Greater Vancouver Real Estate Sales for November (guess how big the drop is?)

[Cosmo]

From a North Vancouver Real Estate Agent's Blog (the picture is his which he attached to this information)

Nauseous November is a statistical bloodbath for the Real Estate Industry. Look for all kinds of wonderful newspaper articles next week.

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This month really was the pits for Realtors and home sellers. REBGV home sales are down about 70% compared with last November and the MOI has roared to over 21 Months. Inventory has started to shrink and will continue to reduce as we approach the year end. Now the speculation begins as to how high the listing count will climb this spring.

Today we are faced with 76% higher inventory than the same time last year (19,524 v. 11,114). This number combined with the horrendous sales numbers (915 v. 2884 last November) has stomped out any of the last few burning embers of this market... Okay, that was a bit harsh but at Novembers sales pace it would take over 21 months to clear out our existing inventory v. 3.85 MOI in Nov. 2007. Wow, what a different market.

The good news is that affordability is improving. Lots of previously priced out Vancouverites may now be able to afford to buy a home in Vancouver! Prices are falling and if you look hard enough you can find some excellent buys, however you may want to sit on your hands for a while longer.

For now let’s all enjoy the holiday season! There are some serious sales going on this season and not only on houses and condos. Have a Merry Christmas and happy holidays.

 

[FunSugarDaddy]

Whatever, these topics have been done to death. You know it's starting to get boring when I say that given that pretty much all I do for a living is analyze this type of stuff.

Bottom line a correction of some kind was bound to happen, and it's good news for anyone hoping to get into the real estate market. How much things decide to correct is yet unknown..time will tell.

Unless you bought your first home and year or two ago, and many have, this news certainly isn't apocalyptic.

Not that it's gonna change the outcome to any degree, but the other thing you may want to make note of is that until midnight, November isn't even over..why would any post stats to a month that hasn't fully completed yet?

 

[FunSugarDaddy]

A correction? And my grandma's knickers are lingerie.
Do you really think that midnight is going to make a difference in the stats? And it's good news for whom? Who exactly is coming into the market now to snap up the deals? One of the problems with deflation is that people wait for a bottom. And by the time a bottom is reached nobody's buying nothin!
And if the topic is boring to you, just skip by the posts.

You're a little dense I take it.

Okay who might this be good for let me think?

Oh I know how about the guy who went bankrupt last year and is starting over, or maybe he/she got divorced and had to sell their place.

Or maybe just maybe there's a whole generation under the age of 30 who have been waiting for this to happen for a couple of years now.

As to your assertion that no one's buying, can you then explain why the place next door to me was sold about 2 weeks ago. Smart guy.

The very least you can do is put things in perspective. We've had about a 70% price increase and now we're having a correction..boo hoo..things like this happen..deal with it, better yet, expect it.

Here's a different perspective on this "horrific" adjustment to the real estate market

My generation has been shut out of the housing market for years. Something's gotta give.
By Vanessa Richmond
Published: November 20, 2008



TheTyee.ca
[Note: story updated at 12:20 p.m. on Nov. 20, 2008.]

"Collapse," "crash," "fall": that's how some Canadian and international media are describing the Vancouver real estate market.

"Homeowners have been blindsided by the speed of the housing market downturn. A sense of irrational exuberance had people stretching to buy homes they couldn't afford and agents say the overextended market hit a wall [in Vancouver last] summer," reports the Globe and Mail.

"Canada's most expensive housing market is hitting a significant slump, with home sales numbers falling and prices declining," writes the Report on Business. A Globe and Mail story quotes Cameron Muir, the chief economist for the B.C. Real Estate Association, as saying, "The bull market in housing is over in British Columbia, and it's been over for several months."

A generation celebrates the bust

It sounds like schadenfreude, but for the young generation shut out of the housing market in Vancouver, this news is a call for cautious celebration. Friends eagerly swap URLS, quotes and stats such as these by e-mail, and talk about it at parties and bars.

But the reason it's only cautious celebration is that even though boomers are wringing their hands over their decreased home values, that decrease still isn't nearly enough to make a "normal" life possible for Vancouver's younger generation.
Housing prices fell 8.8 per cent between May and October 2008, the biggest drop in decades, but that still only means a 3.9 per cent year-to-date price reduction, and that isn't much when you consider that prices have gone up by 69.5 per cent since October 2003.

The benchmark price of a home this month in Greater Vancouver is $695,962, down from $764,616 in March of this year. The average price of a detatched house in Vancouver was $921,000 in February, which has also gone down by about 8.9 per cent. Um, yay.

