Thursday, April 15, 2010

The "Big One" and Parallels

We have all heard the warnings about "The Big One", which is destined to cause massive damage to Vancouver and surrounding areas. Like others, I interpreted this as reference to the risk we take living on or near the San Andreas Fault, and the devastating earthquake which experts claim could hit any minute. Now I'm convinced that "The Big One" more aptly describes the long anticipated and often denied bursting of the Vancouver and perhaps National real estate bubble.

A brief recap of 2008

Vancouver has a history of being a boom bust market, with the most recent plunge occurring in 2008. For those who have forgotten, according to RBC, in the third quarter of 2007 Vancouver broke free of its past limitations and became its most unaffordable ever! No, not 1981, the year which everyone loves to hear campfire stories about, 2007.

What came next was thought by many well overdue. The US housing bubble burst years earlier and Vancouver's market was by far the most expensive in Canada, while not even nearly having the household income levels to support it. Mortgage Rates began to inch up and finally the buyers stopper buying. I was selling real estate at the time and I can tell you first hand, in May things just shut down. You can see from the charts below that listings soared and buyers vanished. The supply of housing inventory went from about 3 months, to well over 20 months within half of a year.



The outlook was grim for our housing market as you can see with this clip from Global news in 2008, prices were falling like a stone:


What happened? Well, our buddies down south kind of coaxed the world into a massive global recession and rates fell so fast and so hard that the competitive 6.29% 5 year term dropped to well under 4% with variable rates in the 2's. The massive global recession, stock market collapse and surging unemployment were not enough to curb Vancouverites and investors of their voracious appetite for real estate. The result..? In a frenzy of sales activity prices raced up 20%, right back to their previously unsustainable highs.


Here we are. April 2010 and we just reached another milestone. The price for a detached single family home in Vancouver just eclipsed 1 million dollars. Bravo Vancouver! OK, enough celebrating...Let's lay our eyes on a few of these beauties.

Grow your buds in style in this pot grower's paradise in Southlands
SOLD: $1,340,000

With this Arbutus home you are sure to be the envy of your friends
SOLD: $1,700,000

Who wants Dunbar? You too can have your own little slice of heaven
SOLD: $1,920,000

Anyways, we have prices right back up to where they were, and the kicker is the listings are beginning to pile up again. Actually this time it's happening faster than in 2008. In the GVRD we currently have almost 16,000 homes listed for sale which is trending towards at least 1000, if not 2000 more homes for sale than the end of April 2008.

Current inventory level:
Chart courtesy of Vibe

Sales have also been on a tear. The sales numbers could come in as one of the strongest Aprils on record. This would normally provide a weakness in my assertion that housing prices will fall, but the rush from buyers can be attributed to a few very good reasons, all bearish. The most serious is rising mortgage rates. We have been spoiled by record low rates for many years now and the consensus is that they will continue to climb as the Bank of Canada rises rates and bond yields increase. To top it all off we have the new CMHC rules and the ever popular HST is on its way.

The point of this note is not to tell anyone to buy or not to buy, but to counter all the bubble denying that has hit the media lately. The interview with Will Dunning (mortgage salesman) really irked me when Will blatantly denied a real estate bubble by concluding that since there has been no speculation (funny because Finance Minister Jim Flaherty disagrees as does REMAX) and there has been no risky lending (Canadian subprime problem) there is no bubble, thus we can all chill out.

Buying real estate or anything worth hundreds of thousands dollars warrants diligent research. This message is hardly comprehensive but hopefully it can help someone make a more balanced purchasing decision. Don't buy the hype!

Friday, January 23, 2009

What now?

Rather than post a poll I figured I would post something new. So let's see how long I can stretch out this simple question. Here I go...

The Vancouver real estate market entered a severe slowdown in 2008. After a lacklustre spring market we reached a point at which the slowing sales and mounting inventory combined to end price gains. Prices have fallen every month since April (Benchmark SFH) and the economy has gotten far weaker since the "correction" began.

All things come to an end. The bubble has burst, and we will recover. However with the economic weakness bearing down on us, this year does not look good. Interest rates are falling rapidly which is great news for our market. Unfortunately, I don't think it's enough. There are far too many storm clouds on the horizon, and we may have to weather an economic hurricane before we see a rainbow.

