that a lot of 5bdr/SFH in the $2300-$2500/month range entered the market last year (starting late summer I would say, most of them accidental landlords). Places like ours are steady in the $1800-$2100 range for the last 5 years, and the influx of of those 2300-2500 homes definitely helps keep those prices from growing.
Last fall, I had a number of conversations with my landlords and gave them the full picture, mentioning that we would have no problem finding something decent in the very same area. Of course, we were perfect tenants all these years. Apparently, it worked out, everybody seems to be happy now.
Back to your situation. First, I think buying something just because “we have to move out of here anyways” is a plain bad idea. Do the math and then decide. Second, I personally wouldn’t mind renting for another few years in your situation, even if it comes at a bit higher price comparing to the deal you have now. Rental pool in our (yours and mine) sector is improving, it’s renter’s market.
Yes, I know moving is painful. I know your wife wants a nest (mine too). Yes, – peer/parent pressure, accidental landlord risks etc. But the risk of losing money by buying something is just way too high these days. My $0.02.”

C.Junta at VCI 22 Jan 2013 12:51pm

Great analogy from /dev/null.
Whether you’re on the Titanic or in a lifeboat, the speculative mania is at the very least time-consuming, inconvenient, anxiety-provoking, and distracting.
– vreaa

Matthew Klippenstein Looks Back On Being A Vancouver RE Bear Since 2006 – “Although he and his wife earn well above the average household income in Vancouver, they’ve decided to continue renting.”

“This might be of interest to readers; as a Burnaby-ite (and way-premature housing bear) I noted the Canadian housing and debt situations in the first article I wrote for Green Car Reports about electric cars in Canada. [excerpt below]
I don’t want to throw the blog off-topic, but figured the link might be of mild amusement. I guess the older 2006 MacLean’s article reference might qualify under your “delaying buying” category. And if you had one, “premature calls of the top”. 🙂
– Matthew Klippenstein, via e-mail to vreaa, 22 Jan 2013

Is that a housing bubble? A January 2013 cover story in Canada’s national newsmagazine MacLean’s argues that the housing market has become a popping bubble. While the U.S. housing bubble peaked in 2006, Canadian real estate peaked in spring 2012, with household debt reaching levels seen in America at the peak of the U.S. housing market. If Canadian consumers pay down their debt in coming years, the higher up-front costs of electric cars might stifle sales, even relative to 2012. (Full disclosure: the author was quoted in the above-linked magazine seven years ago arguing house prices were a bubble back then. He and his wife used the money saved by renting to purchase their plug-in Prius last fall.)”
‘Plug-In Electric Car Sales In Canada: A 2012 Review’, Matthew Klippenstein, Green Car Reports, 21 Jan 2012

“Every day Matthew Klippenstein, a 30-year-old fuel-cell engineer, goes online to wait for the sky to fall on the housing market. “House prices make me angry,” he says. Although he and his wife earn well above the average household income in Vancouver, they’ve decided to continue renting. “We’d rather be able to enjoy our lives and be able to afford to have kids.”
Klippenstein watches local housing prices on the site RealtyLink. He feels prices are inflated, and bases this view on information he’s gleaned from blogs forecasting a drop, and on the logic of Canadian financial gurus like Eric Sprott. … Klippenstein thinks the market will correct itself in the next 18 months. “When the bubble bursts,” he says, “there will be a lot of people who got swept up in a speculative fever, who’ll lose a lot of money.”

– from ‘Bubble, bubble, toil and trouble’, Kevin Chong, Macleans, 29 May 2006 [yes, two thousand and SIX – ed.]

“Life has worked out very well. I’ve learned to laugh at myself. 😉
We do still rent (the money saved did after all help us get a plug-in car!) and most importantly, are content to do so. Planning to move in the next year or two, since our place is getting a bit small with the three of us. Though admittedly, the problem is more than likely “too much baby stuff” than “not enough square feet”. Timing will somewhat depend on how fast and far the market falls.”

– Matthew Klippenstein, via follow-up e-mail to vreaa, 23 Jan 2013

Thanks for all this, Matthew.
Vancouver was indeed already locked in the jaws of a speculative mania in real estate by 2006.
Earlier, actually.
– vreaa

Matthew Klippenstein blogs at ‘Eclectic Lip‘.

“I was approved for about 420k in the spring I only made a little more than 50k last year. I looked at a few condos in Vancouver and decided to keep renting.”

“I was approved for about 420k in the spring I only made a little more than 50k last year. I looked at a few condos in Vancouver and decided to keep renting.
I sold my house on Vancouver island for about 40% over assessment also about 20k more than I thought it was worth. I don’t know if a human came to appraise it.
My experience of the past year from looking at condos to selling a home and getting pre-approved I see so many holes in our system.”

Funky Monkey at VREAA 23 Dec 2012 9:27am

BC Realtors Predict ‘Unsexy’ Market – “Over the next year or so we expect price changes to hover around zero”; “Price increases of the last decade are long gone”

Announcer: “There hasn’t been a crash, thankfully, but Ottawa, and the Bank of Canada, are desperate to raise interest rates once the economy improves. Economists are expecting rates to start inching upwards by late 2014, meaning that the price increases of the last decade are long gone.”

Cameron Muir, BC Real Estate Association economist: “We expect the market in Vancouver is going to be unsexy over the next year or so… uh, uh, long term trend sales activity… prices… probably pretty flat, we expect prices to stay.. hover around zero… percent or two on [inaudible] side.. depending on what community or neighbourhood you’re in.”

– from Global News 19th or 20th Dec 2012 [video archived by GreenhornRET; hat-tip El Ninja]

Next year will likely see the first very clear declaration of substantial price weakness in Vancouver RE.
Yes, we’ve already seen some price drops, but the numbers are not very remarkable (1%, 4%, 7%), and have been easily hidden in reporting. They certainly haven’t yet pervaded group consciousness.
Realtor association predictions tend to (1) extrapolate recent activity and (2) err on the side of optimism. These calls for a flat market are precisely that, and we are close to certain that they will be proven wrong.
It is noteworthy that even Global sees enough evidence to state plainly “the price increases of the last decade are long gone”.

I’d submit that the use of the word ‘unsexy’ is likely an unconscious attempt at delivering a sobering idea in a playful fashion, in the hope that it makes it somehow more palatable.

As an aside, consider these reports from the perspective of our recently discussed (mythical) ‘Discretionary Seller’. If you had already decided that you’d like to sell, and either had your property on the market, or had taken it off awaiting a strong spring, how would you feel about these predictions? What would you tend to want to now do? Those who reply: “Put another log on the fire and wait for a strong market (in 2014? 2015?)”, back of the class.

– vreaa

Bids All Insultingly Low So Taken Off Market – “We will just wait until the spring when the markets come back and we will get a higher price.”

“True story. Ran into neighbour. She just took her place off the market. It has been constant open houses. She told me the bids were all coming in too low. She was very insulted that people would bid so low. So she took it off the market because she “will just wait until the spring when the markets come back and she will get a higher price”. I didn’t say a word.”
Girlbear at VCI December 5th, 2012 12:27 pm

Overheard On Robson – “They were talking about how prices had dropped. One said she was looking to buy, and was weighing up whether this would be a good time to do so.”

