*VANCOUVER BUBBLE* The road to a 50% housing crash (w/ monthly stats)

[adamtheman]

(Updated as of May 1, 2013)

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DETACHED - $1,152,091
- Down 6.7% in 14 months from all-time high in Feb, 2012 ($1,235,244)

APARTMENT - $417,460
- Down 13.6% in 24 months from all-time high in Apr, 2011 ($483,424)

ATTACHED - $549,447
- Down 7.4% in 13 months from all-time high in Mar, 2012 ($593,139)

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INFO: This is a dedicated thread intended to track the Vancouver "real estate bubble" and upcoming (speculated) crash. It is also designed to facilitate related Vancouver / BC specific real estate discussion.

DATA: The prices listed below are the monthly DETACHED averages for the Greater Vancouver region - which covers Vancouver and surrounding areas. I am not including condos or attached in the below detailed figures. I am only tracking detached at this time (due to lack of available long term stats for attached/condo).

METHOD: I will be tracking for up to a 50% drop. The all-time high was set in Feb, 2012 at $1,235,200. In order to find the month that represented 50% of this value, I had to go back over 6 years all the way to Aug, 2005, when the average price was $607,100. Therefore, that is the target. I will update this topic at the beginning of each month with new data as it becomes available.

COLOURS: The Red/Green indicate the MOM (Month on Month) prices. Green means that it went up from the previous month. Red means it went down from the previous month.

GRAPH: At the very bottom I have included a graph which shows average prices back to 1977. It also includes CONDOS/ATTACHED back to 1984. (Credit to Larry @ Yattermatters)

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APR/13 - $1,152,100
MAR/13 - $1,176,600
FEB/13 - $1,221,000
JAN/13 - $1,152,900
DEC/12 - $1,078,500
NOV/12 - $1,053,900
OCT/12 - $1,116,100
SEP/12 - $1,119,200
AUG/12 - $1,142,200
JUL/12 - $1,041,300
JUN/12 - $1,061,100
MAY/12 - $1,073,300
APR/12 - $1,106,600
MAR/12 - $1,155,500
FEB/12 - $1,235,200 *** ALL-TIME HIGH ***
JAN/12 - $1,145,900
DEC/11 - $1,064,200
NOV/11 - $1,134,900
OCT/11 - $1,162,300
SEP/11 - $1,104,800
AUG/11 - $1,162,200
JUL/11 - $1,133,300
JUN/11 - $1,215,200
MAY/11 - $1,223,400
APR/11 - $1,204,500
MAR/11 - $1,155,000
FEB/11 - $1,173,300
JAN/11 - $1,144,500
DEC/10 - $1,046,300
NOV/10 - $1,043,100
OCT/10 - $1,058,500
SEP/10 - $1,016,300
AUG/10 - $999,400
JUL/10 - $941,200
JUN/10 - $970,500
MAY/10 - $955,100
APR/10 - $1,003,800
MAR/10 - $1,002,000
FEB/10 - $963,100
JAN/10 - $950,700
DEC/09 - $952,900
NOV/09 - $903,400
OCT/09 - $913,900
SEP/09 - $872,100
AUG/09 - $890,000
JUL/09 - $824,400
JUN/09 - $819,200
MAY/09 - $831,100
APR/09 - $816,800
MAR/09 - $792,500
FEB/09 - $763,200
JAN/09 - $782,900
DEC/08 - $813,700
NOV/08 - $745,700
OCT/08 - $825,200
SEP/08 - $790,000
AUG/08 - $808,000
JUL/08 - $828,700
JUN/08 - $904,100
MAY/08 - $887,500
APR/08 - $880,800
MAR/08 - $918,500
FEB/08 - $920,600
JAN/08 - $877,200
DEC/07 - $810,900
NOV/07 - $813,100
OCT/07 - $850,000
SEP/07 - $819,800
AUG/07 - $856,100
JUL/07 - $831,200
JUN/07 - $809,300
MAY/07 - $852,400
APR/07 - $794,300
MAR/07 - $785,200
FEB/07 - $743,200
JAN/07 - $761,100
DEC/06 - $775,700
NOV/06 - $765,300
OCT/06 - $795,800
SEP/06 - $741,600
AUG/06 - $749,200
JUL/06 - $730,800
JUN/06 - $718,700
MAY/06 - $716,200
APR/06 - $701,900
MAR/06 - $699,900
FEB/06 - $705,100
JAN/06 - $655,900
DEC/05 - $627,500
NOV/05 - $609,600
OCT/05 - $624,300
SEP/05 - $630,300
AUG/05 - $607,100 *** TARGET / 50% DROP ***
JUL/05 - $596,100
JUN/05 - $580,000
MAY/05 - $588,900
APR/05 - $555,400
MAR/05 - $563,900
FEB/05 - $542,600
JAN/05 - $524,300
DEC/04 - $532,000
NOV/04 - $525,600
OCT/04 - $549,700
SEP/04 - $538,400
AUG/04 - $525,700
JUL/04 - $521,800
JUN/04 - $542,700
MAY/04 - $530,300
APR/04 - $532,500
MAR/04 - $516,600
FEB/04 - $504,400
JAN/04 - $495,900
DEC/03 - $475,100
NOV/03 - $493,300
OCT/03 - $479,800
SEP/03 - $472,400
AUG/03 - $457,100
JUL/03 - $428,600
JUN/03 - $436,900
MAY/03 - $433,600
APR/03 - $438,600
MAR/03 - $426,700
FEB/03 - $434,000
JAN/03 - $422,700
DEC/02 - $395,500
NOV/02 - $403,700
OCT/02 - $396,400
SEP/02 - $398,100
AUG/02 - $399,000
JUL/02 - $390,500
JUN/02 - $398,100
MAY/02 - $400,500
APR/02 - $399,000
MAR/02 - $393,000
FEB/02 - $389,700
JAN/02 - $363,900 *** BUBBLE BEGINS ***




