Real Estate

Vancouver housing bubble?

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Sr. Member
Aug 3, 2006
625 posts
410 upvotes
January 2019 Real Estate Report: Home listings increase while buyers remain in holding pattern

https://www.rebgv.org/market-watch/mont ... -2019.html

Sales of detached homes in January 2019 reached 339, a 30.4 per cent decrease from the 487 detached sales recorded in January 2018. The benchmark price for detached homes is $1,453,400. This represents a 9.1 per cent decrease from January 2018, and an 8.3 per cent decrease over the past six months.

Sales of apartment homes reached 559 in January 2019, a 44.8 per cent decrease compared to the 1,012 sales in January 2018. The benchmark price of an apartment property is $658,600. This represents a 1.7 per cent decrease from January 2018, and a 6.6 per cent decrease over the past six months.

Attached home sales in January 2019 totaled 205, a 35.7 per cent decrease compared to the 319 sales in January 2018. The benchmark price of an attached unit is $800,600. This represents a 0.5 per cent decrease from January 2018, and a 6.2 per cent decrease over the past six months.
Deal Expert
User avatar
Feb 9, 2003
18116 posts
2617 upvotes
Langley
datoprookie wrote: https://news.gov.bc.ca/releases/2018FIN0009-000501

Satellite families will pay the highest rate of the speculation tax (2%) so it is not exactly a secret that they are being targeted. And yes they should be playing household income tax and no they shouldn't be applying for low income assistance. They are basically leeching off the system and if the speculation form helps the CRA identify these individuals then I am all for it.

You often speak about how inefficient the government is yet you think they are capable to implementing a system which can data mine different municipal, provincial and federal databases to find the pertinent information for the speculation tax. Seems like not only a contradiction but also a pipe dream to me. Why not get the information directly from the horse's mouth and if the horse lies, it is on record and can be used against them in the future.
It is illegal for the government to use data for a purpose other than the reason it was collected. This, not technical issues, is usually why data isn't shared.
Deal Expert
User avatar
Feb 9, 2003
18116 posts
2617 upvotes
Langley
adamtheman wrote: lol holding pattern
IKR....7.2% benchmark price drop in 6 months is a "holding pattern." A few years of "holding" and housing will be affordable again.
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
civiclease wrote: I'm talking about the dam itself being an environmental catastrophe, not the threat of it eventually breaking.
But that's not how you stated it... "The Site C project sounds like an environmental catastrophe waiting to happen" sounds more like when it breaks - ie like tailings pond failures.
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
datoprookie wrote: https://news.gov.bc.ca/releases/2018FIN0009-000501

Satellite families will pay the highest rate of the speculation tax (2%) so it is not exactly a secret that they are being targeted. And yes they should be playing household income tax and no they shouldn't be applying for low income assistance. They are basically leeching off the system and if the speculation form helps the CRA identify these individuals then I am all for it.

You often speak about how inefficient the government is yet you think they are capable to implementing a system which can data mine different municipal, provincial and federal databases to find the pertinent information for the speculation tax. Seems like not only a contradiction but also a pipe dream to me. Why not get the information directly from the horse's mouth and if the horse lies, it is on record and can be used against them in the future.
You still won't catch what you are looking for by having everyone answer the same question and then trying to weed through all of that data to get to the targets that you are looking. The current system is basically saying "yes, we know that we are looking for a needle in a haystack but we really need to pile on more hay to make things more effective".

Why do you think I am saying that the current system is inefficient? And that more time and energy will be spent trying to find the data this way? The ONLY people who don't want to use a smarter way of doing things are generally people who will benefit from it - ie the civil service.

