REW.CA News

Vancouver Real Estate Market - 2 Different Pictures

REW.ca, May 16, 2012

Okay, it looks like the big crazy boom in Vancouver house prices is over for now. Some kind of drop in prices could well be on the way, to the relief of everyone except west siders who haven't cashed out yet.

So what happens now? It's funny how different stats can tell different stories.

A May 15 article in the Globe and Mail is a good snapshot of the Vancouver real estate market as it teeters on the brink of... something. Great headline too: "Vancouver's Real Estate Swoon Deepens."

But the graph accompanying the Globe and Mail article totally loses us when it compares the percentage change in average Toronto and Vancouver home prices over the last year.

Greater Vancouver includes several of the most desired and expensive neighbourhoods in Canada. The sheer volume of luxury home sales skews the average price unrealistically.

RE/MAX just released its report on luxury home sales across Canada. After 2011's unprecedented luxury-home feeding frenzy in Greater Vancouver, first-quarter sales this year dropped by 31 per cent (but they're still twice as high as they were in 2010).

Knock out 180 sales ranging from $2 million to $20 million and you're going to see the effect in the average price. That's why this Globe and Mail graph takes such a dive.

First reaction: Yikes. Run for your lives!

Compare that to the graph below that shows the percentage change in MLS® benchmark prices. These are changes in sold price for homes that are typical of their type for the area.

Benchmark prices don't reflect sales of ultra-expensive homes -- except in neighbourhoods where those are the norm -- so they give a better idea of the trajectory of house prices throughout a region.

Like the Globe and Mail graph, this one shows the change over the last year in Vancouver, Toronto and all of Canada.

That much calmer look at the real estate market still illustrates the huge gap between stratospheric Vancouver house prices and those of the runner- up for the title of Most Expensive City in Canada. Nobody's denying that our prices are ridiculous. But comparing the two charts also shows how even facts can be misleading.

See also:

REBGV Market Stats for April

Fraser Valley Housing Stats for April

Two Top Economists vs the Bubble

BC Real Estate April Stats

Every real estate board in BC saw more unit sales this April than April 2011, except for those in the Lower Mainland. Chilliwack registered no change, while the Fraser Valley and Greater Vancouver dropped 3.6 per cent and 13.2 per cent respectively.

Because these are the most expensive real estate markets in BC, the overall dollar volume of home sales in April dipped 12.5 per cent from last April.

Meanwhile, BC's North, the Okanagan and Kamloops were hot. Even Vancouver Island and Victoria, which have been stagnant for some time, are seeing more activity.

Vancouver, BC – May 15, 2012. The British Columbia Real Estate Association (BCREA) reports that the dollar volume of homes sold through Multiple Listing Service® (MLS®) in BC declined 12.5 per cent to $3.8 billion in April compared to the same month last year. A total of 7,058 MLS® residential unit sales were recorded over the same period, down 1.8 per cent from April 2011. The average MLS® residential price was $532,855, 10.9 per cent lower than a year ago.

A 10 per cent dip in Lower Mainland home sales offset a 14 per cent increase across the rest of the province,” said Cameron Muir, BCREA Chief Economist. “Kamloops, the Okanagan and the North all posted double-digit increases in home sales in April compared to levels one year ago."

"The share of provincial sales garnered by Vancouver and the Fraser Valley declined from 65 per cent in April 2011 to 60 per cent last month,” added Muir. “A larger proportion of homes sold in less expensive regions contributed to the average BC sales price dipping nearly 11 per cent."

Year-to-date, BC residential sales dollar volume declined 15.8 per cent to $15 billion, compared to the same period last year. Residential unit sales dipped 9.7 per cent to 23,782 units, while the average MLS® residential price was 6.8 per cent lower at $546,870.

You can read the full report here.

See also:

REBGV Market Stats for April

Fraser Valley Housing Stats for April

BCREA represents 11 member real estate boards and their approximately 18,000 REALTORS® on all provincial issues, providing an extensive communications network, standard forms, economic research and analysis, government relations, applied practice courses and continuing professional education (cpe).