(credit to Larry @ yattermatters)

[adamtheman]

Here is some interesting info about the previous booms, for those who asked:

BOOM #1
- Mar/79 @ $73,200
- Apr/81 @ $181,200 (147% increase in 25 months - 102% with inflation)
- Dec/84 @ $113,300 (38% decline in 45 months - 51% with inflation)

BOOM #2
- Jun/88 @ $177,100
- Jul/96 @ $426,400 (140% increase in 97 months - 92% with inflation)
- Feb/99 @ $339,900 (20% decline in 31 months - 23% with inflation)

BOOM #3
- Jan/02 @ $363,900
- Feb/08 @ $920,600 (153% increase 73 months - 100% with inflation)

Let's stop here and take a look at where we are. A 153% increase (100% with inflation). It looks strangely familiar to when the two previous bubbles burst. Now would be a good time to predict a bubble burst... and... sure enough, wouldn't you know it? The bubble "pops" (or so everyone thinks). In Feb 2008, prices start dropping, and they drop almost 20% over the summer. It was supposed to end here... but it didn't. The government steps in with super low interest rates and prevents the normal cycle from happening. Not only does the market recover almost immediately, but the bubble continus to grow at an alarming rate. So what ends up happening? Here is where we end up, exactly 4 years later:

- Feb/12 @ $1,235,200 (239% increase in 121 months - 177% with inflation)

Because of the government's intervention, we are now in a much larger bubble than before, with a 177% increase after inflation, compared to the previous 102% and 92% gains. The end result will be a much quicker, faster and deeper drop in real estate prices. As proof of this, we are already down 15.7% in just 5 months. And now the government is literally begging for a "soft landing". However, the government had their chance for a soft landing in 2008, and they blew it, and now we will all suffer a "hard landing" because of the 4 extra "bonus years" that extended our bubble.

How ANY rational person can sit here and look at the above statistics, and then (with a straight face), try to tell me (or themselves) that real estate will continue to boom simply shows the true power of denial. And all that I hear constantly is, "It's different here" and "We have asian money so we'll be fine". I guess we will see how it all works out, but statistics do not lie.