Real estate has proven itself a tremendous value for long term wealth creation but it's not always the best time to buy.

How do you think this will play out? Will we get a dead cat bounce this spring? Will we flatline for a few years? We will rush to new price highs this spring? You tell me.

Friday, November 28, 2008

November Inventory and Sales --updated--

This month really was the pits for Realtors and home sellers. REBGV home sales are down about 70% compared with last November and the MOI has roared to over 22 Months. Inventory has started to shrink and will continue to reduce as we approach the year end. Now the speculation begins as to how high the listing count will climb this spring.

Today we are faced with 76% higher inventory than the same time last year (19,524 v. 11,114). This number combined with the horrendous sales numbers (915 v. 2884 last November) has stomped out any of the last few burning embers of this market... Okay, that was a bit harsh but at Novembers sales pace it would take over 22 months to clear out our existing inventory v. 3.85 MOI in Nov. 2007. Wow, what a different market.

The good news is that affordability is improving. Lots of previously priced out Vancouverites may now be able to afford to buy a home in Vancouver! Prices are falling and if you look hard enough you can find some excellent buys, however you may want to sit on your hands for a while longer.

For now let’s all enjoy the holiday season! There are some serious sales going on this season and not only on houses and condos:). Have a Merry Christmas and happy holidays.

Months of Inventory (MOI) Sucks to be Squamish

Listings +76% YOY

Sales -70% YOY


Prices are falling sharply. Believe it or not the average SFH price fell 10% this month. Yes in 1 month. $745,778 for November v. $825,206 for October. The average has dipped 19% since March. It will be interesting to see if the benchmarks also make a dramatic drop.

Monday, September 29, 2008

September Report

September proved to be an exciting month for me, being voted Best Realtor by you all in the Best of Vancouver contest and then being quoted in the Macleans cover story on housing.

Unfortunatly our real estate market reality is pretty dull. More of the same market trends we've seen over the last many months: high inventory,lower sales and falling prices. Inventory has roared to 21,002 listings(+72% YOY) and sales continue to be well off from last year but an improvment MOM at 1619( -45% YOY). The MOI (months of inventory)has also stayed very high at 13 months compared with 4.4 months last Sept.




Do you think that the stock market bloodbath will have any affect on our local real estate? Will investors sell in fear of a global recession? Or perhaps put money back into tangible assets like real estate?

All sub area inventory charts here: INVENTORY

Friday, September 12, 2008

Months Of Inventory

These numbers are for August.

It looks like my home town of North Vancouver is one of the better markets to be selling a home right now. For such a large market, West Vancouver is struggling. What will September bring?

Monday, July 21, 2008

20,000 Listings. Is this the top???

We just hit 20,000 listings in the REBGV and the trend would point to even more homes for sale this fall. Currently were up over 60% in YOY inventory and on track for 70%+ by month end. We saw prices decline last month and many feel prices are destined to continue moving downward. We will likely see well over 8 MOI (months of inventory) at month end compared with 3 MOI at the end of last July.

Is this a good thing or a bad thing? Does cheering a price correction make you a pessimist? I guess it depends entirely on your current position.

One thing is for certain, home prices we're growing at a rate that could not be sustained. Now our market is re balancing. I personally would not want to be holding a bunch of pre-sales right now.

What does this mean for buyers and sellers?


Price sharply. Don't get greedy.


Prepare to hold long term, and take this opportunity to negotiate favourable terms.

Thursday, May 29, 2008

May 2008 Inventory and Sales Summary

Spring market eh? Well the chill in the air has cooled our Vancouver real estate market. The only thing red hot this spring is the growth of listings.

Last week we saw the sell/list ratio strengthen over early May, although not significantly. Let's see if we can get a healthy S/L for June.

Sales are down a startling 29% compared with May 2007, and even dipped under last month’s sales. For some perspective last year May 07 sales gained 28% over April 07 sales.

We started 2008 with slightly less inventory than 2007.We are currently up 39% over last year, and 69% over May 30th 2006.

What are you seeing out there? Keep on posting!

Here are some visuals:

REBGV Sales:

Listing Inventory:

REBGV: +39%

Van West: +63%

Van East: +27%

North Van: +81%

West Van: +57%

All inventory charts will be updated for the 31st: INVENTORY CHARTS