To demonstrate the profession’s commitment to improving Quality of Life in BC communities, BCREA supports policies that help ensure economic vitality, provide housing opportunities, preserve the environment, protect property owners and build better communities with good schools and safe neighbourhoods.

For detailed statistical information, contact your local real estate board. MLS® is a cooperative marketing system used only by Canada’s real estate boards to ensure maximum exposure of properties listed for sale.

Vancouver in 2050 - The Future Belongs To...

REW.ca, May 14, 2012

What will Vancouver be like in 40 years? And what can we do now to make sure it's a place we'll still love?

REW.ca talked to a real estate insider who's lately been spending a lot of time looking into the future.

David Allison is president of Braun Allison Inc., a marketing company that works with property developers to make their projects appeal to buyers. And seeing it can take years to plan and build a project, he says "the development industry is building for who we're becoming, and taking a guess at who we'll be tomorrow."

Allison sees a radical demographic change coming. He forsees that the people who live here will be different, and the way we communicate with each other will be different.

By 2050 the Metro Vancouver population will be over 4 million, almost double the 2.3 million people here now.
Seventy per cent will be first- or second-generation immigrants with no inherited memory of how Vancouver used to be.
Those under 65 will have lived their entire lives with computers and instant communication. Allison says, "Technology will become like air -- 'that invisible, but that necessary,' to quote Margaret Atwood. Any type of off will feel as weird as holding your breath."

He has a name for the future citizens of Metro Vancouver: ROVERS. They will be...

Richer than us:
International immigration will account for 23 per cent of the population. A large proportion of them will have chosen Metro Vancouver over other global options.
Older:
There'll be proportionally fewer young people.
Very Educated:
They'll be smart and entrepreneurial, taking advantage of total connectedness and access to information.
Retired:
They'll be living more and working less, choosing to live here because of what technology lets them do.
Strangers:
They'll have global, worldly experience, but no particular history here.

In 40 years, Allison says, "their dominance will be complete."

The change has already started, of course -- more poeople, more demand for housing, more wealthy outsiders. It's changed the character of many neighbourhoods and threatens to change the character of many more.

Naturally enough, change brings resistance.

Allison understands. "We see ourselves as rightful owners of the city. Others are coming and changing things, making things more expensive, changing neighbourhoods into things we don't recognize anymore, and we don't like that."

But he asks people to imagine themselves in the position of the aboriginal population when the Europeans came. "It's such a cliche, but change is the only thing you can count on."

"Do we think we're going to stop the influx of people to this global playground that we live in?" he asks. "That's naive and dangerous."

He's an enemy of NIMBYism and questions the notion that Shaughnessey or the West End or Kits should stay unchanged.

"We can try to keep everything as is, so only the uber-rich will be able to live here... or we can change in ways that are inclusionary so more people will be able to enjoy the places we value."

If that's going to happen, people are going to have sit down and talk. And listen.

"Any change gets messy in the in-between bits," he says. "We're in the messy bit now, and people are arguing and fighting, and at the same time getting more and more sophisticated about how we present our arguments.

"It used to be that developers had the money and control of the conversation. Social media changed that, so now neighbourhood/community people can call the shots because they understand how to use the tools.

"I think the fundamental problem is that there's a feeling of a divide. People who think that a development company, just by being a development company, is somehow evil... that these are people with gold coins falling out of their pockets as they run down the halls giggling to themselves. But in fact they're taking huge risks to help us build this city. There has to be incentive on the table so the smart people will do it -- and do it right.

"Otherwise Vancouver becomes a playground for the ultra-rich becuase there's no new housing stock.

"It doesn't make sense for any one group -- developers, politicians or residents -- to be the only people bringing about the answers. We need to make the discussion less theatrical."

One discussion forum he points to is More Homes for More People on Facebook and Twitter (@MoreHomes4), which puts out an open invitation to anyone, with any point of view, to talk about how we'll build Metro Vancouver.

"Maybe it's a bit 'Thomas More' of me to think we're all going to sit around a table and talk. Maybe it's utopian, but it's got to be better.

"What's coming is definitely going to change the character of neighbourhoods. We have to get over that. So how can we make change happen so the things that are great about a neighbourhood stay viable?

