August 2012 saw declining MLS condo prices in Greater Vancouver. Frank Schliewinsky discusses some of the challenges facing the market in his recent “Strategics Vancouver Condo Report,” excerpted below:
Sales of all product types have been dropping since at least the beginning of this year. And despite media reports to the contrary, MLS prices are starting to soften too.
The reasons for this slump in the condo market are not hard to find. Net migration to BC has slowed. The Province is losing population to Alberta and international migration is down. While many still deny the existence of a housing bubble, the Vancouver market has been sitting on a very large bubble called the Chinese real estate market and that has come in for a hard landing. The result of the bubble bursting in China has been fewer well heeled Chinese buying condos in Vancouver. This has been particularly noticeable in Westside Vancouver and Richmond.
How will all this end? Probably like most housing cycles. Buyers will sense better deals if they wait. Sales will continue to drop over the next 12 to 18 months and prices will follow. The new condo market will feel the effects in 2013. Eventually, low prices will entice more buyers into the market and a new cycle starts assuming we don’t have another financial crises.
MLS High Rise Markets
August sales figures for high rise condos show that this market is in for rough ride. The 215 or so MLS high rise sales are the lowest so far this year. YTD sales are now 18% below sales for the first eight months of 2011. Sales in all the major high rise markets in Greater Vancouver are down. YTD sales in the Downtown market are off by 21%. Burnaby is down by 22%. Richmond high rise sales are down by 38%.
Average MLS selling prices for high rise are off too and not only because high end buyers have left the market. Average prices in Westside Vancouver, the focus of much hand wringing over sky rocketing price increases over the past year, have dropped by 22% since hitting a high of $951,000 in September, 2011. Average price per square foot is down by 13%. Sales of $1 million+ high rise condos used to make up more than 20% of MLS high rise sales in this market. Now it’s only 13% but high end units still make up 20% of active listings. Sellers of expensive Westside high rise condos are having to drop their asking price by an average of 10% to make a sale.
So not only are average prices going down because of fewer sales of expensive units but selling prices of expensive units are also softening. Westside Vancouver is in the lead for these price declines but other MLS high rise markets are also starting to have actual price declines. The overall average MLS selling price for high rise condos in August was $493,000 or $556 per square foot. Average price is down by 10% from 12 months ago. Average price per square foot is down by 5%. Overall, the difference between list and selling price is now 4% with units over $1 million having to drop their asking price by an average of 7% to make a sale.
MLS Low Rise Markets
MLS low rise selling prices are still holding their own for now but sales have slipped since the begining of this year. YTD sales are down by 16% from the same period in 2011. MLS low rise sales are down in all markets with the biggest YTD declines in Richmond (32%), Westside Vancouver (25%) and North Surrey (13%).
The average MLS selling price for low rise condos in August was $337,000 or $363 per square foot. This is not much different from the high of $347,000 reached in April, 2011. Average price per square foot is down by about 6% from April, 2011. Changes in average selling price don’t show it, but what seems to be happening in the MLS low rise market is that prices are also softening but buyers are taking advantage of any price reductions to buy a slightly larger unit. The average difference between list price and selling price is now 5%.
MLS Townhouse Condo Markets
The 225 or MLS townhouse sales in August also represent a low for 2012. YTD sales are now 16% below the same period in 2011 with further declines expected. The biggest YTD declines so far this year have been in Richmond (31%) and the Tri-Cities markets(18%). Average MLS townhouse prices are still flat.
Average selling price in August was $481,000 or $310 per square foot; not much different from prices 12 months ago. The situation developing in the MLS townhouse market may be the same as what’s happening in the low rise market. Declining sales are having some effect on prices. The overall average difference between list and sales price is 4%. But price declines are not reflected in the average price because buyers are taking advantage of price declines to move up in unit size.
This Greater Vancouver Condominium Market Overview is compiled by Strategics, a Vancouver-based company providing information and analysis since 1981 helping to minimize marketing risk for apartment condominium developers, lenders, project marketers and investors.