As for the horse, it's been proven to lie. In fact, not only do the horses lie but many of the trainers, owners, and jockeys also lies. And (here's the important part...) we already have them on the record with the lies with the false/incomplete/not filed declarations that have been filled out either as a FINTRAC required document, OR the many forums required low-income assistance to leech off the system. After all, they had to fill out those other forms in order to get the benefits, right? What's the difference if they fill in another form and lie about what's contained on this form? It will just be another one in a large stack of forms that are on the record and that they lied on. Why should this one make any more of a difference than the dozens of other forms that were falsely filled in before?
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
i6s1 wrote: It is illegal for the government to use data for a purpose other than the reason it was collected. This, not technical issues, is usually why data isn't shared.
Depends on the particular data... If you take something as simple as a mailing address, you can easily cross-reference names with addresses and wonder why they list address A as their principal residence when all of their mail is sent to address B. Sure, it can be as simple as a mail drop but if that maildrop is in another province, they would have to do some explaining.
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
i6s1 wrote: IKR....7.2% benchmark price drop in 6 months is a "holding pattern." A few years of "holding" and housing will be affordable again.
It might be the start of a massive downward curve... after all that how they all start - no change, then a very small change, then a large change followed by an even large change as the curve accelerates in a direction with increasing speed.
[OP]
Deal Fanatic
User avatar
Dec 3, 2004
5134 posts
3571 upvotes
Vancouver
Here's some YoY numbers. Detached homes. Median prices.

Richmond
Jan/2018 = 66 sales @ $1.76 million
Jan/2019 = 30 sales @ $1.45 million
Prices down 17%, sales down 54%

Burnaby
Jan/2018 = 56 sales @ $1.65 million
Jan/2019 = 26 sales @ $1.44 million
Prices down 13%, sales down 54%

Coquitlam
Jan/2018 = 56 sales @ $1.26 million
Jan/2019 = 27 sales @ $1.09 million
Prices down 13%, sales down 51%

Maple Ridge
Jan/2018 = 74 sales @ $879k
Jan/2019 = 39 sales @ $795k
Prices down 9%, sales down 47%

Quite frankly, these numbers are far worse than I ever would have imagined. To put these numbers into perspective, you need to realize that January 2019 wasn't exactly an amazing year either for sales, and yet sales have plunged over 50% YoY.

Richmond is the hardest hit. Amazing. Look at that. Prices down 17% YoY and sales down 54%. What is mind blowing is there was only 30 sales of detached homes in Richmond for the ENTIRE month. That's less than 1 sale a day.

If we look at listings, the situation gets even worse. Richmond had 302 new detached listings in January 2019, compared to only 236 in January 2018. Looks like Richmond could be ground zero for the real estate crash, which is only fitting since that is where the bubble began.
Deal Addict
Dec 27, 2006
1958 posts
933 upvotes
https://www.theglobeandmail.com/busines ... ing-slump/

In Vancouver, a $2.9-million teardown becomes a $2-million money loser
Published February 4, 2019

4213 W 14th Avenue in Vancouver, British Columbia, on Feb. 4, 2019.
BEN NELMS
Call it Exhibit A for the state of Vancouver’s slumping market for detached houses.

In a gauge for rundown properties, a buyer paid $1,980,000 last month for a three-bedroom teardown in the city’s Point Grey neighbourhood, nearly three years after the seller bought it for $2,880,000.

The listing took 14 months to sell, underscoring the sluggish sales activity across the region. Housing sales have tumbled to a 10-year low in Greater Vancouver as a market once fuelled by bidding wars gives way to a period of declining prices.

Story continues below advertisement

Last month’s 1,103 sales in the region for various housing types were the lowest for January since 2009, when only 762 properties changed hands in that month during the recession, the Real Estate Board of Greater Vancouver said on Monday.

Sales volume in January dropped 39.3 per cent when compared with the same month in 2018, and slumped 36.3 per cent beneath the 10-year average for January.

