AuthorTopic: 🏘️ Anatomy of the Housing Downturn in Vancouver, Canada  (Read 367 times)

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🏘️ Anatomy of the Housing Downturn in Vancouver, Canada
« on: November 12, 2018, 12:02:14 AM »
https://wolfstreet.com/2018/11/11/housing-downturn-in-vancouver-bc-canada-detached-single-family-condo-townhouse/

Anatomy of the Housing Downturn in Vancouver, Canada
by Wolf Richter • Nov 11, 2018 • 53 Comments   
It’s not pretty.

In 2018, “each month has brought weaker than normal sales, rising inventory, and continued downward pressure on prices” in Vancouver, British Columbia, writes Steve Saretsky, a Vancouver Realtor and publisher of real-estate blog, Vancity Condo Guide. The market faces another headwind: “With the Bank of Canada determined to reach a neutral rate of interest of between 2.5-3.5%, borrowing power continues to erode.”
The single-family price spike unwinds.

The hardest hit segment are single-family houses (“detached houses”). Sales volume in the city of Vancouver has dropped to 27-year lows for most months of the year. In October, sales plunged 32% year-over-year to 146 houses, the third worst October on record. The plunge in sales was first triggered by the imposition of a tax in August 2016 on nonresident foreign buyers – mostly investors living in China. This chart from The Saretsky Report shows sales volume in every October going back to 1991 (click to enlarge):


Inventory for sale of all types of homes combined – single-family, townhouse, and condo – in the city of Vancouver surged 24% year-over-year, “pushing prices lower across all property segments,” he writes. Within that group, townhouse inventory jumped 34% and condo inventory soared 74%.

But inventory of single-family houses edged down by 4%, to 1,556 listings, “primarily a result of sellers taking their house off the market and trying to wait out current conditions,” Saretsky writes. Given the decline in sales, months’ supply surged 35% to 10.7 months. “This has paved the way for buyers to negotiate steep discounts”:

    We have now been in a weak detached housing market for over two years and as a result, price declines are becoming more noticeable and more significant. There is strong evidence from previous housing booms that volumes tend to lead prices by about two years, and for the most part that has been the case here in Vancouver.

The median sales price of single-family houses in October dropped 13% year-over-year to C$1.88 million. From the peak of the crazy spike in the spring of 2016 to October 2018, the median price has plunged by over C$700,000 or 28% (click to enlarge):


The Saretsky Report adds:

    We are seeing more forced sales as a result of Vancouver’s vacancy tax and BC’s proposed speculation tax which is slated to begin starting January 2019. Remember, a house that is listed for sale but does not sell in the calendar year is still subject to Vancouver’s empty homes tax of 1% of the assessed value.

The once red-hot condo market begins to gasp.

Sales of condos in the city of Vancouver fell 28% year-over-year, to 388 units, the lowest for any October since 2012 (click to enlarge):


But inventory for sale jumped by 70% year-over-year to 1,845 condos, though it remains moderate by historical standards. Saretsky writes, “when sales fall and inventory jumps, that trend should keep market participants on their toes.”

The report:

    Similar to the detached market, sellers are trying to maintain current prices and buyers are holding out anticipating future price declines. Sellers will need to price their condos more competitively or they risk sitting stale on the market. There is now 4.7 months of inventory for sale.

The median price of condos sold in Vancouver in October dropped 7% year-over-year to C$699,000. The average sold price per square foot, at C$1,016, is now down 10% from the peak in January 2018 (click to enlarge):


Then there is the condo construction boom.

Across Greater Vancouver, as of September there were 41,944 condos under construction “that will all require buyers to close upon completion date.”

    The recent slowdown in the condo market has also impacted the pre-sale market. Developers are reporting much weaker absorption rates at pre-sales centers and are ramping up incentives to entice new buyers. As a result of the slowdown and market uncertainty, commercial brokers and developers are reporting a significant decline in new land purchases.

    If prices continue to decline, developers run the risk of seeing some buyers back out of existing contracts. There are growing reports coming out of Hong Kong that this is already beginning to happen in that market. What happens in the Hong Kong market is certainly relevant considering there are a number of projects being developed in Vancouver that were marketed and sold in Hong Kong.