The truth remains, as Andrew Ramlo of the Urban Futures Institute said, "If you are in your mid-30s coming into the market at $900,000, you either have to win the lottery or have a lot of money behind you."

Housing Boomer Advice

Some boomers have suggested to me that my generation is far more affluent than any other because we're sitting on houses that have suddenly become worth a million.

If only. I think they're confusing us with themselves. Most people I know are working artists, musicians, professionals and small-business owners in their 30s and 40s: the so-called creative class. A small minority "got in" to the housing market before the spike; the rest rent basement suites, apartments, or duplexes, pay high rent (to boomers, mostly) and make sacrifices to live in the city. Few expect they'll ever be able to own in Vancouver. For many, the cost of housing means if they stay in town, they won't be able to afford to have kids. Or, if they move somewhere affordable enough to have kids, they'll have to leave their support networks, aging parents and job prospects behind. And without the security of home ownership, retirement also looks shaky.

One friend's mom (a boomer) said if our generation were to stop spending so much money on dinners out, we might be able to afford homes. She and her husband bought a house in West Vancouver 40 years ago, and comfortably raised three kids on one middle class salary. She’s inferring it's what we could have if we smarten up.

In 1977, the average detached house in Greater Vancouver cost $67,100 according to the Real Estate Board of Greater Vancouver, and Statistics Canada data shows the average Vancouverite earned $10,687 per year. Today, the average detached house in Greater Vancouver costs $825,206 and Statistics Canada’s most recent data, from 2006, shows the average Vancouverite earns $36,700 a year. That means in 1977, a house in Vancouver cost about six times the average salary, and now costs 22 times the average salary.

I’m afraid the numbers just don’t support her suggestion that being able to have the life they did, and own sprawling five bedroom homes on the water in West Van, comes down to the cost of sushi.

Until about a decade ago, you could be a middle class worker, or even an artist or a hippy, and still comfortably get a mortgage, and have kids. When I walk around my neighbourhood and talk to the people who own the average bungalows and sprawling character homes -- some bohemians, some working class, a few middle class people -- they tell me they were able to work reasonable hours, buy a home, pay it off, and even retire early.

It's what we still learn as kids: if you stay in school, work hard then get a normal job, you can buy a place and raise a family. Most young Vancouverites, whose parents are in such a position, are glad their parents are safe and secure and warm in their likely mortgage-free homes, but it's far from our own reality.

Class defined by birthdate

It's, in fact, lead to what I suspect must be the greatest example of generational tension in this postcard city. The haves and the have-nots are mostly defined not by class or birth but by birthdate.

Most people I know in Generation X and Y either have a secret sense of shame about not being able to achieve a "normal" life despite their hard work, or a sense of anger that they've been shut out by factors outside of their control. I don't want a sprawling house worth a million dollars. I want a small one or an attached one worth much less than that, that's large enough to raise a family in, but with a responsible footprint. One that lets me live a life unencumbered by high rent that won't ever translate into equity. I'd like the stability that comes with owning, the freedom it gives me to tinker on small projects to improve my own environment.

I admit that while I like most boomers individually, I have no warmth for them as a group. Simply put: their gains are at our expense. Did they not think that such increased housing values would have to be made up somewhere? Did policy makers not look around and think they needed to address a housing situation that was rapidly making one generation into millionaires and leaving another outside in the rain?

Housing, a market failure

Whoever thought it was a good idea to profit from housing? What if drug companies hiked medication prices sky high just in time for this generation's retirement? What if health care wouldn't cover the costs, and left most of the boomers unable to afford care. And the kicker -- what if governments turned a blind eye saying it's just the free market?

One friend said to me I can't be angry because boomers didn't do it on purpose: most are oblivious to what it means for our generation. To that, I ask about how the court would view the defense that you didn't know you were breaking the law. Ignorance is not a defence, is it? This is harsh, I know, but my generational anger's been brewing a while.

Another friend says that it's just human nature. People are greedy and built to take care of themselves. But I know that's not true. His parents are glad housing prices are coming down, and don't mind what it means for the value of their own home, because they know it means he'll one day be able to buy a place to live, have his own family, and be safe. And that makes them happy.

I agree politicians and policy makers have lots of important, pressing issues to deal with, like homelessness. But it'd be great if they'd then turn their attention to the extortionately housed.

And here's an idea to get them going: how about a tax that makes it prohibitive to flip houses and apartments? Got a better idea? I know our generation is open to any suggestions you've got.

 

[chilli]

I've always believed and continue to believe that banks should get out of the mortgage lending business.