Greater Vancouver home sales

Sales volume in January for detached houses, condos and townhomes

0
500
1,000
1,500
2,000
2,500
3,000‎
2008
2010
2012
2014
2016
2018
1819
THE GLOBE AND MAIL, SOURCE: rebgv

×

year sales
2008-01-01 1819
2009-01-01 762
2010-01-01 1923
2011-01-01 1819
2012-01-01 1577
2013-01-01 1351
2014-01-01 1760
2015-01-01 1913
2016-01-01 2519
2017-01-01 1523
2018-01-01 1818
2019-01-01 1103
Greater Vancouver home sales

download csv
Simply put, the psychology swung last summer to being a buyer’s market, with consumer confidence eroded by an array of B.C. taxes on real estate, said Phil Moore, president of the Greater Vancouver board.

“Anything above $3-million has been hardest hit,” he said. “Buyers don’t like instability and they’re looking for homes that are liveable.”

Within the City of Vancouver, listings for detached houses for less than $1-million are no longer rare. “I’m surprised that we’re starting to see more and more detached sales in East Vancouver below $1-million and even a few sales on the west side under $2-million,” Mr. Moore said.

Provincially, the B.C. NDP government raised the foreign-buyers tax to 20 per cent one year ago, while expanding that tax beyond the initial target of the Vancouver region. Other provincial factors include what the NDP calls a speculation and vacancy tax targeted primarily at out-of-province residents, and other B.C. taxes aimed at higher-end properties.

Higher interest rates and toughened borrowing rules are other factors, housing experts say. Canada’s banking regulator implemented a stress test on Jan. 1, 2018, making it harder for buyers to qualify for mortgages.

Story continues below advertisement

The benchmark price (an industry representation of the typical home sold in an area) for all residential types in Greater Vancouver has declined for eight consecutive months, hitting $1,019,600 last month after setting a record high of $1,094,000 last May.

The benchmark price for detached houses has fallen 14.1 per cent over the past year on Vancouver’s west side to $3,049,700. The region’s condo segment began softening in mid-2018, including in the less-expensive suburbs. In New Westminster, for instance, the benchmark price for condos sold has fallen 8.5 per cent over the past six months to $524,400.

Look no further than the Vancouver teardown as a dramatic example of the turmoil in the detached segment. The listing in the Point Grey neighbourhood on the city’s west side went on the market for $3,070,000 in November, 2017. The house, built in 1912, languished for six months without any takers. Last May, the seller lowered the asking price in what would be the first of four markdowns.

Finally, after slashing the list price to $2,199,900 on Jan. 7, the knockdown sold days later for $900,000 lower than what the seller paid nearly three years earlier, or a 31-per-cent plunge. The seller had acquired the teardown for $2,880,000 in February, 2016. Six months later, the then-B.C. Liberal government introduced a 15-per-cent tax on foreign buyers in the Vancouver region.

In desirable neighbourhoods on Vancouver’s west side, rundown homes that fetched as much as $3-million during a red-hot market in mid-2016 would now sell for roughly $2-million to $2.3-million, reflecting land value only, housing observers say.

“We made a good deal,” said Gordon Ge, the agent who represented the Point Grey buyer. “The market is dropping down right now because of the extra taxes.”

Story continues below advertisement

Mr. Ge said his client plans to rent out the bungalow for a couple of years, before demolishing it and building a new house.

The listing agent, Danielle Lu, said she couldn’t say much about the transaction. “I am sorry that I can’t discuss anything about my client. It is their decision,” she said.

Still, the affordability crisis persists. Even with a buyer’s market, prices remain lofty compared with the 2000s. Records for Ms. Lu’s listing show that the property sold for $455,000 in 2002 and resold for $751,500 in 2005 – above the asking price in both instances.

Developers say there are examples on Vancouver’s west side and in the district municipality of West Vancouver of extreme price drops for detached properties, especially teardowns that are sold for land value. But they expect 2019’s bumpy ride will smooth out with improved sales activity in 2020 and an optimistic outlook over the long term.

“Builders need to have confidence that values are going to move up during the course of construction,” said Neil Chrystal, chief executive officer of Polygon Homes Ltd.