"Let's move on in a way that hurts few people as possible."

David Allison is President of Braun Allison Inc.,a real estate branding and communications company, and author of Branding Buildings Better.

Fraser Valley Housing Stats for April

REW.ca, May 4, 2012

The Fraser Valley real estate market saw 1,435 sales in April, up 1.6 per cent from March, but 5.3 per cent off the frenetic pace of April 2011.

April sales reflected what's happening in the Greater Vancouver real estate market: detached houses in the most expensive areas took the biggest hits. In the Fraser Valley Real Estate Board (FVREB), that means South Surrey/White Rock, where sales dropped 46.3 per cent from last April.

Interestingly, townhouse and apartment sales slowed more than sales of detached houses in most areas.

What's Up, What's Down - At a Glance
	Apr 2012/Mar 2012	Apr 2012/ Apr 2011
Overall Sales	+1.6%	-5.3%
- Detached	+11.4%	-6.1%
- Attached	-12.5%	+12.3%
- Apartment	-10.3%	-12.5%
New Listings	+2.2%	+7.4%
Active Listings	+6.9%	+6.3%

Sellers added 3,134 new listings to the market in April, so now there are 10,312 properties for sale throughout the region.

FVREB President Scott Olson says, “To put it in perspective, in the last decade, April 2012 ranked second lowest for sales during that month, while new listings came in at the third highest, meaning it’s a good time to be shopping for a home in the Fraser Valley because selection has only been this extensive twice."

MLS® Home Price Index

More good news for buyers -- prices are staying put in the Fraser Valley. The overall benchmark prices throughout the region increased only slightly, ranging from 0.4 per cent in Mission to 1.1 per cent in South Surrey/White Rock.

Scott Olson says, “When you combine modest sales with normal, seasonal increases in listings it helps keep house prices in check, which is what we’re seeing. Benchmark prices for all property types remain essentially unchanged from March and for townhomes and apartments, they’re on par with what they were one year ago.”

The MLS® Home Price Index tracks the changes in benchmark prices for homes with similar features.

Fraser Valley MLS HPI Benchmark Prices % Change
	April 2012	March 2012	April 2011
Detached	$576,600	+0.7%	+5.3%
Attached	$318,400	+1.1%	+1.9%
Apartment	$205,800	+0.5%	+0.8%

You can read the Fraser Valley Real Estate Board's full breakdown of statistics here.

REBGV Market Stats for April (And a Look Back at April 2008)

REW.ca May 2, 2012

It's Spring, the height of house-hunting season. Logic tells sellers to list their properties, and that's just what they're doing -- to the point that the MLS® is warning Realtors that new listings could take longer to process because of high volume.

April's 6,056 new listings across Greater Vancouver were 3.6 per cent higher than last April and 6.7 per cent above the 10-year average for April, according to the Real Estate Board of Greater Vancouver.

(For the sake of curiosity, new listings in April 2008 -- the beginning of the last big correction in the Greater Vancouver real estate market -- jumped to 7,010. That was a 25.6 per cent increase over April 2007 and 24 per cent above the current 10-year average. No comparison.)

Meanwhile, sales declined last month. At 2,799, Greater Vancouver home sales hit an 11-year low, dropping to 16.9 per cent below the 10-year average for April.

(Again, for comparison, April 2008 saw 3,218 sales, which was 4.5 per cent below the current 10-year April average. So back in 2008, while listings took a sudden jump, home sales were still fairly brisk.)

Comparing February-through-April home sales to the same period last year, detached homes were down 25.9 per cent, attached homes were down 20.6 per cent and apartments were down 15.6 per cent.

The biggest drops in home sales of all types were seen in three of the four most expensive areas in Greater Vancouver: Richmond, Vancouver West and West Vancouver. (North Vancouver, the third most expensive area saw smaller declines.) Burnaby and Delta also experienced substantial drops in sales.

Even Vancouver East -- the hot area according to word on the street -- saw 26.3 per cent fewer detached home sales over the last three months compared to the same period last year. There must be some hot pockets there. We keep hearing stories of bidding wars. But overall, the detached house market is cooling there too, while apartment sales actually increased by 3.2 per cent.

