Greater Vancouver real estate is improving, but it’s not even close to normal yet. Real Estate Board of Greater Vancouver (REBGV) numbers show a big climb in sales in August. The rise in sales was met with a jump in inventory though, offsetting most of the improvement. The region continued to see falling prices, with the composite falling more than 10% from peak for the first time since the recent downturn.
Greater Vancouver Real Estate Prices Enter Technical Correction
Greater Vancouver real estate prices continue to fall, according to the local board’s benchmark price. REBGV reports the benchmark, or typical, home cost $993,300 in August, down 8.3% from last year. In the City proper, Vancouver East saw the benchmark fall to $1,033,400, down 9.3% over the same period. Vancouver West fell to $1,226,200, down 9.3% from last year.
Greater Vancouver Composite Benchmark Price
The price of a typical home across Greater Vancouver, in Canadian dollars.
Source: REBGV, Better Dwelling.
The rate of price growth is improving, but prices hit a new milestone – a technical correction. The 8.3% decline made in August is an improvement from the month before, and marks the second consecutive uptick. Prices however are still falling lower, and have rolled back to May 2017 levels. Compared to the peak, prices are now 10.05% lower across Greater Vancouver. Falling 10% below is the point when a technical correction for prices is made. This the first-time the REBGV composite has made that move recently.
Greater Vancouver Composite Benchmark Price Change
The annual percent change of a typical home across Greater Vancouver.
Source: REBGV, Better Dwelling.
Greater Vancouver Real Estate Sales Make Double Digit Climb
Falling real estate prices are bringing back buyers, with sales making a double digit climb from last year. REBGV reported 2,231 sales in August, down 12.7% from the month before. This represents an increase of 15.7% compared to the same month last year. Sales are still down 9.2% from below the 10-year August sales average. That makes it the second fewest sales in the past 5 years for the month, or the fourth highest… out of five. The REBGV president said “Home sales returned to more historically normal levels in July and August compared to what we saw in the first six months of the year.” Uh, sure.
Greater Vancouver Composite Sales Vs. Listings
The number of homes sold vs total inventory in Greater Vancouver.
Source: REBGV, Better Dwelling.
Greater Vancouver Inventory Rises Over 13%
Greater Vancouver real estate saw a decline in the number of new listings for sale. REBGV reported 3,747 new listings in August, down 18.8% from the month before. This represents a 3.5% decline when compared to the same month last year. The monthly decline is typical for the season, but the more modest annual decline is not. Even with a drop in new listings though, the number of total listings continues to swell.
Active listings, the total number of listings for sale, climbed across Greater Vancouver. REBGV reported 13,396 active listings in August, down 5.9% from the month before. This represents an increase of 13.3% compared to the same month last year. Once again, the monthly decline is seasonal, but the annual increase is not. The past month was the highest number of active listings for August since 2014.
Higher sales improved the sales to active listings ratio (SALR), but climbing inventory took a lot of the edge off. REBGV’s composite SALR reached 16.7% in August, up from 16.3% during the same month last year. The market is considered a buyer’s market when the ratio falls below 12%, and prices are expected to fall. When the ratio rises above 20% the market is a seller’s market, and prices are expected to rise. Between 12% and 20% is considered balanced, and the market is priced right for demand. Currently the market demand for the amount of inventory is marginally better than last year.
Greater Vancouver is seeing some improvements, with sales making a big jump. However, the rise in sales was met with a substantial increase in inventory. Rising sales help improve buyer sentiment, but rising inventory is tapering price growth.
Like this post? Like us on Facebook for the next one in your feed.
Haha. Using REBGV numbers for prices. Good one.
How are prices only down 10%? That has to be wrong.
They are average prices only, across all types – detached, condo’s, luxury etc. Luxury detached market has been hit hard, regular detached houses moderately, townhomes and condo’s have just started to drop – and because there are a heckovalot of condos on the market, they are probably skewing the average a fair bit.
