Vancouver real estate, welcome to the bear market. Real Estate Board of Greater Vancouver (REBGV) numbers show price declines became larger in December. The drop in prices came with a huge decline in sales, and a surge in inventory.
Greater Vancouver Real Estate Prices Fall Over 2.7%
The price of a “typical” home across Greater Vancouver is falling. The REBGV typical home (a.k.a. the benchmark) fell to $1,032,400 in December, dropping a cool $10,000 (0.93%) from the month before. Prices are now down 2.7% compared to the same month last year. In Vancouver proper, Vancouver East fell to $1,039,200, down 4.6% from last year. Vancouver West fell to $1,272,900, down 7.2% 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 declines could just be getting started, since they are accelerating. The REBGV 2.7% 12 month decline in December is slightly larger than the month before. This is the first time we’ve seen negative growth this large since June 2013.
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 Fall Over 46%
Greater Vancouver real estate sales are falling, and fast. REBGV reported 1,072 sales in December, down 33.33% from the month before. Compared to the same month last year, sales are down 46.82%. The board noted this a massive 43.3% below the ten year average for December. There’s really no way to spin that number as good, especially when you look at inventory.
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 47%
New listings of Vancouver real estate fell last month. REBGV reported 1,407 new listings in December, down 59.3% from the month before. The decline brought the number of new listings 25.6% lower compared to last year. The decline wasn’t enough to push total inventory levels lower.
The total number of listings for sale saw a huge jump from last year. REBGV reported 10,275 active listings in December, down 16.51% form the month before. Compared to last year, active listings are still up 47.67%. The monthly decline is fairly seasonal, but the annual increase is not.
Lower sales and more inventory pushed the sales to active listings ratio (SALR) much lower. REBGV’s SALR fell to 10.43 in December, down 63.99% compared to the same month last year. The market is considered a seller’s market when the ratio rises above 20, which is bullish for prices. The market is a buyer’s market when the ratio falls below 12, which is bearish for prices. Between those numbers is just right. Currently we are in a bear market, the first time the region has been in one since 2013.
Prices are still very high for the region, but fundamentals are deteriorating. Sales have dropped far below typical numbers seen in December. At the same time, more people are trying to sell their home than normal. The combination usually has further negative consequences for prices.
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I hope readers are smart enough to understand that a 12 month drop isn’t the same as the drop from peak. I heard real estate agents say it’s just a 2% decline, not a big deal. Actually, it’s a -5.66% from peak ACROSS THE REGION. The region includes suburbs that didn’t see prices rise all that much, and don’t have much to correct.
Declines in the City of Vancouver are actually much higher from peak, and there’s no near term headwind to reversal.
I wasn’t going to respond to this, but everything you say is inconsistent with the published data. I would go look at the published numbers from the REBGV for the suburbs – they have had a meteoric rise….Faster than the city of Vancouver. I think you need to look at that yourself instead of the made up number from that realtor.
The region is a weighted index. The bulk of sales occur in the COV and Richmond, so the “increase” in the suburbs are minimal to the index. Please don’t try to correct people if you don’t understand what you’re talking about.
Real price drops are far more than VREB states, just ask anyone trying to sell their home in 2018. Same with sales, far lower than the 46% drop stated. Here’s Zolo, Canada’s largest real estate brokerage putting out real time, truthful data, unlike VRB’s frankenstats.
Currently showing a 72% drop in Van detached and 68% drop in condos.
https://www.zolo.ca/vancouver-real-estate/trends
Most of 2018 it showed similar numbers, but now into 2019 the drops will probably be less, due to the stress test coming in jan 2018 and sales falling off a cliff, so comparables will be low as well.
I totally believe we’re towards a massive price decline.
But your title/ statement is completely wrong – Bear market term means a decline of 20% or more.. (you’re welcome to Google it)
Cheers!
That’s for the stock market, and you’re referencing a crash. Real estate is determined by absorption, since there’s almost never a 20% drop (except for maybe Vancouver soon). Feel free to Google it.
I warned you guys a number of months ago that the stock market will crash and this will have serious consequences for the Canadian real estate market. The S&P 500 is tanking right now.
I would also like to note that this is only the beginning.
I have a friend who was bragging about owning 4 properties in Toronto and is making easy money from the rent. I warned her that a bear market will be coming to the stock market and the real estate market will follow suit. If companies are laying off people then how do you think these people will be able to pay for their overpriced mortgage? I can’t wait until my friend files for bankruptcy and comes back to me saying I was right all along. This is the price you pay for being greedy.
Wow you are a good friend
That’s nice of you Jay to be giddy about your friend going bankrupt…. classy!
Why should I be sad for her if she’s been flaunting her “wealth” all of these years? All of you people out there that are pretending to be real estate moguls will pay the ultimate price for your greed and hubris; bankruptcy.
Why isn’t anyone talking about West Vancouver? It’s literally down 30% from its peak. Speculators are taking 2, 3 million dollar hair cuts upon re- listing.
Just a big fat lol.
What’s even more interesting is that she rationalized that a bear market would not affect her because she’s renting out the properties. She said she’s only worried about the real estate value 20 years from now.
Unfortunately this is a very oversimplification to a very complicated problem. If the value of the property goes down, then the debt to equity changes and the bank then requires additional payments. This means that anyone who is over-leveraged will have no other option but to file for bankruptcy. This is not even accounting for the scenario that either her or her husband gets laid off from their jobs, which is a strong possibility if the stock market crashes.
What blows my mind is that the Canadian real estate prices have been going up for about 20 years. Did you really think it would go up forever?