Townhouses are more advanced in same scenario.

Sales fell 9% in October year-over-year to 67 townhouses. Inventory for sale surged 37% to 314 townhouses. Months’ supply jumped 67% to 5.2 months. And the median price dropped 15% year-over-year to C$990,000.

Once red-hot Fraser Valley freezes over.

Fraser Valley – to the east of Metro Vancouver and destination for Vancouver housing refugees, lured once upon a time by massive developments and lower prices – “was the hottest condo market in the lower mainland in 2017, with year-over-year price growth peaking at 51% in December 2017,” Saretsky writes. “However, 2018 hasn’t been so kind. In October home sales plummeted 50% year-over-year, and inventory spiked 149%. The median sales price is decelerating rapidly.”

This chart shows those trends in percentage terms: the spiking listings (red), declining median sold price (yellow), and plunging sales (blue). Click on the chart to enlarge:


In the US too, hot air is hissing out of the market. Read…  Sales of New Houses Plunge, Pile of Unsold Homes Highest since January 2009, Prices Drop from Year Ago 
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Offline RE

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🏘️ Bubble Trouble: Seattle-Bellevue Metro Housing Market Goes South
« Reply #1 on: November 20, 2018, 12:51:22 AM »
https://wolfstreet.com/2018/11/17/housing-market-downturn-seattle-bellevue-king-county-active-listings-price-reductions/

Bubble Trouble: Seattle-Bellevue Metro Housing Market Goes South
by Wolf Richter • Nov 17, 2018 • 108 Comments   

The inflection point was July. Conditions have deteriorated since.

Active listings of houses and condos for sale in October in King County – which includes Seattle and Bellevue but does not include Tacoma – nearly doubled compared to October last year, jumping 91% to 5,749 listings, according to data by the National Association of Realtors. This was the largest inventory for sale since the end of Housing Bust 1 going back to 2012.

Inventory for sale started surging off low levels in the spring. In July, it reached the highest level since October 2014; and it continued to soar from then on. By this measure, July marked the inflection point of the housing market in King County. An inflection point is the beginning of the downturn in a market. It’s when the rising line representing the market bends (inflects) and starts going downward. The red bars in the chart mark the months following the inflection point (all data below via realtor.com):


And cuts in asking prices explode. When inventory piles up and sales cannot keep up because potential buyers aren’t buying, motivated sellers roll up their sleeves and see what it takes to move the house or condo, and what moves it are price reductions that are deep enough to meet the market. The market is where buyers are, but they have retreated and sellers are now having to find them. Gone are the price wars when buyers jostled for position for their chance to drive the price even higher.

The chart below shows the number of price cuts per month in King County. By this measure too, the inflection point occurred in July, when price cuts reached the highest point since October 2014. And over the following months, price cuts blew through the roof:


In terms of percentage change from a year ago, in October these price reductions more than tripled (up 205%) from October last year:


So what’s happening to listing prices? These are the prices that sellers are asking for. They’re not the prices that sellers might obtain if and when the unit is actually sold (that would be a measure of selling price). In King County, the median listing price peaked in May at $742,000. This means half of the properties listed for more and half listed for less. The median asking price has since dropped every month, falling to $675,000 in October. This marks a 9%, or $67,000 drop from the peak.

Some of this drop is normal seasonality, as asking prices in the county typically peak in June or July and then drop through January or February. Year-over-year, the median listing price remains up 3.9%.

But that year-over-year increase of 3.9% is a far cry from the double-digit increases that reigned since Housing Bust 1, topping out at 26% during the final throes of the fever in January this year.

Ironically, the “Trump Bump” had a large effect on real estate though President Trump isn’t exactly the most voted-for politician in King County – he got 21% of the popular vote in 2016. I found this to be true also in other metros that are decidedly not in the Trump-zone, such as in San Francisco and Silicon Valley: He got 9% of the popular vote in San Francisco County, 18% in San Mateo County, and 21% in Santa Clara County. But when it comes to home prices in these liberal bastions, the “Trump effect” made property owners a ton of money – if they’re able to get out in time.

