Vancouver real estates is finally starting to cool down, but it’s doing so incredibly fast. Real Estate Board of Greater Vancouver (REBGV) numbers show growth deceleration in August. This is the sixth consecutive month we’ve seen price growth slow. The slowing growth is largely due to sales plummeting, while inventory begins to soar.
Greater Vancouver Prices Fall To Lowest Growth Since 2014
The price of a typical home in Greater Vancouver got a little cheaper, but was still up from last year. REBGV reported a composite benchmark of $1,083,400 in August, down $4,100 from the month before. Despite being lower, the annual price change is 4.1% higher than the same month last year. The benchmark is seasonally adjusted, so seasonal pressure is theoretically removed.
Greater Vancouver Composite Benchmark Price
The price of a typical home across Greater Vancouver, in Canadian dollars.
Source: REBGV, Better Dwelling.
Greater Vancouver real estate prices are still showing huge growth, but decelerating fast. The benchmark’s annual gain of 4.1% is the sixth consecutive month it’s moved lower. It’s still a very high rate of growth, but it’s the lowest we’ve seen for Vancouver since April 2014, and it’s heading lower. Worth keeping an eye on this indicator.
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 Drop Over 36%
Greater Vancouver real estate sales have dropped off of a cliff. REBGV reported 1,929 sales across REBGV, down 36.6% when compared to the same month last year. If that seems like a huge decline, that’s because it is. The total number of sales is 25.2% below the 10 year average of sales for August.
Greater Vancouver Composite Sales Vs. Listings
The number of homes sold vs total inventory in Greater Vancouver.
Source: REBGV, Better Dwelling.
Greater Vancouver Real Estate Inventory Rises Over 34%
The total number of new listings in Greater Vancouver is rising. REBGV reported 3,881 new listings in August, down 2.6% from the month before. On an annual basis, new listings increased by 34.3% when compared to the same month last year. The monthly decline is normal for the season, the annual increase is not.
The decrease in sales and increase in new listings sent total inventory much higher. REBGV reported 11,824 active listings in August, up 2.63% from the month before. This represents a 34.3% increase when compared to the same month last year. Despite the large growth, we aren’t expected to see a decline back to low inventory levels soon.
The decrease in sales and rise in inventory is understandably lowering price growth. New regulations restricting AirBnB operators is also expected to push inventory even higher. The regulations will restrict operators to one license per unit, forcing those with multiple units to sell or become long-term landlords. Those not interested in becoming a landlord (especially with falling rents), are expected to put their extra units on the market. More inventory meets tighter financing rules, isn’t great for that decelerating price growth.
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Benchmark Price is a pure fabrication by the Real Estate Board. Real Price drops are in the order of 20%.
Here’s Huffington Post telling the true state of affairs, though even they add the Benchmark Price narrative.
https://www.huffingtonpost.ca/2018/09/05/vancouver-real-estate-correction_a_23518030/
All Greater Vancouver segments are showing price declines now, including condo sector (even on official REBGV report).
At the same time inventory continues rising.
Detached sales are worst in 27 years:
http://vancitycondoguide.com/august-fewest-detached-home-sales/
To the author, Kaitlin Last: The comment above by Ken is absolutely correct. You are falling into the trap of using the Board’s highly subjective HPI benchmark pricing. This HPI benchmark system is highly skewed, and simply allows the board to hide what’s really happening. You and anyone else can look at the latest stats published by the board. In the package, you can see some amazing numbers. For example, MEDIAN prices and AVERAGE prices, both of which are far more accurate and insightful than the HPI numbers, have dropped 20 percent from last August to this August, for detached houses in West Van and North Van. Prices for these two areas have also dropped 10 percent from July 18 to August 18. There is no price growth; there are only prices that are dropping like stones. I can’t understand why the media doesn’t dig into this!
The media is generally lazy but what I don’t understand is why BD keeps using these indices. That information (aside from being completely useless to any analysis as you correctly pointed out) is readily available elsewhere.
The fact that a the average house could be worth $1 million shows how much inflation has devalued currency in the last ten years.