For details check the Listing & Sales Activity Summary of REBGV's latest report.

The sales-to-active-listings ratio is still in balanced territory at 17 per cent, says REBGV president Eugen Klein.

What's Up, What's Down - At a Glance
	Apr 2012/Mar 2012	Apr 2012/Apr 2011
Overall Sales	-2.6%	-13.2%
- Detached	-5.2%	-19.7%
- Townhome	-3.4%	-22.3%
- Apartment	-0.1%	-0.9%
New Listings	+3.6%	+3.6%
Current Listings	+8.5%	+16%

Benchmark Price (MLS® Home Price Index)

Despite slow sales and higher inventory, the benchmark prices for homes continued creeping upwards in April. The overall benchmark price for all housing types in Greater Vancouver rose by 0.7 per cent over March, and 3.7 per cent over April 2011.

Compare that chart to the highlighted part of the Residential Average Sale Prices chart.

The average price has dropped sharply since January. That reflects the nature of the two different measurements. Average prices are just that, and they can be badly skewed by sales of a lot of high-priced properties. Sales at the high end have slowed considerably, so there are fewer big numbers affecting the average price this Spring.

Benchmark prices reflect the sold price of a typical home for each area and each type of home. They are less likely to be distorted by atypical home types and prices. It'll be interesting to see if next month's benchmark prices begin to reflect what looks like a sodden Spring for home sales.

Greater Vancouver Benchmark Prices % Change
	Apr 2012	Mar 2012	Apr 2011
Detached	$1,064,800	+1.0%	+6.3%
Townhouse	$487,300	+1.2%	+1.7%
Apartment	$375,900	+0.3%	+1.1%

You can read the full stats package here.

You can watch the video below.

Bank of Canada: Money Stays Cheap

April 17, 2012

The Bank of Canada today announced — for the 13th consecutive time since September 8, 2010— that its overnight rate target would remain at 1 per cent. However Mark Carney's announcement has the real estate industry preparing itself for an increase in interest rates sooner than expected.

The rate was not expected to rise before mid-2013 as long as the inflation rate stays on the Bank's 2 per cent target, but the Bank is now projecting 2.4 per cent growth in the economy for 2012 and 2013.

From the press release:

The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.

As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January....

Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus (i.e., low interest rates) may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.

Mortgage rates have already risen slightly, even though the Bank has not changed its policy interest rate. According to the Canadian Real Estate Association, "As of April 17th 2012, the advertised five-year lending rate stood at 5.44 per cent. This is up 0.2 percentage points from 5.24 per cent on March 8th, when the Bank made its previous policy interest rate announcement."

For the best mortgage rates currently available, use the mortgage calculator on our Mortgage Information page.

You can read the full Bank of Canada report here.

BC Real Estate Assoc March Stats

April 13, 2012

The British Columbia Real Estate Association reports a quiet March in MLS home sales compared to March 2011. Unit sales were up in half the regions, and down in the other half, which included Greater Vancouver and the Fraser Valley.

The British Columbia Real Estate Association The British Columbia Real Estate Association (BCREA) reports that the dollar volume of homes sold through Multiple Listing Service® (MLS®) in BC declined 26.5 per cent to $3.8 billion in March compared to the same month last year. A total of 6,882 MLS® residential unit sales were recorded over the same period, a decline of 20 per cent. The average MLS® residential price was $545,959 in March, 8.1 per cent lower than in March 2011.

"The spike in consumer demand recorded a year ago was not repeated last month," said Cameron Muir, BCREA Chief Economist. "A marked increase in high-end home sales a year ago pushed up unit sales and skewed average prices higher, so it's no surprise to see fewer home sales and lower average prices in March of this year."

Year-to-date, BC residential sales dollar volume declined 17 per cent to $9.2 billion, compared to the same period last year. Residential unit sales dipped 12.7 per cent to 16,724 units, while the average MLS® residential price edged back 5 per cent to $552,785 over the same period.

You can read the full report here.

See also:

REBGV Market Stats for March

Fraser Valley Housing Stats for March

Condo Prices Holding the Line

April 9, 2012
Glen Korstrom, Business in Vancouver

The cost of two-storey homes and detached bungalows in Vancouver has risen considerably over the past year, but prices of standard condominiums remained flat, according to a Royal LePage survey.