Eric Carlson, chief executive at Anthem Properties Group Ltd., said he expects sales volume for resale properties to be slow for another one or two quarters. For buyers considering entry-level condos, the thought of losing $50,000 in market value has been a deterrent, he said. “But they will get tired of sitting in basement suites or living with their parents or having roommates," Mr. Carlson said.
Deal Addict
Dec 27, 2006
1958 posts
933 upvotes
https://www.bloomberg.com/amp/news/arti ... of-iceberg?

Biggest Vancouver Home Price Fall Since 2013 Is Just Tip of Iceberg
Natalie Obiko Pearson
February 4, 2019, 4:13 PM EST

Photographer: Ben Nelms/
Benchmark residential real estate price drops 4.5% in January

Vancouver began the year with benchmark home prices falling the most in almost six years, according to the local real estate board. That may be just the tip of the iceberg.

Metro Vancouver’s composite home price, including houses, condominiums and townhouses, fell 4.5 percent in January from a year earlier to C$1.02 million ($780,000), the biggest decline since May 2013 and down about 8 percent from the June 2018 peak, according to the Real Estate Board of Greater Vancouver.

Signs of a correction have been evident for months with transactions slowing and properties lingering unsold. Last year, the sales plunged to the lowest in almost two decades amid a slew of new taxes, rising interest rates, and tighter lending rules.

“Today’s market conditions are largely the result of the mortgage stress test that the federal government imposed at the beginning of last year,” Phil Moore, the realtor group’s president said in a statement Monday.

Vancouver appears to be following a broader trajectory among global cities, including London, Hong Kong and Sydney, that saw massive gains as buyers binged on easy capital during a decade of cheap debt. Now some of that liquidity is drying up. Chinese outbound investment has slumped since a 2016 crackdown on capital outflows, while the U.S. Federal Reserve is shrinking its balance sheet.

London, NYC, Hong Kong Are No Longer Immune to the Housing Slump

“Vancouver real estate was one of the largest benefactors,” of that stimulus, says Steve Saretsky, a Vancouver realtor and author of a local real estate blog. “It may be simple to summarize the slowdown as a few local tax policies and tightening of lending standards, but in reality it’s much more complicated,” says Saretsky, who’s now trying to explain the darkening macro picture in a market where many locals have long considered home price appreciation unstoppable.

He rattles off troubling indicators, such as the 19.5 months of unsold inventory languishing on the market. The benchmark composite price is a “lagging index” and doesn’t capture the full picture, since detached houses have been falling for nearly two years and are down 12.8 percent from their peak, says Saretsky.

The top end of the market driven largely by foreign buyers, especially Chinese, has been the hardest hit. Prices in posh West Vancouver have plunged 14 percent in a year.

“These homes in West Van were selling for C$12 million, C$13 million two years ago,” says Adil Dinani, a realtor with Royal LePage, a unit of Brookfield Real Estate Services Inc. “Agents are asking me to throw them off for anything -- C$8 million, C$8.5 million, whatever it is.”

Dinani, who’s been in the business for 14 years, says there are fewer speculative investors, and foreign buyers have really pulled back. “And what local buyer has C$6 million, C$7 million to put towards a home?” he said.
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
adamtheman wrote: Here's some YoY numbers. Detached homes. Median prices.

Richmond
Jan/2018 = 66 sales @ $1.76 million
Jan/2019 = 30 sales @ $1.45 million
Prices down 17%, sales down 54%

Burnaby
Jan/2018 = 56 sales @ $1.65 million
Jan/2019 = 26 sales @ $1.44 million
Prices down 13%, sales down 54%

Coquitlam
Jan/2018 = 56 sales @ $1.26 million
Jan/2019 = 27 sales @ $1.09 million
Prices down 13%, sales down 51%

Maple Ridge
Jan/2018 = 74 sales @ $879k
Jan/2019 = 39 sales @ $795k
Prices down 9%, sales down 47%

Quite frankly, these numbers are far worse than I ever would have imagined. To put these numbers into perspective, you need to realize that January 2019 wasn't exactly an amazing year either for sales, and yet sales have plunged over 50% YoY.

