Greater Vancouver detached real estate is still spiraling. Real Estate Board of Greater Vancouver (REBGV) numbers show sales dropped to a 20 year low in April. The decline in sales is combining with a multi-year high for inventory. The result is Greater Vancouver detached prices are now at the lowest level in three years.
Greater Vancouver Detached Real Estate Prices Down Over 11%
The price of a “typical” detached home is dropping rapidly, according to the board’s benchmark. REBGV reported the Greater Vancouver detached benchmark fell to $1,425,200 in April, down 11.1% from last year. In the City, Vancouver East’s typical detached home fell to $1,357,200, down 12.1% from last year. Vancouver West did even worse, with the benchmark dropping to $2,948,400, down 13.4% from last year. Those losses range from $177,000 to over $450,000 for the typical home – over just the past year.
Greater Vancouver Detached Benchmark Price
The price of a typical detached home across the Greater Vancouver Real Estate Board, in Canadian dollars.
Source: REBGV, Better Dwelling.
The losses on detached homes have been getting larger for the past few months. Last month’s 11.1% annual decline is the largest seen since April 2009. The annual pace of growth has now decelerated for 14 consecutive months. Prices are now the lowest they’ve been since April 2016 – three years ago.
Greater Vancouver Detached Benchmark Percent Change
The 12 month percent change of a typical detached home across the Greater Vancouver Real Estate Board.
Source: REBGV, Better Dwelling.
Fewest Detached Real Estate Sales In Over 20 Years
Greater Vancouver detached real estate sales fell to a low for the month. REBGV recorded 586 sales in April, up 10.8% from the month before. This represents a 27.02% decline compared to the same month last year. The monthly increase is seasonally expected, but the annual decline is not. This was the fewest detached sales for April in at least 20 years, as far as REBGV data went back. As for the City of Vancouver, it was the fewest detached sales for April since 1992.
Greater Vancouver Detached Sales Vs. New Listings
The total number of detached sales, compared to the number of new detached listings per month.
Source: REBGV, Better Dwelling.
Greater Vancouver Detached Real Estate Inventory Rises 10%
New listings for Greater Vancouver detached homes fell, compared to last year. REBGV reported 2,085 new listings in April, up 16% from the month before. This represents a 15.89% decline compared to the same month last year. Once again, the monthly increase is expected, the annual decline is not. Falling new listings did little to relieve building levels of inventory.
The total number of active detached listings reached a multi-year high for the month. There were 6,236 active listings in April, up 10.39% from the month before. This represents an increase of 8.71% compared to the same month last year. That is the most detached inventory for the month of April since 2014.
Falling sales and rising inventory is pointing to potentially lower prices. The sales to active listings ratio (SALR) fell to 9.4%, down a third from last year. When the ratio is above 20%, the market is a seller’s market – where prices are expected to rise. The ratio below 12% is a buyer’s market, where prices are expected to fall. Between 12% and 20% is balanced, and the market is priced right for demand. Currently the market is considered a buyer’s market.
Greater Vancouver’s detached market is seeing lower prices, fueled by a rapid shift in demand. Sales have fallen to a multi-decade low, while inventory is at a multi-year high. A strange sight, considering the economy is theoretically doing very well.
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Toronto will soon follow this trend.
The real fun starts when the housing starts crater. Then several negative feedback loops start feeding each other.
Genuine question; why would housing starts cratering push prices lower? Wouldn’t this decrease future supply increasing future demand vs. supply? And in the near-term push new construction buyers into the resale market instead?
A ton of BC’s GDP, jobs, as well as government revenues are tied to new construction. It slows means you will see a recession, which can then trigger a negative feedback loop.
Furthermore, assuming Vancouver’s new construction market has been fueled similarly to the GTA’s (probably more extreme), I would say its safe to predict that at least 50% of new precon sales over the past 5 years have been “investors”. It’s quite possible that they have been building a lot more inventory than what would be supported by end users only.
I’m sure down the road there will be another supply crunch and price growth due to a slowdown of new builds over the next while. But that will be years out and will start its growth from a much lower price point than today.
“It’s quite possible that they have been building a lot more inventory than what would be supported by end users only.” That’s a true and scary point. When the party stops, many homes (condos and houses) might be standing vacant. But them it won’t be because of investors. It’ll be because there’ll be no one left to with a need to occupy them.
Thanks Griz!
A few points that a lot (but not all) of construction workers share:
– They make a lot of money in good years.
– Bad years involve several weeks/months unemployed.
– They tend to invest in what they know instead of diversifying. They got rich building homes? They put all their cash buying real estate because that’s what they know and trust. Hedging is rarely a thing.
– They’re not afraid of borrowing money.
– The longer it’s been since a tought time the looser they are with money, and inversely they’re very conservative after crashes (delays employment and investment recovery).
– At this point only the 55+ years old have experienced a downturn.
After three months of less demand for the trades a lot of guys will have blown through their liquidity and margins, and a lot of their assets will be leveraged, underwater properties. The shockwave will carry on to realtors, mortgage industry, and luxury goods.
Right now everyone is buying! Good ole FOMO at work. Also the fear that rates will increase is helping people decide to buy. Purchasing a place but not having the means to carry a higher interest rate isn’t smart. If the prices go down, interest rates go up, you won’t be getting out of it easily and you’ll still be on the hook for the full exorbitant purchase price. But we shouldn’t worry because prices only go up and interest will hold steady or go down…..
Metal Matt (montreal matt? more than likely matt? machine translation matt?) has it spot on.
Between the wealth effect, reduction in jobs, folks leaving the region for greener pastures there’s a lot of negative feedback to watch out for. On the upside we have data to measure it all (and BD helps us parse it, thxs btw!)
Watching the monthly value of housing permits (right along with the yield curve) is one of my favorite things.
Only place I know to proactively look for this data is from StatsCan:
https://www150.statcan.gc.ca/t1/tbl1/en/tv.action?pid=3410006601
Unfortunately there’s a lot of noise in the total value of permits, and the number of permits data doesn’t go very far back. If anyone has a better source I’d definitely like to hear about it (or fire me a link).
It’s Montreal Matt, but I like the sound of Metal Matt. I might go with that.
Look at the drops in price. The last big one barring this previous month was in 08 when the scumbag bankers told us to save their asses due to a potential depression.
Apparently the economy is “booming” now so what exactly going to happen if the US goes into recenssion in 2020 and pulls us down with it?
The drops are going to be really severe (20% a year drop not out of the question) as the village of vancouver doesnt even have an industry (outside drugs and money laundering) or uber lol.
Burn baby burn
Now only if this would happen in the Toronto and GTA areas!
” It’ll be because there’ll be no one left to with a need to occupy them. “…
Seems like the opposite outcome of the game named – ” musical chair ” .. !
More chairs than players.
Bc will become like saskechwan
Check out live charts for all areas of the lower mainland at:
http://vancouverrealestateblog.com