Standard two-storey homes rose in price 9.1% to $1,182,250 in the first quarter of 2012 compared with the same quarter a year ago. Detached bungalows posted a similar 9% jump to $1,068,500 during the same period.

Standard condominiums, however, rose a modest 0.5% year-over-year to $510,000 in the first quarter of 2012.

News of the sluggish price increases for condos come as insiders forecast that prices for pre-sale condominiums will fall 10% in 2012.

MPC Intelligence and Strategics recently produced a 416-page Condominium Market Opportunities Report on Metro Vancouver’s condo market that notes highrise, pre-sale condominium prices were close to $586,000 in late 2011. It projects that average prices in 2012 will be close to $530,000. (See this week’s Business in Vancouver “Condominium glut to drive prices lower in 2012” – issue 1172; April 10-16.)

If average prices in 2012 wind up being higher than $530,000, sales will likely be unexpectedly slow, the report said.

MPC’s senior manager Jeff Hancock told Business in Vancouver that the projected price dip is likely partly because of an “oversupply” of concrete units in 15 southeast False Creek developments – enough units for 23 months worth of sales.

2 Top Economists vs The Bubble

REW.ca, April 9, 2012

Just relax. Vancouver real estate bubble fears are overblown, and the numbers don't bear them out.

Two top economists told REW.ca the same thing about where the Lower Mainland and Vancouver real estate market is going, and neither of them foresees the kind of sudden, extreme correction many people are worried about (or hoping for).

Cameron Muir (left) is the Chief Economist of the BC Real Estate Association, and the familiar face delivering BCREA's video outlook every month. Warren Jestin (right) is Chief Economist at Scotiabank, where he studies Canadian and global economic issues.

Muir describes the real estate market as "a constellation of factors that interplay with one another," but he says the age-old demand and supply ratio is the most telling. In real estate that's sales-to-listings, and he says that ratio is currently in balanced territory: in between 15 and 20 per cent. With unit sales below the 10-year average across the region, expect "moderate-average typical demand scenario."

Demand -- distinct market segments

When it comes to demand, Warren Jestin says there are two distinct market segments. The high end, driven by wealthy families, produces eye-popping numbers like the benchmark price of $2,250,100 for single detached houses in Vancouver West.

As Cameron Muir points out, luxury home sales appreciate much faster during good times. Those extremes put upward pressure on average prices by skewing the whole regional price picture, as we saw last year.

(The new MLS® Home Price Index and benchmark prices give a truer picture of typical home prices and trends for each market area, as they're less affected by a few ultra-high-end sales. For instance, the average March price for a detached house in Greater Vancouver was $1,155,521, while the benchmark price was $1,056,400 -- almost a full $100,000 apart.)

The other market segment -- let's call it The Rest of Us -- will buy homes when there's optimism about job security and continued income. That's a much larger market segment.

Strong economic fundamentals for BC

BC is doing well on the job front, says Jestin. Our province has outperformed the national average fairly consistently, and he believes that over the next year BC will outperform Central Canada and the Maritimes and see employment growth.

In Asia, 20 million new homes are being built, fueling a 2.25 - 2.5 per cent growth in demand for construction-grade lumber. And Asia has a net demand for other resources, including natural gas and oil. BC's position as a gateway to those developing markets will require new infrastructure, creating jobs and economic activity.

These strong economic fundamentals result in confidence that will drive consumer spending on the biggest item on the household balance sheet: the home.

Interest rates -- low and stable

But how affordable is that home? Greater Vancouver has the highest benchmark prices in Canada and the Fraser Valley is in third place behind Toronto. We've seen numerous affordability studies warning about the high ratio of home price to income.

Muir says those studies leave out one factor in the calculation: interest rates. We're at lifetime lows -- the bottom of a 25-year decline in interest rates -- which means you can borrow more for the same payments.

Neither economist sees interest rates rising sharply. It's true they have nowhere to go but up, but it would take a worldwide economic shock to drive rates steeply upwards, so low interest rates should continue to buoy the market for at least a year.

