Okay, it looks like the big crazy boom in Vancouver house prices is over for now. A flat market or a 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 (they’re still twice as high as they were in 2010, but there weren’t nearly as many $2 million homes back then).
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 the Globe and Mail graph below takes such a dive.
First reaction: Yikes. Run for your lives!
But hold on. 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 the same facts can send confusing messages.
If you’re buying or selling, talk to a Realtor who knows your area well. Someone with experience in your neighbourhood will be watching the changing situation daily, and will know mood of your particular market. What’s selling and what’s not? How long are properties staying on the market? What are potential buyers after? How close are sales prices to asking?
Those hyperlocal stats are more important to your goals than general averages and benchmarks.