What was 2012 like in the Greater Vancouver real estate market? Well, nothing like 2011. But not nearly as bad as the bubble watchers predicted.
The balanced market slid into a buyer’s market as the sales-to-listings ratio fell below 12 per cent.
Luxury home sales dropped by about 40 per cent, so mega-priced homes had less effect on average prices.
First-time buyers became scarce in Greater Vancouver after the government tightened requirements for buyers with less than a 20 per cent down payment. New buyers and buyers looking for affordability buoyed the Fraser Valley and Chilliwack housing markets.
Sales went into suspended animation as both sellers and buyers perceived a falling market. Buyers waited for prices to fall. Sellers removed their homes from the market because there was so little action from buyers.
As you can see from the chart, 2012 sales were consistently well below 2011 sales. A total of 25,032 homes sold in 2012, a decrease of 22.7 per cent from 2011′s 32,387. This was 25.7 per cent below the ten-year average, and the lowest level since 2000.
Listings dropped off in the latter part of 2012. Home owners who didn’t have to sell didn’t list at all, knowing they wouldn’t get the high prices that prevailed until May. But even with all the pessimism (or optimism, depending on whether you’re selling or buying), 2012 Greater Vancouver home listings were down only 2 per cent from 2011—which had the second-highest listings in 10 years. In fact, listings were actually up 0.6 per cent from 2010.
Benchmark prices—based on the price for a typical home in a given neighbourhood—dropped somewhat. Instead of 2011′s 7.6 per cent benchmark price increase, the 2012 MLS® overall benchmark price is down 2.3 per cent year over year. This prompted BC Real Estate Association economist Cameron Muir to respond: “I don’t think that’s going to institute any panic selling in the Vancouver real estate market. For all intents and purposes for most forecasts that’s around a zero gain.”
On the ground, price reductions became more common. Homes priced by the wishful-thinking method either had their prices reduced to come more into line with current values or stayed on the market for months on end. Or both.
So far, the more conservative forecasters have proven right. The Greater Vancouver real estate market seems to be experiencing a “soft landing” rather than a wholesale collapse. Last year was a much-needed normalization after a period of frantic buying and spiralling prices. That period ended in spring when Greater Vancouver benchmark prices hit their all-time peak. Since then, single-family house prices have retreated by 6.5 per cent ($62,237), townhouse prices have dipped by 4.4 per cent ($21,441) and benchmark prices for condos have gone down 12.8 per cent ($48,601).
Reuters news agency did a recent poll of 15 real estate market forecasters, including economists from banks, government and the real estate industry. The median prediction for Vancouver prices in 2013 was a drop of 3.8 per cent, with an eventual total decline of 12.5 per cent.
That seemed to be the attitude of sellers in the Greater Vancouver market in December. It’s the slowest month for real estate sales anyway, sales and prices were starting to decline and there just didn’t seem to be a lot of action. It was a continuation of the standoff between buyers and sellers that’s been happening since October.
Sales and Listings
The Real Estate Board of Greater Vancouver reports that new listings fell by 50 per cent from November’s numbers. Only 1,380 homes were listed on the MLS® for resale in December. Compared to December 2011, new listings were down 13.8 per cent.
December was the slowest month for sales in 2012. A total of 1,142 homes sold, 31.1 per cent fewer than the 1,658 in December of 2011. The 10-year average for December is 1,855, and last year’s sales were 38.4 per cent off that mark.
It will be interesting to see whether listings remain low or the market sees the usual surge of listings anticipating the spring market.
|Dec/Nov 2012||Dec: 2012/ Dec 2011|
Benchmark Price (MLS® Home Price Index)
The MLS Home Price Index, which traces the movement of benchmark prices, tells the story. Prices for all home types are dropping, but more gently than they did after the previous peak in 2008:
REBGV’s detailed statistics show only a few areas where m/m benchmark price changes are signficantly higher or lower than the average. Month over month, single-family detached house prices dropped by 2.1 per cent or more in Bowen Island, Burnaby South, North Vancouver, Port Moody and the Sunshine Coast, but were up by 1.5 per cent in Whistler (where prices are up 4.9 per cent over 2011.) Other places where prices went up year over year were Burnaby South, Coquitlam, Port Coquitlam, Port Moody, Vancouver East and Maple Ridge.
Benchmark prices for townhouses were very stable compared to November and compared to December 2011. The Sea-to-Sky region saw some impressive price gains, though. Squamish prices were up 11 per cent y/y and 2.3 per cent over November; Whistler townhouses fetched 12.7 per cent more over the year and 1.5 per cent over November.
That said, there were more drops than pops in benchmark prices in December.
|Dec 2012||Nov 2012||Dec 2012|
You can watch the video update here.