Jestin sees three- and five-year mortgage rates going up about 0.5 per cent over this year, and a year from now the beginning of a rise in short-term interest rates, which will affect variable mortgages.

He says, "In the purchase decision, that reality has to be there. Now is the time to temper enthusiasm, but not panic.

Multifamily construction takes over

Even with low mortgage rates, single-family detached houses are out of reach for most first-time buyers, particularly in Metro Vancouver. Muir expects to see detached-house prices continue to increase for two reasons: there's no place to build more of them because of our geography, and they're becoming a smaller and smaller proportion of our housing stock. Most of the new ones being built are replacing houses that were torn down.

Construction is moving to condos and away from single-family detached. In fact, condo construction is outpacing household formation in Greater Vancouver, and the growth of condo prices has flattened, with a possible drop in prices predicted.

Now, condos are fulfilling a new role, says Jestin. First-time buyers are starting in condos/townhouses as "the starter house" becomes too expensive to contemplate.

Condos are also becoming the source of rental properties. Investors see them as a good opportunity for cashflow because the rental market is so tight.

No bubble

"Prices are nuts!" "Nobody can afford to get into the market!" "It's all gotta collapse sometime... "

We Lower Mainland locals talk about our real estate market obsessively, and try to make sense of it from anecdotal evidence and a tsunami of unrelated statistics.

So it's educational to hear from two professionals whose job it is to make sense of statistics and put them in context.

Our market is definitely changing, with multifamily housing growing fast. Our prices are definitely out there, but because of strong demand in particular areas, not rampant speculation. Activity is definitely slower, but in the last couple of years we've seen "a profound run-up."

Warren Jestin admits there's a risk for slower growth and higher interest rates, but doesn't believe there's a bubble about to burst because he doesn't forsee job destruction (as happened in the US housing crisis).

Cameron Muir says, "Prices are very sticky on the way down. If there are no big macro-economic shocks, we're not going to see dramatic changes."

Fraser Valley Housing Market Stats for March

REW.ca, April 4, 2012

How does saving $14,000 a minute sound? Abbotsford's Re/Max Little Oak Realty determined that if you compared house prices in Abbotsford to those farther west in the Fraser Valley, every extra minute spent on your commute could save $5000 to over $14,000 per mile. (See full story.)

Now compare house prices in the Fraser Valley to those in Greater Vancouver and think about the savings per minute-behind-the-wheel:

MLS® Benchmark Price, Detached House
Greater Vancouver	$1,056,400
Fraser Valley	$ 572,700

Those lower prices were the driver last month with "an increase in demand for more affordable properties, in particular detached homes for less than $500,000 and townhomes," according to FVREB President Scott Olson.

The Fraser Valley Real Estate Board covers eight areas. Seven had benchmark prices below $563,700 for a detached house in March, and townhouses and apartments came in under $500,000 in all eight. Here's the breakdown by area.

Prices were up very slightly, as shown in this table and the graph below.

Fraser Valley MLS HPI Benchmark Prices % Change
	March 2012	February2012	March 2011
Detached	$572,700	+0.8%	+4.9%
Attached	$315,000	+1.0%	+0.4%
Apartment	$204,700	+1.5%	+1.4%

The MLS® Home Price Index tracks the changes in benchmark prices for homes with similar features. It's showing a slight upward trend.

Sales and Listings

"It was quieter than usual for March," says Scott Olson. Sales were down 22 per cent from last March, and 13 per cent lower than the 10-year average.

What's Up, What's Down - At a Glance
	m/m Mar 2012/Feb 2012	y/yMar 2012/ Mar2011
Overall Sales	+11.3%	-22.3%
- Detached	+9.1%	-31.7%
- Attached	+21.8%	-1.9%
- Apartment	+11.4%	-17.6%
New Listings	+7.7%	-9.2%
Active Listings	+6.7%	+4.5%

FVREB says "The average number of days to sell a detached home was 46 in March 2012, one day faster than last year. It took 49 days on average to sell a townhouse and under two months or 58 days to sell an apartment."

You can read the Fraser Valley Real Estate Board's full breakdown of statistics here.