These aren’t averages, it’s the benchmark. The benchmark is a weighted price index.
Weighted prices, so in essence, a curated value rather than an actual one. It is a challenge to come up with a fair metric that would cover condo’s, townhomes, detached homes and luxury properties, etc. It would also be suppressing to think that a group with a vested interest like a real estate board would come up with a non biased approach to valuing those numbers. Now factor in the wide range of neighbourhoods covered in the GVRD and the numbers given don’t really represent anything. A homeowner in a old Vancouver neighbourhood and one in new Langley development will have entirely different experiences, one is a long established with a known system of transportation and services and the other is in complete flux with the possibility of a skytrain service at an as yet undefined future date.
Yes a multimillion dollar detached home in Vancouver has taken quite a hit but a similar home in Langley has seen somewhere between no change and a slight increase over the same time period.
An older single bedroom condo in Langley has seen prices drop like a rock, where a new condo has seen price increases in the same city. Even here this is subjective as they are likely in entirely different neighborhoods with very different crime statics and population demographics.
Because of the higher prices those houses in Vancouver and North Vancouver matter more for “average” detached home prices and yet they are not the largest number of homes in the area. As usually happens the older developed parts of the area, which happen to be the most expensive are the hardest hit and tend to also over-represent the actual market.
Of course there are people on many sides of this who desire to cherry pick data to support their own needs. Flat prices are bad for real estate sales so you want either falling or rising prices to push more people to jump on either selling or buying. Existing homeowners who are looking to sell want prices to change depending on where they are going to upsize, downsize or leaving the market. Those who have not entered hope for some sort of unprecedented miracle that will allow them to finally enter the market. Those homeowners who have no near term plans, and are not worried about renegotiating a mortgage, laugh at the rest of it, knowing that the market is a long term thing and these short terms fluctuations, no matter how extreme they seem in the moment, mean nothing as prices continue to follow an overall steady path.
The bubble is bursting or prices are rising is a nice fairy tail but it ignore the fundamental principles that real estate is built on. As long as the population keeps rising and the land that we desire to use for housing is limited, it will continue to drive prices up over the long term. A 10% drop in one year after seeing a large constant rise over the previous few doesn’t mean anything in the long run, especially when it is artificially created by some heavy handed and poorly thought out government interference. It’s just a short term aberration that will certainly hurt some and help others but will likely result in a even steeper rise in the new future to overcompensate for the public overreaction to new policy.
“heavy handed and poorly thought out government interference…blah blah…”
Ha ha ha.
I bet you don’t have a problem with the CMHC, first time home buyer incentives, shared equity, capital gains tax exemption….right?
Oh wait but that’s different?
If you think Vancouver RE can only go up forever, then go ahead and leverage up as much as you can. Better hope a recession never hits China. Like, ever.
Apologies, I misspoke, yes its not an average, Ethan is correct! This is how they explain it: https://www.rebgv.org/news-archive/mls-home-price-index-explained.html
The weighted price index in some ways can be even worse than an average depending on how its weighted, which as far as i can tell is not posted. I’m not sure how transparent the process is for tweaking the “basket”…
Does everything written up means price will go up ?????
To Rana,
If prices do go up, so will the traffic line up at the US boarder. To go to US is a 3 hours wait, to go back to Canada – just drive through. On a bad day- 3 cars in front of you. Everything is so much cheaper in US. I don’t ever buy our meats, fish … etc in Canada, same for gas. But the most difference is in RE. Why is Canada so expensive????????
Does a price weighed index, as the Benchmark is, really properly reflect price changes.. that the public is aware of? Where higher priced houses are weighed more heavily on the index.
When you live in a district and the house prices are selling at ; ex. 28% below assessed values isn’t this a more realistic reflection of where house pricing is going..
Greater Vancouver real estate will always go up and up. When all these towers are empty and the job vacancies increase.