Govt's should lend out money on mortgages at a flat surcharge of 20% of the mortgage value - with no extra fees and no interest front end loaded.

Therefore a 300,000 condo would cost you $360,000 total.

5% down = $18,000.00 = $342,000 to finance.

your payment = $1140.00 per month.

That would make housing affordable, so it helps ou the little guy - it spur the market again - and it would add to gov't coffers.

Most importantly, it would take us out of the recession.

 

[bcneil]

I've always believed and continue to believe that banks should get out of the mortgage lending business.

Govt's should lend out money on mortgages at a flat surcharge of 20% of the mortgage value - with no extra fees and no interest front end loaded.

Therefore a 300,000 condo would cost you $360,000 total.

5% down = $18,000.00 = $342,000 to finance.

your payment = $1140.00 per month.

That would make housing affordable, so it helps ou the little guy - it spur the market again - and it would add to gov't coffers.

Most importantly, it would take us out of the recession.

So 5% down on your 300,000 condo, you owe 342,000. 42000 more than resale, guess you really better make sure you like the place, cause you can't move for several years, and have negative equity.

 

[InTheBum]

So 5% down on your 300,000 condo, you owe 342,000. 42000 more than resale, guess you really better make sure you like the place, cause you can't move for several years, and have negative equity.

Not exactly cooking the books in this case...lol

 

[slacker]

I've always believed and continue to believe that banks should get out of the mortgage lending business.

Govt's should lend out money on mortgages at a flat surcharge of 20% of the mortgage value - with no extra fees and no interest front end loaded.

Therefore a 300,000 condo would cost you $360,000 total.

5% down = $18,000.00 = $342,000 to finance.

your payment = $1140.00 per month.

That would make housing affordable, so it helps ou the little guy - it spur the market again - and it would add to gov't coffers.

Most importantly, it would take us out of the recession.

Have you thought this through?

What do you think the average price for a house would be right now if mortgage rates were 25%? Now what do you think prices would be if rates were 1%? Drastically different. House prices are supply vs. demand vs. ability to pay. If rates are 1% everyone could get in on the market right? Exactly. Demand will far outstrip supply. And prices will rise drastically.

Now which rate would be more affordable, 1% or 25%? For the average chump who needs a 90% mortgage, they would be about equal, because in the end house prices will be determined by ability to pay, which is on average going to be lets say a $2000 a month payment. Whether that $2000 goes to a %1 rate on a 500,000 house, or 25% rate on a 100,000 house, neither will be more affordable. Well the exception is with 25% rates people with lots of cash will find houses quite affordable (but rates like that throw everything else off too).

This is one of the reasons I'm not a big fan of most affordable housing initiatives, any attempt to subsidize people is just going to come back and bite us in the ass as more affordibility is ultimately going to drive up prices simply because people will have more money to pay.

You are right that it might help take us out of a recession but it sure isn't going to help the little guy, and in the end it would all come crashing down even harder.

 

[FunSugarDaddy]

Real-estate is down...what isn't???? A person who sold their home 6 months ago is no better off financially than the guy who didn't. There may be few exceptions but most people have seen their portfolio drop more than 20% if you have a moderate risk investment strategy.

Depends what they did with the money. If they put it in a money market fund or a GIC they probably are. Assuming they had any extra money left over after paying the mortgage, real estate broker and perhaps capital gains tax.

 

[Cosmo]

November isn't even over..why would any post stats to a month that hasn't fully completed yet?

Umm... because I know what those stats will be and I can post them?

Report: Real Estate sales and prices dropping
Tuesday, December 02 - 01:46:26 PM
Shane Bigham/Katharine Kitts
VANCOUVER (NEWS1130)

Bad news for home sellers, good news for home buyers. The latest numbers from the Real Estate Board of Greater Vancouver show nearly 2,000 fewer sales in November, nearly a 70% drop from November 2007.

At the same time, prices are coming down, dropping nearly 13% in the last six months. And the number of new listings last month was more than 10% lower than November 2007. The Real Estate Board calls it 'improving affordability', as the overall residential benchmark price in November 2008 was $495,704, compared with $568,411 in May 2008.

And while the affordability envelope has opened up for potential buyers, it has altered the number of listings on the market. Dave Watt, president of the Real Estate Board, says many people are taking those 'For Sale' signs off their front lawn. "I think the people that have taken their homes off the market were what I would call, 'people who were never truly a seller'. They were putting their house on the market saying 'pay me X number of dollars then we'll sell and move on'."

Watt also says there's been a change in how buyers think; instead of pure profit on their minds, they're focusing more on a long term committment.