“My wife was walking on Robson Street last week. She doesn’t look out for this kind of thing as much as I do, but she couldn’t help overhearing two women, aged about 30, dressed smartly, talking about RE. They were talking about how prices had dropped. One said she was looking to buy, and was weighing up whether this would be a good time to do so.”
– via e-mail from westsidefrank, 17 Dec 2012

The Myth Of The Cool-Headed Discretionary Seller – “I think that’s one of the reasons why the Canadian housing market is likely not going to have a hard landing because you’re not going to have a lot of motivated sellers – people aren’t going to be forced into it by rising interest rates or declining employment so they can take their time and wait for the market to stabilize.”

Seller’s aren’t competing with buyers, they’re competing with other sellers.

Vancouver sales dropped 27.6 per cent in November compared with November 2011, after tighter lending rules came into force this summer. The average price is down 6.3 per cent for the same period to $682,215, while the MLS home price index is down 1.7 per cent from a year ago. The average price reflects the mix of sales, while the HPI reflects price changes for typical homes.
BMO deputy chief economist Doug Porter called Vancouver a “rather obvious exception” to the soft landing that most Canadian cities would see for their real estate markets. “I don’t know that I’d call it a hard landing in Vancouver, but it’s definitely a bumpier landing than most cities in Canada are going through right now,” Porter said. Meanwhile, it appears people thinking of selling their homes are holding off, especially in Metro Vancouver, which saw the largest drop in the country for new listings. New supply reached its lowest level in more than two years, CREA said.
“That may help avert a harder landing for prices because sellers do have the leeway to back off,” Porter said. “Fundamentally, I think that’s one of the reasons why the Canadian housing market is likely not going to have a hard landing because you’re not going to have a lot of motivated sellers – people aren’t going to be forced into it by rising interest rates or declining employment so they can take their time and wait for the market to stabilize.”
– from ‘Bumpier’ landing seen for Vancouver real estate’, Vancouver Sun, 18 Dec 2012 [hat-tip Edmund Garland]

There have been many stories that served to stimulate Vancouver’s RE mania. The most prevalent latter day myth appears to be that of the discretionary seller. We are all invited by many commentators (bankers, realtors, commenters on the blogs), to imagine the cool-headed seller deciding that, no, this is not the right time to sell, and backing off, biding their time, waiting serenely for the next leg-up in the market; in calm and comfort, perhaps next to a fire with a good book; no hurry, no urgency whatsoever.
I believe that this construct is complete hogwash.
I’d submit that, in the vast majority of cases, once an owner has made the decision to sell, they start the mental preparation for unloading that property. They move into a position where they disinvest themselves of the idea of ownership, and a clock starts ticking.. they have a building desire to convert that asset into cash, to ‘get out’ of the market. In a market where prices have barely budged, but sales are weak, they may be able to convince themselves that a more robust time for sales is just around the corner, so they may take their property off the market. But make no mistake, they remain very much in the ‘sell’ mode, they have their finger on the trigger, and they are waiting to unload. There is no intense urgency at that point; more a mode of expectation, of anticipation of coming action. Imagine now how that group of wannabe sellers responds when prices take their first substantial step down. Suddenly comparables are selling for 10% or 15% lower, and for lower prices than offers they themselves rejected 6 months before. Do these sellers remain cool? Well, a few may, but, here’s the point, a majority will not. They will experience new-found urgency, and many will rush to market. And only a few of them have to do anxious deals for prices to suddenly find themselves 20% to 25%-off the peak. And then more owners holding shadow inventory will respond, and so on. This is how speculative manias unwind.
The other side of all of this is, naturally, the buyers. There will always be some buyers, of course, at each step of the descent, but not enough to rescue the market; not enough to plateau it or take it to new highs. We won’t see a rerun of 2009 (although some of the early buyers will be “buying the dip”, in anticipation of a 2009-type rebound). Buyers will dry up because prices are falling. Yes, but won’t falling prices increase demand? asks the economist. Yes, falling prices increase demand, when those prices are falling from reasonable levels to cheaper levels such that the asset for sale looks like a good deal based on its fundamental value. But, when assets are at stratospheric prices, when people have been overextending themselves to buy at prices that are 2 to 3 times those supported by fundamentals, when people have been buying only because they anticipate future price strength, the dynamics are very different. People stop buying because their premise for buying (“prices will rise”) goes away.
Thus a powerful self-reinforcing system of price increase turns into reverse, and prices collapse. Falling prices beget falling prices. If that seems circular, that’s because it is. A ‘virtuous’ cycle turns ‘vicious’, and by this mechanism price drops that few have anticipated come to pass. Perhaps 2013 will be the first sharp leg down.
– vreaa

It’s Different Here, Really It Is – “The rich are not the same as most people, otherwise Vancouver’s prices would never have risen so far above average household incomes in the first place.”

“The free-falling Vancouver housing market shows no signs of reversing its slide with the latest figures showing November sales 30.3% below the 10-year average for the month.
The Real Estate Board of Greater Vancouver now says consumers have begun pulling their homes off the market rather than settle for a lower prices in what is still the country’s most expensive market to buy a home.
Since reaching a peak of $625,000, the board’s MLS Home Price Index for all residential properties in the city is off 4.5% to an average of $596,900. Prices are off 1.7% from a year ago.
“Home sellers appear more inclined to remove their properties from the market today rather than lower prices to sell their properties. On the other hand, buyers appear to be expecting prices to moderate,” said Eugen Klein, president of the board.”

– from ‘Vancouver homeowners pulling properties off the market rather than settle for lower prices’, Garry Marr, 4 Dec 2012

“Given that Vancouver’s RBC housing affordability ratio has been about 92% of household income for awhile now, that must tell you that most homes here are bought by people with wealth. They can afford to hang on and wait for better market conditions, so it makes sense that listings are getting pulled. Conventional house price economic responses are more applicable to cities like Calgary and Edmonton that will react to changes in their (oil based) economy than they are to Vancouver. The rich are not the same as most people, otherwise Vancouver’s prices would never have risen so far above average household incomes in the first place.”
– ThinkRight commenting at Financial Post 4 Dec 2012
[hat-tip to JS who adds “I love the logical deduction that because the affordability ratio has been so poor, it obviously means that homes are bought by people with wealth.”]

Agreed, JS, you’ve got to love some of the bizarre justifications for current circumstances.
From the school of handwaving logic. Also, tautological.
“Prices are high for good reason (trust me on that) therefore they will stay high.”
And the bit about “the rich are different from most people”? (gack!!)
Regarding the article, and sellers pulling their wares in disgust.. they still do think it’s different here, but will discover it’s pretty much the same as everywhere else.
Sales are down; Prices will follow.
– vreaa

“If I had bought when I was 20, I would likely be mortgage free right now. In 10 years, I’ll likely be glad I bought in 2011, as opposed to waiting an additional 5 years.”

“The sooner you buy, the sooner you’ll be mortgage free, and then the sooner you can retire/diversify your time with minimal monthly fixed costs. If I had bought when I was 20, I would likely be mortgage free right now. In 10 years, I’ll likely be glad I bought when I did (last year [2011]), as opposed to waiting an additional 5 years.”
gobigorgohome at RETalks 27 Nov 2012 12:54pm

Appropriate handle.
Timing can be a bitchallenging.*

People who bought near the top in 1981-1982 waited 25 years (yes, twenty-five, not a typo) to break-even in real dollar terms.
– vreaa

[* see what he did there? if only you were all as polite. -ed.]