In King County, before the 2016 election, the subcutaneous metrics of the market were already losing steam. But after the election, asking prices surged year-over-year, as if sellers had suddenly picked up some magic cues, and bedazzled buyers chased them higher. But that too has now petered out:


The impact on selling prices – the prices at which properties are actually sold – is already visible, even in the Case-Shiller Home Price Index which lags about three months by design (the data released at the end of October was a rolling three-month average for June, July, and August). After spiking for months into June, prices turned around and dropped 2% in July and August, the sharpest two-month drop since Housing Bust 1:


The Seattle metro is a prime example. But prices ticked lower in some of the biggest housing bubbles in the US. Something is afoot. Read… Declines Hit the Most Splendid Housing Bubbles in America 
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Offline K-Dog

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Seattle-Bellevue Metro Housing Market
« Reply #2 on: November 20, 2018, 08:36:05 AM »
Quote
Responding to the above post.  A quote would do but I'm trying something new.


This is a good thing.  Taxes have been getting unmanageable because they go up with prices.  Politicians were getting way too much money.  Once I was a fool and thought that giving politicians more money would mean they would do good things with it.  Was blind but now I see.

There is going to be another Trump bump in the future when all the kiddies who are going to the architecturally award winning Seattle schools graduate and find out they are not as special as their million dollar educations led them to believe they were.  All the trophies they earned for simply 'being here' are going to make it insufferable for the rest of us while they adjust and become normal.  Of course some will never make the switch.  But they will all find out having a million dollars and having a million dollar education is not the same thing.  The exception being those who are rich of course.

Here is an letter to an Everett paper with a bit of a different focus.  But where the money goes is stated and I highlight it.  I do agree with the author,  The letter is coming from another direction.  Not only will the kiddies have ego problems, according to the letter they won't have skills that will do anybody any good.

Quote
Schools aren’t providing what we pay for

Pertaining to The Herald’s Sept. 10 front-page story (“Big raises now may mean deficits later for public schools”) regarding school financing not solved by the judicial McCleary decree: Increasing pay and budges with money for which purchasing power is evaporating won’t solve anything.

According to our county assessor’s property tax distribution pie chart, schools take two thirds of our money. That’s almost seven times more than the next tax-grabber. Unimportant incidentals like ports, transit, libraries and hospitals get a few sundry hundredths.

But that enormous segment of our money makes our student drop even further in comparison to industrial nations.

STEM will also fail us. STEM, as only vocational training for rocket science populations, doesn’t teach Americans to govern adequately.

Only parents are interested in capably educated students. Teachers organize to fight management for a bigger grab at tax money, not to produce fully educated safe-capable graduates. After all your political party leaders, intellectuals, judges, lawyers, historians and media are just as dumbed as are their followers they dumbed to get control of.

Citizens rigorously disciplined to think for themselves made American incomparable. Children trained to bear the burdens of providing life’s needs by thinking for themselves are the only people capable of reaching an adulthood able to raise a family while helping those in need and protecting the rights of all to be cooperatively independent.

Ken Stacey

Everett

Ms Dog and I own our Doghouse, not being paper millionaires anymore means lower taxes and that's a good thing.  More significantly the housing bubble has been hell on people who rent.  People who are working MacJobs have to pay $2000 a month for a one bedroom apartment now.  That sucks.  They should see some immediate relief as the market adjusts.  What has been happening to the working poor is that as their leases run out they can't renew.  Instead they must go month to month and worry about rent bumping up unexpectedly.  That nonsense should be coming to a quick stop.  The homeless should also see some benefit but that will take longer.  The working poor should be seeing some relief right now.
« Last Edit: November 20, 2018, 08:50:53 AM by K-Dog »
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: Seattle-Bellevue Metro Housing Market
« Reply #3 on: November 20, 2018, 08:49:19 AM »
You think Trump is responsible for RE prices in Seattle crashing?  ::)  You think this translates into more Trump voters?

You have been smoking too much ganja.



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Offline K-Dog

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Re: Seattle-Bellevue Metro Housing Market
« Reply #4 on: November 20, 2018, 09:02:46 AM »
You think Trump is responsible for RE prices in Seattle crashing?  ::)  You think this translates into more Trump voters?

You have been smoking too much ganja.



RE

Consuming too much is impossible.  All that happens is you get a headache, you don't fly higher. 