Additional statisitics from the REBGV report:

*Active listings in November declined 4.7 per cent to 18,348 from the 19,257 active listings in Greater Vancouver in October 2008.

*Sales of detached properties in November 2008 declined 69.8 per cent to 322 from the 1,067 units sold during the same period in 2007. The benchmark price for detached properties declined 8.6 per cent from November 2007 to $666,525. Since May 2008, the benchmark price for a detached property in Greater Vancouver has declined 13.6 per cent.

*Sales of apartment properties declined 67.9 per cent last month to 410 compared to 1,276 sales in November 2007. The benchmark price of an apartment property declined 8.6 per cent from November 2007 to $342,315. Since May 2008, the benchmark price for an apartment property in Greater Vancouver has declined 12.2 per cent.

*Attached property sales in November 2008 decreased 73.7 per cent to 142, compared with the 540 sales in November 2007. The benchmark price of an attached unit declined 6.4 per cent between November 2007 and 2008 to $426,287.

Since May 2008, the benchmark price for an attached property in Greater Vancouver has declined 10 per cent.

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NOTE this stunning last stat... Since May 2008, the benchmark price for an attached property in Greater Vancouver has declined 10 per cent.

Believe it or not the average SFH price fell 11% this month. Yes in 1 month. $745,778 for November v. $825,206 for October.

The average has dipped 19% since March. Prices are falling sharply.

It will be interesting to see if the benchmarks also make a dramatic drop.

I continue to stand by my original predictions. As the market unwinds and the economic situation worsens, look the price of Lower Mainland real estate to drop by a minimum of 40% for detached houses and a minimum of 50% for condos for their March 2008 highs.

 

[mclovin76]

i read that average house prices that were 500000 were going to b 320000 by the end of next year. I like it.

 

[FunSugarDaddy]

They when up about 70% over a 5 year period and now the markets correcting..personally I'm not sure what the big deal or the huge suprise is about.

If anything it represents the first real change those under 30 have had to get in the market in quite some time.

Far from being a bad things, it's more of an intergenerational issue. Babybooms are unhappy about it, and those trying to get in the market are hoping it keeps on dropping.

As to where it's going to end up, hard to say. I personally think it'll be in the range of 20-25% perhaps less, but who knows?

 

[Cosmo]

personally I'm not sure what the big deal or the huge suprise is about.

As to where it's going to end up, hard to say. I personally think it'll be in the range of 20-25% perhaps less, but who knows?

One answers the other.

In a detailed analysis of economic growth since 2001, Robert Shiller (Yale Economist) noted that most of the economic growth in North America (and Europe) since 2001 was a result of mortgage equity refiancing.

Take that away and economic growth since 2001 (a tremendous bull run in all aspects of the economy) has been about 1%.

The tremendous run-up in Real Estate prices the last five years triggered a huge number of players in mortgage backed equity... which permeates all aspects of the economy.

The collapse of the market (even if it only goes back to values of 5 years ago) is triggering devasting effects on all aspects of the economy.

THAT is why many believe another Great Depression is no longer out of the question.

If nothing else, we are entering a Great Recession. Look for four quarters of negative growth in 2009 and little or no growth for a few years after that.

More importantly... look for a large number of well known companies to collapse, mounting job losses, combined with families being forclosed on because they are under water due to re-mortgaging on the equity from the last five years

This is what the big deal is all about.

That, plus the fact there are so many in BC (and on this board) who think we will be magically immune to it all.

 

[FunSugarDaddy]

Seems to me you're mxing world economic events in with our local real estate correction and trying to equate the two. But whatever.

We know there's a whole recession underway that COULD end up being a depression. We basically know that much of it was caused by low rates, particularly in the US along with lax lending practises that together created a housed asset bubble. Not just in the US but in much of Europe and Australia and other parts of the world.

We also know that the lending practises in Canada never got to the stage of NINJA loans (No Income, No job, No Assets) fiscal.

Thus our regulartory climate is considerably different.

We also know that the market here didn't rise anywhere near as much as it did in the US sunbelt, Australia and Ireland, where house prices typically have risen not 70% as was the case here, but in many cases well over 100%.

We know that over the last few years, amortization rates, which were historically a maximum of 25 years, were pushed to 35 and for a brief period of time 40 years, before the 40 year amortization period was eliminated.

We know that until recently the BC economy has been fairly healthy, and that interest rates are low and likely to fall in the future.

We also know that the cap rate in BC has been out of wack for a number of years, whereby the rents generated from the housing prices don't justify themselves on a rental income basis. Cap rate is about 3% +/- 1%

We know housing listing are down and sales down even more, and that there is downward pressure on the housing market, after a prolonged gain. The gain itself was about 70%, the correction so far about 10%.