Wake Me Up At 50%-Off – “Buyer’s market, home prices fall? When homes go up a million % and then come down 3.8%…that’s not much of a bargain.”

“Vancouver home sales and prices were lower last month as Canada’s third-largest city continued its role as one the nation’s hardest-hit centres in an ongoing housing market slump.” …
“While Canada’s market continues to look balanced overall, there are clear pockets of strength and weakness,” BMO Capital economist Robert Kavcic observes in his analysis of the CREA results. The BMO report described Vancouver, Victoria, Regina and Saskatoon as buyers’ markets — where supply markedly outstrips demand and dampens asking prices.”

‘Vancouver a buyer’s market as home sales, prices fall’, The Province, 16 Nov 2012

“Buyers market, home prices fall? When homes go up a million % and then come down 3.8%…that’s not much of a bargain.”
‘Tom Anderson’, commenting below The Province article, 16 Nov 2012

We’re with Tom on this one.
These ‘Buyer’s market’ cries are recurrent, closely akin to premature bottom calling but not quite the same thing.
Similarly, charts showing a ‘Buyer’s market’ when inventory rises against sales are misdirected and mislabelled (see example below). ‘Months of Inventory’ (MOI) and the ‘Ratio of Sales to Active Listings’ are ways of expressing inventory in terms of sales. High inventory and relatively weak sales are indicators of likely future price direction, but such circumstances don’t say anything about how market prices compared to fundamental value. MOI can “go to the wall” for a long period before a market bottoms. Years, actually.
To clarify: A true ‘Buyer’s market’ emerges when a buyer gets good, or at the very least reasonable, value for his or her money.
– vreaa

– Inventory:Sales Ratio Abuse, as evidenced in this chart from Fraser Valley RE Board data, posted by local realtor ‘silverman’ at RE Talks, 3 Oct 2012

Expect to see the term ‘Buyer’s market’ a lot in coming years:

‘It’s a buyer’s market for greater Vancouver’, The Province, 2 Oct 2012

‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, The Vancouver Sun, 4 July 2012

“There is a place in Lynn Valley for sale, asking price 860k 2 months ago. My friends made an offer for 760k, less than assessment. It was rejected back then, but seller appeared last week and said that they are now ready to sell for 760k. My friends took a look again and decided that they don’t like it anymore.”

“My friends are looking for a house in North Van and they’re lowballing all the time. There is a place in Lynn Valley for sale and asking price was 860k 2 months ago. They made an offer for 760k less than assessment. It was rejected back then, but seller appeared last week and said that they are ready to sell for 760k now. My friends took a look again and decided that they don’t like it anymore. So, 100k discount in 2 months… There are motivated sellers out there!”
Aleksey at VCI November 13th, 2012 at 5:44 pm.

“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse. And buyers are saying ‘It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”

“While the national housing market appears to be retreating in an orderly way, the data show pockets of sharper slowdown, particularly in the western Canadian cities of Vancouver and Victoria, which once led the hot housing market.
“Personally I don’t see any revitalization of the market in the near future,” said Victoria real estate agent Tony Joe, noting that investors have left the market.
Residential sales fell 8.3% in September from a year earlier in Victoria and were down 32.5% in Vancouver, according to the local real estate boards. Prices were down 2.6% in Victoria and 1.4% in Vancouver on the year, according to the Teranet report.
The price declines are far smaller than the plunge that hit U.S. homeowners during the crash. Still, buyers are hesitant, wondering if they should wait until next year to purchase.
“Sellers will commonly say, ‘I’m going to wait until the spring, when the market is better.’ And I warn them that it could be worse,” said Joe. “And of course buyers are saying ’It looks like things are bad, I’m going to hold off until the market drops another 10 or 20%.”’
Joe, a 21-year industry veteran, does not foresee such a drastic decline, simply because Canadian lenders have been prudent and interest rates are not going up soon. Sellers will pull houses off the market rather than accept a price drop.”

– from ‘Canada braces as housing slowdown takes hold’, National Post, 5 Nov 2012

Spot The Speculators #88 – “My girlfriend and I just put an offer on a condo by Gilmore station for 430K. It looks like we’re going to get it. We plan for this condo to be both an investment and a home for at least the next 7 years.”

“I graduated last year and got a stable government job and my gf is a chef. We’ve saved up about 50K for downpayment, and we just put an offer on a condo by Gilmore station for 430K. It looks like we’re going to get it. We plan for this condo to be both an investment and a home for at least the next 7 years.
We both grew up in Richmond, and as much as we love the place, there are inherent issues with the city. Most importantly, its housing market is based on one factor – Chinese investors.
The housing market in Vancouver is strongly influenced by investors from overseas, mainly China, Hong Kong, Taiwan. Earlier this year, policies were tightened for foreign investors, in most cases from China. Money was actually returned to them. This means that the development on River Road in Richmond by the Olympic Oval is undersold. Now housing prices are dropping like crazy in Richmond after a 5 year boom, not to mention the crawling speed of the market as well.
My company will be moving next to Brentwood mall soon, and this is one of the reason why we’ve decided to move there.
More importantly, the plan to develop and rebuild and revamp Brentwood mall is a good sign, including the three phase project – the first of which includes an ultra high rise. Needless to say, with an increase in population in the area, housing prices are expected to go up in the future.
We almost bought a similar place for 20K more last month, I’m so glad we didn’t because the prices has dropped a little. But there are not a lot of options because sellers who are not in rush simply took their property off the market.
Here are the questions I have:
Is it possible that there will be too much property for sale that dilutes the value of property as a whole in the future? For example, both Brentwood and Oakridge malls have plans for a ton of new homes in the future (both 3 stage projects).
What are other factors that might affect property value in Burnaby and in Greater Vancouver as a whole?
Finally, I’ve heard that housing in Vancouver, as long as it is close to Downtown, UBC, or Vancouver itself, will always be saturated. Can this always remain true if there is such an abundance of developers creating new condos?
Everything considered – what do you expect a 400k-ish condo in Burnaby to be worth on the market in 5-10 years?”

‘Reddit, I need your opinion about something as I’m about to make the biggest purchase of my life’, shaozhen,, 31 Oct 2012

The fact that they see the home, even in part, as “an investment” makes them speculators.
They are buying on the premise that prices will rise or at the very least remain strong.
To answer their last question: I would say that their $400K condo will touch a market price of $220K (real) well before it ever hits $440K.
Would they be buying if they saw that possibility?
– vreaa

Cost To Rent A Luxury Two Bedroom Unfurnished Apartment In Desirable High Income Cities, And In Vancouver

– from ‘Sticker shock: Cost of living varies widely’, Mercer, 9 July 2012 [hat-tip clive]

Vancouver rents are pretty much in line with incomes; RE prices aren’t, yet.
– vreaa

“Vancouver home buyers are ‘seeking their revenge’ after a long running housing boom”.

“Vancouver sales are 40% below the ten year September average. And as the Bank of Montreal’s Sal Galteri puts it “Vancouver home buyers are seeking their revenge after a long running housing boom”.
– from ‘The ‘revenge’ of the Vancouver home buyer’, video clip by Michael Babad, G&M, 3 oct 2012

Archived for the chronology, largely for the interesting turn of phrase.
– vreaa

REW’s ‘House Hunter Chronicles’ – “I had wanted my dream house right away. I wanted to skip the steps. But now I’m thinking short-term house and long-term house.”