But where you got your weird conclusion from what I wrote suggests you should toke up.  A Trump bubble only means Trump caused something to happen.  A Trump bubble is not good or bad inherently, but it is most likely bad. 

Trump's election most certainly caused a big effect in our local RE market.  Chinese millionaires are climbing over each other to buy US citizenship while they still can.  That caused the big spike in prices IMO.

* An amusing effect of the Chinese immigration bubble is to watch the older Chinese men when they are out spending money.  Their contempt for 'dumb bitches' is not hidden at all.  They sneer like a broomstick is up their ass and it just got twisted.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline K-Dog

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Re: Seattle-Bellevue Metro Housing Market
« Reply #5 on: November 20, 2018, 09:10:20 AM »
Trump is like a bull in a china shop.  Lots of unintended consequences.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: Seattle-Bellevue Metro Housing Market
« Reply #6 on: November 20, 2018, 09:10:54 AM »
Chinese millionaires are climbing over each other to buy US citizenship while they still can.

If the Chinese were still climbing over each other to buy citizenship (and Seattle RE), prices would be going UP↑, not DOWN↓.

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Offline K-Dog

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Re: Seattle-Bellevue Metro Housing Market
« Reply #7 on: November 20, 2018, 09:19:15 AM »
Chinese millionaires are climbing over each other to buy US citizenship while they still can.

If the Chinese were still climbing over each other to buy citizenship (and Seattle RE), prices would be going UP↑, not DOWN↓.

RE

Exactly right and what goes up comes down.  Trump got elected and that caused a panic and prices went up.  That panic is over.  Midterms have passed and everybody sees Trump is a dingle-berry and not a game changer.  The panic is over and prices are coming down.  Trump intensified the panic.

Don't be foolish.  You know about bubbles.



You know about the bubble of doom.
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: Seattle-Bellevue Metro Housing Market
« Reply #8 on: November 20, 2018, 09:32:35 AM »
Exactly right and what goes up comes down.  Trump got elected and that caused a panic and prices went up.

The Chinese have been migrating in numbers since the Reagan Administration, and prices have been going up ever since.  Trump hardly caused Chinese immigration to the FSoA.  This isn't a 2 year old phenomenon.  You need to find a new breed of seed to cultivate.  Gregor Mendel you are not at the moment.

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Online Eddie

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Re: 🏘️ Anatomy of the Housing Downturn in Vancouver, Canada
« Reply #9 on: November 20, 2018, 09:36:06 AM »
With the Chinese housing market looking pretty toppy back home, the home equity ATM machine has dried up. No more money for houses in Vancouver and Seattle....(not to mention Toronto and London).

Only highly evolved western men respect Modern Feminism. Most non-Western foreigners treat women like shit. Backward savages.
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Offline K-Dog

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Re: Seattle-Bellevue Metro Housing Market
« Reply #10 on: November 20, 2018, 09:52:39 AM »
Exactly right and what goes up comes down.  Trump got elected and that caused a panic and prices went up.

The Chinese have been migrating in numbers since the Reagan Administration, and prices have been going up ever since.  Trump hardly caused Chinese immigration to the FSoA.  This isn't a 2 year old phenomenon.  You need to find a new breed of seed to cultivate.  Gregor Mendel you are not at the moment.

RE

You are making no sense.  Trump caused an undeniable bump.  I never claimed he caused the damn thing in the first place.  Nixon opened the door. Have a nice day.



Trump is causing a lot of little bumps. He is walking whiplash but Trump prosperity is only the travel of economic backlash changing directions.  It is all temporary and there will be hell to pay.
« Last Edit: November 20, 2018, 09:56:56 AM by K-Dog »
Under ideal conditions of temperature and pressure the organism will grow without limit.

Offline RE

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Re: Seattle-Bellevue Metro Housing Market
« Reply #11 on: November 20, 2018, 10:11:52 AM »
Trump is causing a lot of little bumps. He is walking whiplash but Trump prosperity is only the travel of economic backlash changing directions.  It is all temporary and there will be hell to pay.

I agree with that.  But I seriously doubt he will get any kind of voter bump from a downturn in the RE market in Seattle.  That means lower tax receipts, which means many cops, firefighters and teachers will get Pink Slips.

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