Vancouver Condos Got Another (Minor) Downtick In November

Vancouver Condos Got Another (Minor) Downtick In November

If your Vancouver real estate crystal ball is a little cloudy, you’re not alone. The latest report from the Real Estate Board of Greater Vancouver (REBGV) threw a number of mixed signals that will likely confuse both sellers and buyers. This trend was particularly pronounced in the condo market, which represented more than half of all sales in the region. Vancouver condos saw stagnated prices, a stronger than normal seasonal decline, and the twist – an increased rate of absorption.

Condo Prices Stalled

The benchmark average of condos slipped just slightly in November to $512,100. By slightly, I mean slightly – it’s only a $200 decline from last month. This represents an 18% increase from last year, and a less than 0.5% slip from the August 2016 peak. The largest drop was in Vancouver East, which dropped 2.7% from the month prior to $437,800. Burnaby East on the other hand saw an increase of 2.5% to $539,000. The direction of pricing isn’t all that clear at this point.

Vancouver Condo Prices

Vancouver Condo Prices - November 2016

Condo Sales Declined

Vancouver condo sales are declining very quickly, even when seasonally adjusted. 1,200 sales were booked in November, which represented a 1.9% from the month before, but a drop of 22.7% from the same time last year. The largest decrease was in the Delta region, that experienced a 48.6% increase in condo resales. Conversely, Port Coquitlam saw a 21% increase, the largest in the GVR. Declining sales aren’t necessarily a bad thing by itself, but it does obfuscate the appearance of demand.

Vancouver Condo Sales November 2016

Vancouver Condo Sales - November 2016

Absorption Remains High

This is an indicator that should have everyone’s ears perking up, absorption is still insanely high – and got a little higher. The rate of absorption reached a whopping 83% for condos, a 20% increase from last month – but a 17% decline from the same time last year. The rate of absorption is what determines if it’s a buyer or seller’s market. When it’s higher than 20%, it’s a seller’s market that will likely experience higher prices, if it falls below 10% – it becomes a buyer’s market and should experience lower prices. That stated, stagnating prices and an increase in absorption is a peculiar combination.

Vancouver Condo Absorption

Vancouver Condo Absorption - November 2016

Like us on Facebook to get fresh real estate insights right in your feed.


Source: REBGV

5 Comments

COMMENT POLICY:

We encourage you to have a civil discussion. Note that reads "civil," which means don't act like jerks to each other. Still unclear? No name-calling, racism, or hate speech. Seriously, you're adults – act like it.

Any comments that violates these simple rules, will be removed promptly – along with your full comment history. Oh yeah, you'll also lose further commenting privileges. So if your comments disappear, it's not because the illuminati is screening you because they hate the truth, it's because you violated our simple rules.

  • Reply
    Ben Fernandez 8 years ago

    A few questions for the Layman:

    – When a strata unit ‘pre-sales’ does this count towards the 1,200 sales that were recorded in November? Or does a unit have to ‘close’ before it is considered.

    – 1,200 sales seems like a small sample that would be highly influenced by a single building being brought to market. ie. Lougheed Mall Tower 1 selling ‘Selling Out’ (82% of their 566 units). This number represents half of the total units sold in the month of November. Which leads me to believe looking at a single month as an indicator is really a pointless exercise.

    Contrary you could argue that an entire building selling out in a couple of days is indicative of the depth of the market.

    I would be curious to know what the statistics are comprised of.

    Another well written article. Thank you.

    • Reply
      VanReRe 8 years ago

      They said REBGV, so it would only be residential homes resold. New construction isn’t a part of those numbers.

      Lougheed Mall would definitely not be included in those numbers, neither would any of the other pre-sale units – which could actually add up to close to the number of resales.

      > “leads me to believe looking at a single month as an indicator is really a pointless exercise”

      Looking at a single data point is always a useless exercise, I’m assuming that’s why they showed the charts for longer than a year. In my opinion it’s more important to look at this period vs the same period last year. More expensive homes list in the summer disproportionately drag the numbers higher. So what looks like a crash, is actually just an irregularity of the types of homes sold.

      By no means do I think Vancouver can keep pushing the needle at the rate it has, but there’s no indicators other than the high absorption rate is lower than the insanely high absorption rate of last year to say otherwise. The author called it how it is, “undecided” and “unclear.” If the government stopped trying to scare people with new policies, the market would just push forward like Toronto.

    • Reply
      Fine Shorty 8 years ago

      New construction shows demand to invest in a construction project, it doesn’t necessarily determine real demand for real estate. The reason resale is what everyone is talking about is because real value is determined by liquidity. Just because someone paid x number of dollars for pre-construction, doesn’t mean someone else will pay more on registration.

      There’s some really good examples in Toronto with the Shangri-La, Aura, and Trump Towers. Pre-construction sold out in a flash, now units aren’t doing so hot with re-sale values.

  • Reply
    Port Coquitlam Community News Digest December 21 - Tri-Cities Today 8 years ago

    […] Vancouver Condos Got Another (Minor) Downtick In November | Better Dwelling […]

  • Reply
    Karen 8 years ago

    The combination of a high absorption rate and stagnant or lower prices can make sense if there is a sudden drop in BOTH supply and demand.

    A thinner market usually results in less buyer traffic to each property, as buyers faced with fewer choices visit fewer properties before making a decision. The reduction in traffic reduces opportunities to set up bidding wars and worries sellers, making them more likely to accept lower offers. Especially if there are news headlines about reduced foreign-buyer interest (due to the added 15% transfer tax on sales to foreign buyers).

    It is likely that many if not most Chinese people buying condos in Canada are doing the same thing there as in China – buying to hold empty, simply as speculative investments they hope are less vulnerable to Chinese government confiscation in one form or another. These buyers are generally not interested in selling. Not interested in USING the condos, either, which is a phenomenon unique to China.

    And the transfer-tax headlines have probably caused at least some native Canadian owners to withdraw from the market, since the personal cost of having to move to the exurbs is only worth it if the financial windfall is large enough.

    Sure would be nice to see if my theory is true (big drops in BOTH supply and demand).

Leave a Reply

Your email address will not be published. Required fields are marked *