Richmond is the hardest hit. Amazing. Look at that. Prices down 17% YoY and sales down 54%. What is mind blowing is there was only 30 sales of detached homes in Richmond for the ENTIRE month. That's less than 1 sale a day.

If we look at listings, the situation gets even worse. Richmond had 302 new detached listings in January 2019, compared to only 236 in January 2018. Looks like Richmond could be ground zero for the real estate crash, which is only fitting since that is where the bubble began.
Remember that this is traditionally the 'slow' part of the year with fewer listings and low activity. It's going to start being REALLY interesting when April/May rolls around as the Summer selling season starts.
Deal Guru
Jan 27, 2006
12570 posts
5741 upvotes
Vancouver, BC
Motoss wrote: https://www.theglobeandmail.com/busines ... ing-slump/

In Vancouver, a $2.9-million teardown becomes a $2-million money loser
Published February 4, 2019

4213 W 14th Avenue in Vancouver, British Columbia, on Feb. 4, 2019.
BEN NELMS
Call it Exhibit A for the state of Vancouver’s slumping market for detached houses.

In a gauge for rundown properties, a buyer paid $1,980,000 last month for a three-bedroom teardown in the city’s Point Grey neighbourhood, nearly three years after the seller bought it for $2,880,000.

The listing took 14 months to sell, underscoring the sluggish sales activity across the region. Housing sales have tumbled to a 10-year low in Greater Vancouver as a market once fuelled by bidding wars gives way to a period of declining prices.

Story continues below advertisement

Last month’s 1,103 sales in the region for various housing types were the lowest for January since 2009, when only 762 properties changed hands in that month during the recession, the Real Estate Board of Greater Vancouver said on Monday.

Sales volume in January dropped 39.3 per cent when compared with the same month in 2018, and slumped 36.3 per cent beneath the 10-year average for January.

Greater Vancouver home sales

Sales volume in January for detached houses, condos and townhomes

0
500
1,000
1,500
2,000
2,500
3,000‎
2008
2010
2012
2014
2016
2018
1819
THE GLOBE AND MAIL, SOURCE: rebgv

×

year sales
2008-01-01 1819
2009-01-01 762
2010-01-01 1923
2011-01-01 1819
2012-01-01 1577
2013-01-01 1351
2014-01-01 1760
2015-01-01 1913
2016-01-01 2519
2017-01-01 1523
2018-01-01 1818
2019-01-01 1103
Greater Vancouver home sales

download csv
Simply put, the psychology swung last summer to being a buyer’s market, with consumer confidence eroded by an array of B.C. taxes on real estate, said Phil Moore, president of the Greater Vancouver board.

“Anything above $3-million has been hardest hit,” he said. “Buyers don’t like instability and they’re looking for homes that are liveable.”

Within the City of Vancouver, listings for detached houses for less than $1-million are no longer rare. “I’m surprised that we’re starting to see more and more detached sales in East Vancouver below $1-million and even a few sales on the west side under $2-million,” Mr. Moore said.

Provincially, the B.C. NDP government raised the foreign-buyers tax to 20 per cent one year ago, while expanding that tax beyond the initial target of the Vancouver region. Other provincial factors include what the NDP calls a speculation and vacancy tax targeted primarily at out-of-province residents, and other B.C. taxes aimed at higher-end properties.

Higher interest rates and toughened borrowing rules are other factors, housing experts say. Canada’s banking regulator implemented a stress test on Jan. 1, 2018, making it harder for buyers to qualify for mortgages.

Story continues below advertisement

The benchmark price (an industry representation of the typical home sold in an area) for all residential types in Greater Vancouver has declined for eight consecutive months, hitting $1,019,600 last month after setting a record high of $1,094,000 last May.

The benchmark price for detached houses has fallen 14.1 per cent over the past year on Vancouver’s west side to $3,049,700. The region’s condo segment began softening in mid-2018, including in the less-expensive suburbs. In New Westminster, for instance, the benchmark price for condos sold has fallen 8.5 per cent over the past six months to $524,400.