A serialized story called ‘House Hunter Chronicles’ was posted through the summer at the website Here it is, for the record:

“Follow local house hunters as they experience the highs and lows of buying a home in the intense Vancouver real estate market. Elaine L. is the first to share her search with us. We’ll check in with her every couple of weeks to see how it’s going.”

Elaine L
Family size: Two — a single woman and her mom
Currently: Own a condo
Budget: $800,000 – $ 1.1 million
Neighbourhoods Collingwood, Fraserview, Renfrew, Renfrew Heights, Killarney
Looking for 2000 – 2500 sq. ft. newer detached house with rental suite down, move-in condition

1. Meet Elaine L. (June 16, 2012)

Elaine L. is only in her twenties, but she’s already a veteran in the Vancouver real estate game. She and her mom, Patty, sold the first condo they lived in back in 2004. They rented for a while, thinking Vancouver house prices would go down, but when that didn’t happen they bought their current condo in 2008.

Since then their condo has appreciated by $40,000, and its 880 square feet are starting to feel a bit cramped for the two of them and their dog. When one friend bought a rental property and another bought a house, Elaine was inspired to start house hunting again.

So she’s contacted the same Realtor they worked with before and asked her financial advisor what kind of price she can afford, and the house hunting is on! She hasn’t put her current home on the market yet, and there’s no deadline for buying, but she’s started doing a lot of online research and visiting open houses.

Elaine and Patty would like to stay in southeast Vancouver, where they are now. Finding the right neighbourhood involves researching crime and average income statistics and using Google Maps Live View to check out the look and feel.

Her ideal house is at least 2000 square feet with a mortgage helper in the basement, living area on the main floor and bedrooms upstairs. Elaine says that it’s mostly older houses that offer that layout, and they tend to be out of her price range. But more affordable Vancouver specials, both the classic ones and the newer versions, have suites on the main floor and living and sleeping areas up, all on the same floor.

Chinese traditions also play a part in her search for a good house; for instance, if you need to go down a couple of stairs to get to a house, it’s off the list.

Is she looking for a fixer-upper? Definitely not. “I can build IKEA furniture — that’s about it.”

Elaine credits her friends with keeping her on course. “My emotions get the best of me sometimes,” she says. “I look at a house and I don’t really like it, but I talk myself into it, and then I have to get my friends to talk me out of it.”

2. Elaine Loves and Lists (June 22, 2012)

Follow local house hunters as they experience the highs and lows of buying a home in the intense Vancouver real estate market. Elaine L. is the first to share her search with us. We’ll check in with her every couple of weeks to see how it’s going.

It was a bit like falling in love. The house ticked all of Elaine’s boxes: 2300 square feet, 3 bedrooms on the top floor with the kitchen and living area downstairs, and a 2 bedroom rental suite on the same floor that would cover $900 of the mortgage. It was built just last year, so it’s like new but without the HST. Her mom, Patty, liked it too.


But alas, her love was unrequited. When her Realtor inquired about putting in an offer subject to the sale of the condo the seller said, Don’t bother. “No one wants to sell to you if they have to wait for you,” Elaine says.

That’s why every day last week Elaine and her mom were hard at work — lugging a heavy elliptical trainer down to the storage locker, taking boxes of bric a brac over to a sister’s garage and removing all traces of Elaine’s Hello Kitty collection. They’re staging their condo, and by next week they hope to be able to get their Realtor in to take pictures and put the condo up for sale.

“I don’t want to go through that again,” says Elaine about having her subject-to-sale offer rejected. “We have some places where we can stay for a few months if we don’t find anything. And when we sell we’ll try to set a really late possession date.”

Meanwhile, “It’s a great feeling to be tidy. We’ve decluttered and depersonalized it to get an open, contemporary look. We had the floors redone with a dark laminate and it really opened up the space. We’ve cleaned all the walls. The place looks fantastic.

“A friend warned me not to fall in love with it and decide not to sell. But I want to live in a house.”

The house she fell in love with — actually a half-duplex — has been sold. But the good thing is that there are lots of similar places in the same neighbourhood, so Elaine’s optimistic that something with the same appealing layout will come up… after she’s sold the condo.

“It’s around $900,000, and at first I thought it was expensive for a half-duplex, but it feels just like a detached house. The two halves barely share a wall. Only the rental suites connect. I haven’t seen anything like it in Vancouver.”

Though Elaine was looking to buy a house in Vancouver, this place is in Burnaby, which hadn’t been on Elaine’s radar until a friend alerted her to the listing. It turns out, it’s just across the Burnaby border, only two minutes from where she is now, so she’d still be close to friends and family.

Of course, that’s if all this works out.

The upheaval is stressful. Elaine says “I’m always worrying. What if we sell this and don’t have another place to live? What if the market crashes and my house ends up not being worth what I paid for it?

“But then I remind myself that I’m not biting off more than I can chew. I’ll be living comfortably, even if the market crashes. I always plan for the worst case scenario, so I’m planning everything as if the suite isn’t rented. We’ll be okay.”

3: Keep it Clean (July 18, 2012)

Now comes the hard part: living in a home that has to be clean, shiny and spare at all times.

“Having to clean up after myself all the time is making me want to get it over with,” says House Hunter Elaine L. “I want someone to buy it so I can leave”

The condo she and her mom share has now been on the market since the beginning of July. After hauling out everything that wasn’t nailed down, and getting new flooring installed, she’s thrilled at how great the place looks. But it has to be kept that way.

“I gave my dog a haircut!”
The dog was the worst culprit in the keep-it-clean campaign. Elaine’s mom, Patty, had been spending part of every day vacuuming up the dog hairs that showed up particularly well against the dark wood of the floors — one of the new selling features of the condo.

A canine cropping took care of that problem. Now it’s a matter of always putting things away, dusting and doing the dishes.

All that upkeep is worth it. Their Realtor says that it shows really well, and he’s had favourable comments from people viewing it. Considering there are three other condos for sale in the same building, that’s hugely important. Elaine and Patty indulged in a little spying, going to the open house at one of the other condos to check out the competition, and they’re satisfied that their efforts have given them the upper hand.

The other side of feng shui
They’ve even had some serious interest. A mom and daughter came to look at the condo twice, but they rejected it because the mom said that the ensuite bathroom door facing the bed was bad feng shui. Elaine and Patty are Chinese too, and they have a few criteria based on feng shui principles. But not that one.

“The bed can be moved.” says Elaine. “We’ve lived here for four years and haven’t had bad luck!”

As her Realtor — and every Realtor the world over — says: It’s just a matter of finding the right person.” There are three showings coming up; three chances to find that right person. And with all those prospective buyers coming through her home, Elaine’s decided not to spend the week constantly keeping everything spotless. She’s going to Vegas instead. She’s got a phone with a US number, so anything that needs to be handled can be handled from there.

Let’s hope Elaine and Patty’s luck holds.

4: Elaine’s Las Vegas Luck (July 27, 2012)

Last time we talked to House Hunter Elaine L., she was off to Vegas with a group of friends. She was fed up with having to keep her condo spotless and ready to show at a moment’s notice, so she figured she couldn’t make a mess if she wasn’t there. Problem solved.

So there’s Elaine enjoying a delicious lunch in Sin City when her phone rings. It’s her Realtor. He’s got an offer. Can she look at it now?