[Beeg]

For how many years have people been calling for a crash?

People were calling for a crash in HK and Shanghai for the past decade...never happened.

With so much investment capital coming from Greater China, and prices in Vancouver (and especially the GTA) being cheap in comparison, why do you suspect a crash?

Unless the current Immigration Minister decides to stop all emigration to Canada and stop all the investment dollars coming in.

[adamtheman]

For how many years have people been calling for a crash?

People were calling for a crash in HK and Shanghai for the past decade...never happened.

With so much investment capital coming from Greater China, and prices in Vancouver (and especially the GTA) being cheap in comparison, why do you suspect a crash?

Unless the current Immigration Minister decides to stop all emigration to Canada and stop all the investment dollars coming in.

People have been calling for a crash for a long time, including me. I will fully admit that. But just because bears have been wrong in the past, doesn't mean bulls will be right in the future. Everyone has bias, including me. Your signature indicates you are involved in landlord/real estate stuff. So you probably have a bias as well (you don't want housing to go down). Let's just get that all out in the air (and be fair to everyone).

As far as immigration goes, if you are suggesting that immigration alone is enough to prop up real estate in Canada, what proof do you have of that? I have never seen any proof of the "HAM" (Hot asian money) that many speak of. There is spectulation and rumours, and it is obvious that HAM does exist, but to what extent, no one knows. Even if it were true, that somehow immigration could prop up the entire real estate industry, then what would that mean for canadians born here, unable to ever afford housing? It would be a lose-lose. Also, prices in Vancouver are far higher than Toronto. Not sure where you got that figure from. Vancouver has the highest prices in Canada.

[Beeg]

what would that mean for canadians born here, unable to ever afford housing?

It means we are in an era of globalization and Canadians should work hard, smarter and be more entrepreneurial. And appreciate that the world wants to invest here and we all get richer.

Also, prices in Vancouver are far higher than Toronto. Not sure where you got that figure from. Vancouver has the highest prices in Canada.

Yes, for the time being. Many Asian investors like Vancouver simply because of the climate and the fact it's a much easier flight.

However, the Greater Toronto Area is now very hot. The GTA has good health care, great shopping, a strong economy, Ontario has lots of good universities, the GTA is generally peaceful and the people are open to newcomers. And the prices are much lower than Vancouver.

If you have invested in the GTA over the past few years, you are a happy investor.

When the NDP gain power in BC in 2 years, your predictions might come true for BC. Investors dislike socialists.

[gei]

Another stupid "real estate crash" thread?

[adamtheman]

It means we are in an era of globalization and Canadians should work hard, smarter and be more entrepreneurial. And appreciate that the world wants to invest here and we all get richer.

I'm not sure what to say to this. How can "we all get richer". Because we are importing asian money for our land? Immigration can only take us so far.

Yes, for the time being. Many Asian investors like Vancouver simply because of the climate and the fact it's a much easier flight.

However, the Greater Toronto Area is now very hot. The GTA has good health care, great shopping, a strong economy, Ontario has lots of good universities, the GTA is generally peaceful and the people are open to newcomers. And the prices are much lower than Vancouver.

If you have invested in the GTA over the past few years, you are a happy investor.

When the NDP gain power in BC in 2 years, your predictions might come true for BC. Investors dislike socialists.

I'm not being rude, but I am having trouble taking you seriously. You are saying all the stereotypical things that I hear about, but have never actually heard someone say myself. How do you know all of this? You sound like one of those ads I see in the newspapers. You're telling me about transporation, good health care, great shopping, strong economy (really?), good universities, etc. it sounds like you're trying to sell the idea of real estate to everyone so we can "all get richer". And your signature is filled with advertisements for landlord services, making it even more difficult to take anything you say about real estate seriously.

May I ask, what exactly is your outlook for real estate? Are you suggesting that Canada real estate will rise indefinitely? Or are you suggesting that we will have a "soft landing" (the media's new favorite word). FYI, NDP will gain power in less than a year, not 2 years..... but...... I'd be more concerned about the conservatives... the just dropped the F-bomb (literally) on housing.