That's what we know. What we don't know is what this all means for future housing prices. Likely they'll continue to correct, but it's unlikely to be more 20%. Even in the US where they are dropping 40 or even 50% it's from a much greater increase.

Where we MAY be vulnerable is that when all this asset bubble started, we were already in a relatively high priced market.

 

[FunSugarDaddy]

Housing market won't suffer U.S.-style collapse: report

THE CANADIAN PRESS
November 20, 2008
TORONTO - The latest real estate report from Scotia Economics has good news for home buyers and bad news for sellers: Canada is becoming a buyer's market.

The report says the longest postwar housing boom has come to an end, with prices dropping most in previously booming cities such as Calgary, Edmonton and Vancouver.


But Scotia says Canada's real estate market slowdown is nowhere near the same scale as the collapse experienced in the United States.


Analysts say Canada's housing market is fundamentally different from its American counterpart.

 

[Cosmo]

Analysts say Canada's housing market is fundamentally different from its American counterpart.

Yeah... Real Estate analysts (usually working for Real Estate Agents).

Tracking these clown's gem quotes is bordering on blood sport in some quarters.

It's almost as if these clowns are left over from the former Soviet Union's Department of Propoganda.

Locally the most famous is Cameron Muir, Chief Economist for the Greater Vancouver Real Estate Association.

His comments border somewhere between absurd and comical. Cameron could be standing in a house for sale, buried up to his waist in shit, and tell you (with a straight face) that a postive feature of the house is that it appears to come with a pony.

Here is a chart one R/E discussion board is using to track some of Cameron's 'analysis'. The best one is the last comment, "the fundamentals support a higher level of home sales than last month. That was the end of October. The results after November? A 70% decline in sales.

Bwahahahahaha!

 

[Cosmo]

That's what we know. What we don't know is what this all means for future housing prices. Likely they'll continue to correct, but it's unlikely to be more 20%.

That's why I like you, FunSugarDaddy... you will go out and make the bold prediction based on your beliefs.

You say 20%.

I say 40% or greater.

Fiscal facts, anecdotal evidence and the local 'coffee shop gossip' barometer tell me we are going to crash hard--starting next year, when exploding spring inventory, layoffs, business failures and foreclosures sink their teeth into the already dismal numbers.

Locals can't afford current prices unless they rode the bubble of the past five years upwards (and even at that - trading upward is very difficult right now), and Overseas/American potential buyers don't feel as rich as they thought they were, so there will be no buying speculation and vacation property.

As I have said, I expect condo prices to get hit particularly hard, as they were hyped and inflated even faster than McMansions.

Ultimately we will get to needle each other over the coming year about our 'beliefs' and 'speculations'.

Since the the benchmark price for a detached property in Greater Vancouver has declined 13.6 per cent already this year, we are nearing the bottom (in your opinion).

In my opinion... we are nowhere near the bottom yet (reference my above comment about exploding spring inventory, layoffs, business failures and foreclosures sinking their teeth into the already dismal numbers next year - global factors which will signal when the 'real' crashing begins in earnest).

Again... not a gloom and doom party pooper... just an honest realist taking stock of the unfolding storm clouds.



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By the by... October 2008 figures showed BC lead the country in job losses (8,300) and I am hearing we have topped the list for the month of November too! Figures should be out early next week.

 

[FunSugarDaddy]

Well rest assured I'm no fan of Cameron Muir. But I do stick with my prediction of a 20 -25% decline, with the range more likely near the 20% mark than the 25% mark. Anything beyond that and I will gladly admit I was wrong.

 

[DavidLin]

November stats:
http://www.rebgv.org/sites/default/files/200811-REBGV-Stats Release.pdf

well, November numbers indicate we are at 13.6% from the peak. So I guess we only have 6.4 to go before we hit your 20% mark. Considering we have dropped about 4% these past two months, it won't be long till we hit 25%. So in roughly 2 months, you'll be admitting you are wrong.

 

[FunSugarDaddy]

November stats:
http://www.rebgv.org/sites/default/files/200811-REBGV-Stats Release.pdf

well, November numbers indicate we are at 13.6% from the peak. So I guess we only have 6.4 to go before we hit your 20% mark. Considering we have dropped about 4% these past two months, it won't be long till we hit 25%. So in roughly 2 months, you'll be admitting you are wrong.

If it unfolds like that, you will indeed get my admittance, but I'll NEVER admit that I'm not smarter than a 5th Grader..lol