They talk a bit and work out a counter offer and the Realtor sends it off. Lunch is interrupted several more times as offers and counter-offers fly back and forth. Finally, when Elaine is in the back of a cab on the way to an outlet mall, the Realtor calls with the final offer. He scans it to her phone and Elaine signs it, gets it witnessed, returns and continues to the mall… with considerably more to spend than she had when she set out.


Digital transactions like this are more and more common with the advent of wi-fi, tablets and smartphones. So far there’s never been a problem. Digital signatures are informally accepted as valid, although the real estate industry has not yet had occasion to test them in court. The Realtor also took the contract to Elaine’s co-owner — her mom, Patty — for an ink-on-paper signature.

The condo was on the market for exactly two weeks before the offer, with one open house and 10 private viewings. The buyers saw it in one of the private viewings. The time on market is bang-on for Elaine’s Collingwood neighbourhood. Since May, the majority of comparable condos there have sold within 18 days.

Elaine says the condo had numerous advantages that helped it sell so quickly. First was all the work she and Patty put into it.

“We took so much time to clean it up perfectly,” she says. “We got rid of every trace of our everyday life. It was completely staged. I don’t think other people go to that extreme. We saw other places, and they weren’t as perfect as ours.”

It was also listed in the mid-400,000s — a price that appealed to people getting into the market. Elaine says she’s seen more expensive condos sit ounsold. “A friend of mine has a sub-penthouse that’s selling for $150,000 more than mine, and she’s had it on the market for a year now.”

On top of that, the location is perfect: it’s right by the SkyTrain and close to an elementary school.

The couple who bought have two young daughters. At 880 square feet, the condo will be a tight fit, but in the Vancouver market, condos have replaced fixer-upper detached houses as the first rung on the property ladder for first-time buyers and new Canadians.

The buyers’ bank sent an appraiser, the home inspector did a report and the subjects were removed a little over three weeks after listing. The completion date is August 23. That’s too soon to find a house and move in, so Elaine and Patty are staying with Elaine’s sister for a bit.

“It’s nice not to have a set date for leaving. We can look around until we find the right place. But it’s a motivation as well. We don’t want to impose on my sister for too long.”

Elaine’s excited and a little apprehensive now that the deed is done. “It’s kinda scary. I don’t know where I’m going to live, and I’m going to be taking on a big mortgage. Plus, I’m worried that the market might go down and I will have paid more than the house can sell for,” she says.

But, “Mom believes that in the Vancouver market things won’t go down that much unless something big happens.” So even if the market starts to dive, that’s not going to keep them from looking… or buying

The search is on in earnest now.

5: Know the Market (August 16, 2012)

“I had wanted my dream house right away. I wanted to skip the steps. But now I’m thinking short-term house and long-term house.”

Elaine L. is finding the search to buy a house in Vancouver more frustrating than she had expected, now that she’s in serious search mode. She and her mom, Patty, are camped out at her sister’s place, and they don’t want to be an imposition for too long. On top of that, Elaine was recently promoted at work so her days are super busy. Her evenings are almost entirely occupied with searching online for new listings and going out on viewings or drive-bys.

She’s no longer thinking about a duplex. “It doesn’t feel like the responsible thing to do. I think it’s better to buy a whole piece of land because that’s where the money is, that’s where the resale value is. It just seems more secure.”

But even though she can buy a house up to $1.1 million, she’s finding it tough to find her dream home in Canada’s priciest real estate market.

There was one perfect house made even better by the fact that it was priced in the $840s. She found the listing as soon as it was posted and jumped on it, but despite her quick action, the house was sold before she got to it.

Then there was new Vancouver special that looked more like a heritage house. Not only did it have a unique look, it had the layout she’s after. But by the time she found it, the owners had taken it off the market.

The capper was the three-storey house with an above-grade basement suite downstairs. It was quite new and priced at $799,000. It looked like a steal… until she found out it was a former grow-op.

Lesson learned.

If it sounds too good to be true, it is, and for Elaine that includes any house priced under $800,000. With all the research she does, she knows house prices in her chosen neighbourhoods inside out, and she’s learned to distrust any listing with a price that seems too low for the area.

So the dream house is just going to have to stay in the future. “For now we’re going to look for one with lots of rental income and save up for the one we ultimately want,” she says.

The decision has lightened her load at a highly stressful time. It’s broadened the range of acceptable houses. She can look at the new Vancouver specials that she used to reject because they always had a rental suite on the main floor, and she wanted the main floor and upstairs for herself.

Now that first-floor rental suite is a desirable feature. The income from that will help her get to her ultimate goal, to buy a house in Vancouver that’s exactly what she wants.

[As of 6 Oct 2012, no apparent further updates. -ed]

The final chapter sounds like a dangerous recipe: a rationale for overpaying for a property that is very suboptimal for the owner (a house with the (necessary) rental suite on the main floor!). If Elaine takes the plunge, she could be regretting the decision for a decade or two. – vreaa

Buy Now At 20XX Prices!

441 E 38th
Asking $899K, then $829K. Sold for $820K.
Purchased in December of 2010 for $810K.
“Are we at Dec/10 pricing already?”

timber2012 at RE Talks 4 Oct 2012 1:40pm

There is valid ongoing debate regarding which price measures to use to best monitor the decline.
Not a simple task: Mean, Median, Teranet, Benchmark?
Teranet, using (by our understanding) Case-Shiller-type sale-resale single-property methodology, is likely the most valid price to track.
At the single example level, time1 to time2 anecdotes will always be powerful.
A house that sold for ‘x’ in 20XX, now selling for ‘y’ in 201X, doesn’t necessarily reflect the whole market, but still grabs the attention of prospective buyers.
“Gee, I could buy that now for less than I’d have paid in 20XX!”.
– vreaa

September 2012 Numbers – “Clear reduction in buyer demand; Steep decline in sales activity to 41.6% below the 10-year average.”

So far, so good.

“Vancouver home sales fell 32.5 per cent in September compared with a year ago, says the Real Estate Board of Greater Vancouver.
Sales of residential properties totalled 1,516 for the month, down from 1,649 in August and 2,246 in September 2011, according to the board.
“There’s been a clear reduction in buyer demand in the three months since the federal government eliminated the availability of a 30-year amortization on government-insured mortgages,” board president Eugene Klein said. “This makes homes less affordable for the people of the region.”

– from Vancouver Sun, 2 Oct 2012

“The Real Estate Board of Greater Vancouver maintains that prices remain stable overall in its market. It says its benchmark price index is $606,100, a 0.8% drop from a year ago and a 2.3% decline over the last three months. But there is no mistaking the steep decline in sales activity which in September was 41.6% below the 10-year average.”
– from Financial Post, 2 Oct 2012

“SFH Stats Sept 2012: (ranked by worst sales decline)
Sales:-50% YoY, -10% MoM
Ratio: 22% vs 32%
HPI: -4.2% YoY, -1.3% MoM
Median: -9.8% YoY, -1.4% MoM
Sales -49% YoY, -10% MoM
Ratio: 18% vs 35%
HPI: +4.2% YoY, -0% MoM
Median: -13% YoY, -6.3% MoM
Van East:
Sales:-48% YoY, -6% MoM
Ratio: 30% vs 51%
HPI: +3.2% YoY, -1.1% MoM
Median: -2.5% YoY, -0.6% MoM
Sales:-37% YoY, +16% MoM
Ratio: 30% vs 51%
HPI: +3.6% YoY, -0.2% MoM
Median: +0.4% YoY, -3.7% MoM
Van West:
Sales:-17% YoY, +15% MoM
Ratio: 27% vs 27%
HPI: -6.5% YoY, -1.3% MoM
Median: +1% YoY, +0% MoM”
VMD at VCI 2 Oct 2012 1:17pm

“As an aside, looking at the Average Prices and number of Sales for REBGV, my spreadsheet shows the TOTAL DOLLAR VOLUME for the three housing types has PLUNGED from a high of $3.21 Billion in March 2011 to a low of $1.20 Billion in August 2012. Looks like September 2012 could be even lower.”
lookoutbelow at yattermatters 1 Oct 2012 9:57pm

And in the “Keep Calm and Carry On” (also known as the “It’s Only A Flesh Wound”) category of opinions:
“Clearly my prediction of offshore buyers returning in the fall is coming true. The high average is a reflection of the fact that large amounts of high end housing is selling and selling well.
Like I’ve said all along, this is just a brief pause before the Mainlanders return again. Clearly the high end of the market has not been impacted.”