[Mark77]

Only a 50% drop? You're being generous!

[Engi-Nir]

The good news is, every USA company that closes in canada, moves back to states...given the trend, hopefully, Canada becomes a third world country soon enough.

No Mr America, I need that salary cause everything in Canada is expensive.

Sorry, Mr Canada, it is cheaper in states, cause our cost of living is reality so we don't need to pay labours that high (incl. police officers,teachers, factory works, fast food workers, etc).

Hence, let the prices keep going up, it is all good

[adamtheman]

Another stupid "real estate crash" thread?

Is everything you disagree with "stupid"?

lol... and here folks, is the type of person who keep calling for a "housing market collapse" Yes I am deeply concerned that my condo will lose nearly half of it's value "because of the high number of condos on the market".

lol @ all the people thinking this very minor change will "collapse the housing market".

You own a condo, and you don't want to see it drop... I get it. Pretty much anyone who owns real estate and purchased it recently (especially with a small down payment), will not want to believe that prices can drop. But ignorance is only bliss for so long. You can uptalk real estate all you want but the reality is things aren't looking good. Sorry Gei.

[Mark77]

The good news is, every USA company that closes in canada, moves back to states...given the trend, hopefully, Canada becomes a third world country soon enough. No Mr American, I need that salary cause everything in Canada is expensive. Sorry, Mr Canada, it is cheaper in states, cause our cost of living is reality so we don't need to pay labours that high (incl. police officers,teachers, factory works, fast food workers, etc). Hence, let the prices keep going up, it is all good

Yeah we better hope our gold/silver industries take off, as an alternative to the banking system worldwide. This would actually be reasonably positive for Vancouver as much of Canada's precious metals mining industry is based out of Vancouver offices.

I think Alberta's going to get smoked really bad. Oilsands are the highest marginal cost of production energy source around. The Canadian dollar is likely to rise substantially in the next few years as the housing bubble winds down and folks start de-leveraging (ie: stopping their shorting of the dollar to buy real estate). And there is already a huge discount in Alberta oil because of pipeline capacity shortages.

[adamtheman]

Only a 50% drop? You're being generous!

If we drop more than 50%, I can adjust the chart...

Actually, a true 50% drop is unlikely, but with inflation factored in, it becomes more realistic. What we need to remember is that, even if real estate only drops around 35% over the next 5 years, we also need to factor in the lost money due to inflation, at 2-3% per year and compounded.

[Mark77]

If we drop more than 50%, I can adjust the chart...

Actually, a true 50% drop is unlikely, but with inflation factored in, it becomes more realistic. What we need to remember is that, even if real estate only drops around 35% over the next 5 years, we also need to factor in the lost money due to inflation, at 2-3% per year and compounded.

Where do we get inflation from if nobody's buying stuff to fill their houses with? And construction workers aren't driving around with their big pickup trucks?

IMHO, the BoC is really behind the curve in fighting deflation. Interest rates should be 0% for how bad the contemporary economy is, and the massive underutilization of productive capacity within Canada.

[Beeg]

Yeah we better hope our gold/silver industries take off,

Or it might not matter as Canada becomes a nice suburb for Asian families who want a break from where real commerce and industry is.

Nice trees, good schools, good shopping. Great for the kids. Property taxes are paid, HST and other taxes are paid, no problems. A nice relatively peaceful 'suburb' with a good service economy and lots of natural resources.

While real business is done in low tax, pro-growth Asia.

The Canadian banks are nice and stable and open for business. The government likes taxes paid. What a nice bedroom community, I mean country.

[Mark77]

Or it might not matter as Canada becomes a nice suburb for Asian families who want a break from where real commerce and industry is.

Rents would be rising if that were the case (ie: Asians flocking to Canada to be here temporarily), and that's definitely not happening.

Asian housing collapses are underway, for largely the same reasons as we're going to see in Canada -- massive overcapacity, excess leverage and speculation, and very poor domestic real economies.