Welcome to the New Normal
The way the year ended, Realtors may just as well have closed shop on November 30th and started their Hawaii vacation early. December MLS® condo sales were at or close to record lows, which had many pundits (mostly in Eastern Canada) proclaiming that the Coast was toast.
Although the outlook for MLS condo sales over the next 12 months is not good, it’s not “that” bad. (see: 2013 MLS Condo Market Forecast)
The worst-hit markets are the ones that previously attracted the most offshore (aka Chinese) buyers and investors. Downtown Vancouver high-rise sales are taking a big hit. Westside high-rise sales and prices are both down. Richmond high-rise sales have cratered. But despite the downward sales trend in most markets, selling prices are either holding steady or showing only a modest downward trend.
The next three to four months will set the pace for the condo market in 2013. These are typically the best months for condo sales. The return to the PST/GST tax on April 1st may help sales but what would be more helpful is a reversal of the population loss to other provinces and an increase in international migration. Third quarter 2012 figures show that BC had a net loss 6,423 persons to other provinces for the first nine months of 2012 and a net gain of 35,255 persons from international migration. Total net migration to BC in 2012 will likely be close to 30,000 persons which is down by about 5,000 from 2011 and about half the total net migration in 2009.
MLS High-Rise Markets
The 150 or so MLS high-rise sales in December brought the year’s total to just over 3,530 units, or 21% below total MLS high-rise sales in 2011. The average MLS high-rise selling price in December was $521,000 or $547 per square foot. This was up by 2% from December 2011, but the overall average selling price in 2012 was down by 4% from 2011.
As reported by the real estate board, more sellers have pulled their units off the market over the past few months. Total listings are down but given the drop in sales, the MLS high-rise market still had about 46 weeks worth of active listings at the end of December. Perhaps sellers who pulled their units are hoping for better prices, but over the last quarter of 2012 sellers had to drop their asking prices by an average of 6% or almost $40,000, and this is likely to continue.
Of the approximately 2,220 high-rise condos listed on MLS at the end of December, just over 800 were either under construction or vacant. These sellers most likely don’t have the option of pulling their units off the market and will have to ride this market to wherever it takes them. A comparison of list prices for under-construction units and a price estimate based on the Premium Condo Price Calculator indicates that many have already been substantially discounted. (For specific high rise markets in Greater Vancouver and the Fraser Valley see: Detailed Market Trends)
MLS Low Rise Markets
MLS low-rise sales were also down in December. The 190 sales brought total sales for the year to 4,070 units; down by 18% from total sales in 2011. The average MLS selling price for low-rise condos in December was $316,000 or $352 per square foot. The overall average selling price in 2012 was 3% lower than the average price in 2011. The average difference between list and selling price is now 6%, which suggests that 2013 prices will drop even further in 2013.
At the end of December, the Greater Vancouver MLS market had approximately 3,200 active low-rise listings; enough to supply the market for 55 weeks given the way sales have gone. About 1,250 or 40% of the active low-rise listings are either under construction or vacant. (For specific low rise markets in Greater Vancouver and the Fraser Valley see: Detailed Market Trends)
MLS Townhouse Condo Markets
The 155 MLS townhouse sales in December, a new low for the past four years, brought the year’s total to 2,640 units. YTD townhouse sales were down by 17% compared to 2011. The average MLS selling price in December was $427,000 or $278 per square foot. The overall average selling price for townhomes in 2012 was down by 5% from 2011. Over the past three months, the average selling price for townhouse condos has been 5% below the list price suggesting that further price cutting will be the norm for 2013.
The number of active townhouse listings in December was just over 2,400 units; enough to supply the market for the next 49 weeks if sales continue to follow the present trend. About 35% of these active listings are either vacant or under construction. (For specific townhouse markets in Greater Vancouver and the Fraser Valley see: Detailed Market Trends)