CBM at yattermatters 1 Oct 2012 9:26pm

Inventory high enough, Sales very weak, Prices modestly down from peak.
Price will follow volume, as it always does.
Further drops ahead.
– vreaa

17,250 sqft North Van Lot – “Was $1.15M, then $1.025M, now $888K. Assessed at $969K.”

V949678 4785 Capilano Rd North Vancouver

“North Van listing V949678 [a 17,250 sqft lot]- 4785 Capilano Rd. Was $1.15M, then $1.025M, now $888K (lucky 8s!). Assessed at $969K.”
Sidelines at VCI 21 Sep 2012 at 10:52am

“My friend, a top-selling realtor on the North Shore, told me he’s able to spend a lot more time at home with the kids now, because the market is so slow. He feels that this is the reckoning for which the Vancouver market has been long overdue.”

“My friend is a top-10 best selling realtor on the North Shore. Told me on the weekend that he’s able to spend a lot more time at home with the kids now, because the market is so slow. He doesn’t see any change on the horizon, and feels that this is the reckoning the Vancouver market has been long overdue for.
Reminds me that we shouldn’t assume all realtors are market pumping dolts. The best of them understand that the market comes and goes in cycles, and that they need to have a different strategy to extract the most value out of each part of the cycle.”

Rocker Guy at VCI 10 Sep 2012 10:14am

Victoria – “The ‘next wave’ of first time buyers is when housing drops to where the 30k-40k salary can purchase. A 10% correction has gone unnoticed”

“My social group is mostly 100k/yr co-workers and 30k/yr friends. Of my 15 co-workers all but me have bought, many in the 2007 mania in Victoria. None will have to sell but all took mortgages for as much as they could get and will be paying out 40% of take home for the next 25-35 years.
The 30k/yr friends would love to own, but accept that it’s impossible in this market without moving west out of Victoria and a couple trips through the Colwood crawl usually puts that to rest (for the smart ones anyway).
I won’t be buying, I like winter travel and early retirement too much. So the ‘next wave’ of first time buyers in my world at least is when housing drops to where the 30k-40k salary can purchase, a 10% correction would (and has) gone unnoticed to anyone who doesn’t have an assessment to look at each year.”

Lee at VCI 7 Sep 2012 1:23pm

A 10% correction from a bubble top is just noise, and doesn’t do very much to reconcile prices with fundamental values. It may, however, be enough to cause most buyers to take pause, and thus ensure future price descent.
– vreaa

“Currently I rent here in Vancouver as it’s the only fiscally sane option. Returning mortgage rules to responsible levels makes it far more likely that one day I’ll be a first-time buyer.”

“We do clearly have a bubble and it will burst. It’s wreaking havoc on Vancouver’s ability to retain creatives, families, and increasingly even high-earning professionals. It has a profound negative effect on quality of life here. I am just starting a family. Currently I rent here in Vancouver as it’s the only fiscally sane option. Returning mortgage rules to responsible levels makes it far more likely that one day I’ll be a first-time buyer.”
Many Franks, comment in the Georgia Straight, 3 Aug 2012 16:27

Bear Capitulation – “A long time bear friend of mine just bought a place on the North Shore after many years of waiting. He said that he no longer believes that prices will crash.”

“A long time bear friend of mine just bought a place on the North Shore after many years of waiting. He said that he no longer believes that prices will crash. Prices will keep going up, it’s really different here, renting is throwing away money etc…
He stretched the mortgage to the absolute maximum of what the ‘helpful’ broker was able to get. His monthly housing expenses will instantly double (for an equivalent unit!) and there may be some renovations necessary. But at least he is not a lowly renter anymore.
Interestingly, during the whole buying process, he asked me multiple times for my input / opinions on buying in today’s environment. I told him that I won’t give him any opinion for or against buying and that he should just do what he *feels* is right.”

bubbly at VREAA 30 August 2012 at 10:42 am

Theories of market psychology have it that markets top when the last bear who is going to capitulate does so. But then we’ve noted that before.
The Vancouver market likely topped in 2011.
– vreaa

“We have decided, again, not to buy this year. Been the same since 2007.”

“We have decided, again, not to buy this year. Been the same since 2007. But we are going to move to either Bowen Island or Squamish to rent while the wee ones are still at home. Looking at a nice place on Bowen that was just taken off the market – absolutely gorgeous house listed at $599K that is renting for $1800. By my math that’s a monthly price:rent of 333 or 27.7 annualized.”
ArthurFonzarelli at VCI 21 Aug 2012 10:58am

“They are shocked/angry that there was no bidding war. They were hoping for $3.7M, they had some offers around $3M. They are now taking it off the market to relist when the market improves.”

“My best friend’s hot sister’s boyfriends’s parents listed their Vancouver house three months ago. They are shocked/angry that there was no bidding war (they were hoping for $3.7million at least, they had some offers around 3 million).
They are now taking the house off the market to list when the market improves and they can get what the home is “worth”, at least in their view.”

‘Happy NOT to be Smoking Man’ at 31 Jul 2012 8:43 pm

Next year they’ll be rejecting offers of $2.25M and wondering how they could have passed on the $3M offer. And so on.
– vreaa

“Second friend turned around and said that there is no way it’s going to crash in Vancouver, since San Francisco never crashed.”

“Was at a friend’s wedding last night, with a group of friends. One asked me if I am going to up-size from my current place to a bigger one. I said no, since market is crashing, and gave him most up to date stats -50% in sales compared to last year and -10% in price in last 5 months. Second friend turned around and said that there is no way it’s going to crash in Vancouver, since San Francisco never crashed. I was bit a buzzed from gin and tonic so couldn’t remember exacts stats for San Francisco. Then the first friend jokenly said that second one bought a third property not too long ago and is waiting for it to be built.
At that point I told them that lets not talk about real-state since it’s an emotional topic and I didn’t want to upset anyone, and lets enjoy the wedding.”

SunBlaster at VCI 29 Jul 2012 10:33pm

“We got sick of the ridiculousness of the market. People overbidding on shacks and financing some 90yr-old’s retirement by buying her house which she bought for $90K in 1952 for $1.2 Million.”