Look no further than the Vancouver teardown as a dramatic example of the turmoil in the detached segment. The listing in the Point Grey neighbourhood on the city’s west side went on the market for $3,070,000 in November, 2017. The house, built in 1912, languished for six months without any takers. Last May, the seller lowered the asking price in what would be the first of four markdowns.

Finally, after slashing the list price to $2,199,900 on Jan. 7, the knockdown sold days later for $900,000 lower than what the seller paid nearly three years earlier, or a 31-per-cent plunge. The seller had acquired the teardown for $2,880,000 in February, 2016. Six months later, the then-B.C. Liberal government introduced a 15-per-cent tax on foreign buyers in the Vancouver region.

In desirable neighbourhoods on Vancouver’s west side, rundown homes that fetched as much as $3-million during a red-hot market in mid-2016 would now sell for roughly $2-million to $2.3-million, reflecting land value only, housing observers say.

“We made a good deal,” said Gordon Ge, the agent who represented the Point Grey buyer. “The market is dropping down right now because of the extra taxes.”

Story continues below advertisement

Mr. Ge said his client plans to rent out the bungalow for a couple of years, before demolishing it and building a new house.

The listing agent, Danielle Lu, said she couldn’t say much about the transaction. “I am sorry that I can’t discuss anything about my client. It is their decision,” she said.

Still, the affordability crisis persists. Even with a buyer’s market, prices remain lofty compared with the 2000s. Records for Ms. Lu’s listing show that the property sold for $455,000 in 2002 and resold for $751,500 in 2005 – above the asking price in both instances.

Developers say there are examples on Vancouver’s west side and in the district municipality of West Vancouver of extreme price drops for detached properties, especially teardowns that are sold for land value. But they expect 2019’s bumpy ride will smooth out with improved sales activity in 2020 and an optimistic outlook over the long term.

“Builders need to have confidence that values are going to move up during the course of construction,” said Neil Chrystal, chief executive officer of Polygon Homes Ltd.

Eric Carlson, chief executive at Anthem Properties Group Ltd., said he expects sales volume for resale properties to be slow for another one or two quarters. For buyers considering entry-level condos, the thought of losing $50,000 in market value has been a deterrent, he said. “But they will get tired of sitting in basement suites or living with their parents or having roommates," Mr. Carlson said.
Typical real estate agent -
“We made a good deal,” said Gordon Ge, the agent who represented the Point Grey buyer. “The market is dropping down right now because of the extra taxes.”

Mr. Ge said his client plans to rent out the bungalow for a couple of years, before demolishing it and building a new house.
Probably laughing all the way to the bank with his commission cheque.
Jr. Member
User avatar
Oct 25, 2018
116 posts
123 upvotes
Kelowna
It would be nice to see further breakdown on the stats beyond median prices for detached homes, like square footage and lot size, age of house.

I suspect the numbers would look even worse if it shows that buyers are able to buy more (and newer/renovated units) with less money than previous years.

ie. if in 2017, someone was paying $1.5MM for a 1970-built 1500 sq ft shack overlooking a garbage dump, and in 2019, they are paying $1.3MM for a 2013-built 3000 sq ft house in a nicer part of town.
Deal Fanatic
Oct 7, 2007
6289 posts
2558 upvotes
EndlessRide wrote: It would be nice to see further breakdown on the stats beyond median prices for detached homes, like square footage and lot size, age of house.

I suspect the numbers would look even worse if it shows that buyers are able to buy more (and newer/renovated units) with less money than previous years.

ie. if in 2017, someone was paying $1.5MM for a 1970-built 1500 sq ft shack overlooking a garbage dump, and in 2019, they are paying $1.3MM for a 2013-built 3000 sq ft house in a nicer part of town.
I only know of one detached house that sold on the west side in recent months and it was purchased by a builder. One data point is by no means a representative sample or statistically relevant but it is indicative of something.

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