“My fiance and I both have good professional jobs in health care. We are in our early 30s. He owns a condo in east vancouver that could probably go for 250,000 to maybe 300,000. He bought for 180,000 5yrs ago and renovated. I am renting. We have enough in the bank for a sizeable downpayment on a home in North Vancouver. We are looking to finally consolidate homes and start a family in the next few years. We’ve been looking for 7months and have just been on a 2month hiatus as we got sick of the ridiculousness of the market and people overbidding on shacks and financing some 90yr olds retirement by buying her house which she bought for 90,000 in 1952 for 1.2 Million$ know, the recent Vancouver usual. The market is changing. The new mortgage rules actually suit us favourably as the interest rates haven’t, yet, changed and the other restrictions don’t apply because with our cash flow we could have a Million dollar home paid off in 15 yrs with a 25percent downpayment. My question is, what do we do? If I were to buy a home right now, we’d plan to stay there for at least 10 to 15 yrs. Rental homes on the North Shore are few and far between. And at some point you want to start your life and settle down. I try to stay informed on housing and the economy. Lots of signs pointing in the direction of not buying. Should we sell the condo and rent? Should we keep the condo, rent it out and rent a home? Should we buy something if we can lowball and get a home that was 1Million earlier now for 850,000??”
from Amber, via Garth Turner, at, 26 Jul 2012

This couple will likely be buyers quite soon, as the market softens a little more.
They’ll tell themselves they’ve “lowballed” and gotten a “deal”.
They seem to harbour at least some belief that one can’t “start your life” until you own your home.
– vreaa

“We ARE serious to buy, but on our own terms”; “The buyer and seller would not agree on a $2500.00 difference of value opinion.”

“A recent coffee shop story from a Vancouver Realtor® pal claimed that a sale on a east side $950,000 home never concluded when the buyer and seller would not agree on a $2500.00 difference of value opinion.
Worthy of calculation, the $2500.00 equates to a 0.26% difference of dollar opinion which in this case was big enough to kill the deal. If you are scratching your head wondering why then there is perhaps a reason within that tells us there is more to this market than we might suspect – a reason I believe that won’t be accountable in market fundamentals.
A sentence in an email from a buyer helped clarify this 0.26% conundrum. Stated was:
“We ARE serious to buy, but on our own terms.”

local realtor Larry Yatkowsky, at, 18 Jul 2012, who described this stubbornness as ‘Mule Talk’.

There are periods during a downturn when prices are ‘sticky’; where buyers and sellers stare each other down; where sellers are reluctant to “let go” of properties where they have gotten attached to the idea of them being worth ‘x’ and now the buyer is asking them to “give it away” for ‘x-y’. Then comparables sell for less and expectations are reset.
– vreaa

“I am in the market for a downtown 2 bedroom condo as first time buyer. Here comes the death spiral.”

“Here comes the death spiral at Cosmo 161 W Georgia St:
I am in the market for a 2 bedroom condo as first time buyer in downtown for the past few months. My budget is 500k. I have been watching this building closely.
There are 6 units that are exactly the same layout on MLS. Unit 807, 1608, 1708, 1808, 2108, 2208. Asking price from 575k to 629k.
807 had open house two weeks ago (I viewed) and was the lowest priced at that time. Now 2208 entered the market last week and priced lowest. 807 (V949770) just reduced it’s price to beat 2208 (V962354) this week.
At this rate, I hope they will drop to $500k by Nov. this year.”

G at VCI 20 Jul 2012 10:14pm

If a ‘death spiral’ is beginning (as may indeed be the case), why plan to buy in November?
– vreaa

“I said that if I was him I’d drop the price steadily until his Eastside SFH sold, but he didn’t seem to like that suggestion.”

“I was doing some errands last week that involved dropping in at a number of retail spots. At one, the very friendly guy assisting me commented on the weather and then spontaneously started telling me about having a SFH for sale east of Main. It’d been on the market for 4 weeks and he’d gotten very little interest and no offers. He seemed puzzled by this. I said that if I was him I’d drop the price steadily until it sold, but he didn’t seem to like that suggestion. I didn’t ask him when or for how much he had purchased.”
– from westsidefrank, via e-mail to VREAA, 16 Jul 2012

Kelowna – “Both the deals with “accepted” offers had just collapsed due to “financing”.

“We went to go see houses in Kelowna over the weekend. We saw eight homes – two with “accepted” offers… one our agent showed us, the other was an open house we just happened to walk by… Anyway, we got a call from our agent – both with “accepted” offers had just collapsed due to “financing” issues.”
Bo Xilai at VREAA 8 Jul 2012 10:06pm

Scientists Skip The Math – “No calculations or economic analysis are needed, my co-workers in the science/engineering/technology sector and my friends are always certain that buying is always a better choice. My choice to rent always seems to puzzle them.”

“My choice to rent always seems to puzzle other people. No calculations or economic analysis are needed, my co-workers and friends are always certain that buying is always a better choice. My friend just bought a house before the mortgage rule change, and didn’t take my advice. We all work in the science/engineering/technology sector (not in Alberta) but he is completely oblivious to what’s happening in the rest of the (economic) world. He’s the type that truly believe Canada entered and emerged from the 2008 recession unscathed. Actually, he didn’t even know there was a crisis in 2008 and there will (probably) be one from the next country exiting the Eurozone! It’s sad that these are the types of people that are trying to give me advice.. All I can do is be as humble as possible… but it’s frustrating… My point is – the herd thinking is a very strong force. One that I refuse to believe in.”
Petr Syk at VREAA 8 Jul 2012 5:54am

“I really hope for there to be a big crash. That would probably be the only way to get a place for myself.”

Deborah Cheng has resigned herself to staying with her parents for a few more years unless Vancouver’s housing bubble bursts.
“I really hope for there to be a big crash. That would probably be the only way to get a place for myself,” said Ms. Cheng, a 30-year-old administrative assistant.
She’s saved $90,000, hoping to put a 30-per-cent down payment on a home. But in Vancouver – where the average price of a detached house this year is $732,736, according to the Canadian Real Estate Association – her options in the $300,000 price range are older-studio and one-bedroom units in high-rise buildings.
“You find out that the building is pretty run-down and you might have to pay a lot for repairs in the near future.”

– from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

– vreaa

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. For now, I will continue to rent.”

“I moved to Vancouver in 2008 and despite being able to purchase, have held off due to the insane RE market. I rent a large beautiful home with a pool in the Dunbar area. Landscaping and pool maintennace are included in the rent, so needless to say, I have a very nice life style here. For now, I will continue to rent. If I ever consider purchasing a house here, I will offer well below market value. For now, I am having too much fun and can’t be bothered to look at the crappy homes listed for so much money.
The reason that I came to Vancouver is that my two children are attending UBC. They are now close to graduating and will likely have to leave Vancouver for a place with a more reasonable cost of living/RE. I will likely leave as well so that I will be in a better position to help them financially. This is too bad, as I like Vancouver, the people and lifestyle. I am afraid that many people are going to be seriously hurt by the artificial RE market here and will end up losing everything or become slaves to the bank for the rest of their lives.”

– DR, via two e-mails to VREAA, 24 Jun and 2 Jul 2012

Keith Roy, Revisited – “I’m a REALTOR and I sold my own home 4 weeks ago. I think its time to cash out!”

Two and a half years ago we headlined and sidebarred the story of a young Vancouver realtor named Keith Roy who was the subject of a National Film Board of Canada short-film documentary series. As we said of the films: “Keith, who works the Marpole area of South Vancouver, shows remarkable confidence and even more remarkable candidness as he describes his dreams & strategies, and tells us what it takes to muscle in as a RE ‘professional’. Dressing for ‘gravitas’, becoming a celebrity, poaching assistants, ‘taking it up a notch’, quick profits, bribing tenants.  [For links to the documentaries and transcriptions thereof, see “I am Realtor. Nothing Realtorian is Alien to Me.”, VREAA 10 Dec 2009]

Fast-forward to the present and Keith Roy has apparently come to see the Vancouver RE market for what it is. And, to his credit, in the spirit of his aforementioned candour, he has penned a very bearish entry on his blog. He describes how he sold his own home 4 weeks ago, analyses the high inventory and low sales of Westside homes, and advises clients to “cash out”. He doesn’t make it clear what magnitude of price drops he’s anticipating [see comments section for more on his understanding and intentions], and he advertises for sellers when he probably should be ardently seeking buyers. Regardless, this is the first time we have seen a local realtor go this public with this bearish a prediction.

‘Time to Cash Out: Is the Vancouver real estate market heading for another crash?’, Keith Roy at, 4 July 2012 [hat-tip E.G.]

“I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..
To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. Far too often the real estate industry, of which I am obviously a part, makes excuses for slow sales periods, declining prices and difficult negotiations. These excuses are self serving. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.
Here is a great example of where the real estate industry loses the public trust. The headline of the June 2012 Real Estate Board of Greater Vancouver Newsflash is “Greater Vancouver housing market favoured buyers in June”. The opening line was a bit more accurate: “The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.” But what does “relatively stable” mean in a market as hyper sensitive as Vancouver where real estate is a hobby, sport, profession, retirement plan and cocktail party conversation all rolled into one?”

“There is still lots of opportunity to sell your home. I’m just not sure how much longer it lasts. Prices have started to fall but demand is nowhere near the levels it dropped to in fall 2008. … If you are on fence about selling your home, thinking of cashing out, nearing retirement or need your equity to buy your next home, now might be the right time to call a REALTOR. Otherwise, I’d plan to hold on for another rough ride. I think 2012 will be another one of those years where Summer is better than Fall.”

Don’t Confuse A ‘Buyer’s Market’ With A True Buyer’s Market.

“The number of residential property sales has hit a 10-year low in Metro Vancouver leading the Real Estate Board of Greater Vancouver to declare a buyer’s market.
The announcement is significant since the board has in recent months been calling the market “balanced.”
According to the board’s June report, sales of houses and apartments dropped to 2,362 last month, a 27.6 per cent decline compared with 3,262 sales in June 2011, and a 17.2 per cent drop over the previous month of May.
“Overall conditions have trended in favour of buyers in our marketplace in recent months,” said Eugen Klein, the board’s president, in a news release on Wednesday. “This means buyers are facing less competition and have more selection to choose from compared to earlier in the year.”
June sales were the lowest total for the month in the region since 2000 and 32.2 per cent below the 10-year June sales average of 3,484, the report shows.”

– from ‘Vancouver sales hit 10-year low, real estate board declares a buyer’s market’, Vancouver Sun, 4 July 2012 [hat-tip Loon]

One will be hearing much talk of a ‘Buyer’s Market’ in local media in the near future, and Vancouver Sun/REBGV news release is an example. Most readers on the Vancouver RE blogosphere are very familiar with the difference we refer to, but, for sake of the newbie reader, we thought we’d pop up this post in an attempt at clarification.

The RE Board of Vancouver uses the ratio of sales to listings to decide whether to call the market a ‘seller’s market’, ‘balanced’, or a ‘buyer’s market’. Thus, if listings are high and sales are low (as they are at present), it is automatically deemed to be a ‘buyer’s market’.
This ratio can also be expressed as MOI (or ‘months of inventory’), the theoretical number of months that sales at the current pace would ‘clear’ the inventory (total listings). There is a good correlation between high MOI and downward pressure on prices. See jesse’s articles at ‘Housing Analysis’ for eloquent  discussion of that relationship.
Thus, when the REBGV refer to a ‘buyer’s market’, they mean one where sales are low compared to total listing. Note that this in no way refers to absolute price levels. Yes, it is better for a buyer if there is a low sales:listing ratio and downward pressure on prices (more homes to consider, less time pressure, more bargaining strength) BUT it is immediately apparent that absolute price levels are far, far more important to a buyer. The buyer gets more for their money when prices are lower.
In our own terms, and from the perspective of the vast majority of prospective buyers, it is far better to buy a property that is priced at fair value than it is to buy a very, very over-priced property that happens to be falling in price from very, very over-priced to merely very over-priced.
A true buyer’s market is one where the buyer receives good, or at least fair, value for their money.

Vancouver prices have only recently begun to weaken from their stratospheric heights.
By fundamental measures, they ran up, in the speculative mania of 2003-2011, to levels that are two to three times fair value. Prices have weakened by about 3%-14% since the 2011 peak, depending on which sector you look at, and which price measures you use.
This is not by any sensible measure now a true buyer’s market. It’ll be a buyer’s market when prices hit the vague vicinity of fair value; they still have a long way to go downward prior to that.
– vreaa

“Two things happened. Amount the buyer will qualify for is now lower, so not sure if they can afford same place. And, the buyer said they should really wait as things will get cheaper.”

“My good friend’s wife is realtor on the North Shore. She was about to close on condo purchase (she’s the buyer’s agent). Two things happened – – amount the buyer will qualify is now lower, so not sure if they can afford same place – and – the buyer said they should really wait as the market will now fall so things will get cheaper. That’s one grass-roots feedback.”
ZRH2YVR at VCI 28 Jun 2012 7:49am

Two of many things that happen when markets start falling.
Note how someone who considers themselves an imminent buyer takes a step towards the sidelines. Demand does not behave in a linear fashion.
– vreaa

“It means my total family income would have to be an exorbitant amount to afford an $800,000 house.” [Bizarre Idea!]

Another new rule announced by Mr. Flaherty sets the maximum gross debt-service ratio – the percentage of household income being used to pay for housing – at 39 per cent so buyers will be less likely to take on mortgages that are too big and could leave them floundering if rates increase.
That’s the one that Andrea Benton, a 37-year-old entrepreneur in North Vancouver, B.C., said hits her family of four hardest.
“It means my total family income would have to be an exorbitant amount to afford an $800,000 house,” she said.
The changes in mortgage rules over the past few years have made owning a house less desirable, she said. While she understands the government’s intent is to bring prices down eventually, she said, “It feels a little Big Brotherish to me,” and questions whether it will have its intended effect on the hot North Vancouver market.
“We’re probably going to be long-term renters,” she said. “The closest I’ll probably own anything is a condo when I’m 65.”
– from ‘For many, new mortgage rules put home ownership out of reach’, G&M, 21 Jun 2012

The speculative mania in RE has desensitized Vancouverites to the actual meaning of large numbers.
– vreaa

“I met the landlord’s rep yesterday, and he said prices were going to be weak but Feb 2014 would be a great buying opportunity.”

“I rent a house in a very good area, and was told that it was worth 5 million a couple of months ago when I rented the property.
I was told prices in this area NEVER go down.
I met the landlord’s rep yesterday (he is elderly Chinese, landlord is a Chinese university student!), and he said prices were going to be weak but Feb 2014 would be a great buying opportunity.
I like how he has a very specific date; could be some Chinese astrology call.”

– from ‘T’, via e-mail, 27 Jun 2012