Finances & Real Estate Big Drop Predicted for Vancouver Real Estate Prices

Big Drop Predicted for Vancouver Real Estate Prices

CBC News
Sep 20, 2012

Outspoken financial commentator and former MP Garth Turner is making a bubble-bursting prediction about the Vancouver real estate market, saying prices there could drop by as much as 40 per cent.

But such dire forecasts have been common for years, and at least one local analyst says the often controversial Turner is mistaken.

Still, Turner, a former minister of national revenue and Ontario Conservative MP, said there are obvious reasons he’s forecasting a sharp downturn.

“The average household in Vancouver isn't making enough money to afford the average home,” Turner said. “At the same time, we've had a lot of speculation in the market ... and we've had changes to mortgage lending rules.”

A steady decline in the number sales and prices over the last 90 days, Turner believes, is just the beginning.

“We'll have something around a 30-to-40 per-cent decline in prices.”

Despite his dire outlook, the market has been robust for most of the last decade and condo marketer Cameron McNeill believes Turner will be proved wrong.

“The fundamentals that are driving the market below the surface are just too strong for any sort of bubble circumstance to happen,” says McNeill.

Detached house prices, particularly on Vancouver’s West Side, are well over $1 million, but McNeil says most people aren't that stretched to buy a condo or a townhome, so Turner’s affordability argument doesn't stand up.

 

Generation Y rejoice!

Garth Turner has always been bearish, but from the statistics I'm surprised people are still in denial. Idiotic biased comments from the condo marketer. I think people have all drinken the koolaid that Vancouver is "unique".

I hope when the bottom hits, I'll be in a position to afford something. A price adjustment is coming, we just don't know the timeframe in which it will happen.

 

I have not seen any big drop yet so far.... prices are still very high.

 

Indeed. Price drops are happening though. Supply > Demand. Realtors are having a very tough time right now.

I don't know about a 50% correction, but a correction of some significant magnitude is coming.

 

Curious where you're seeing substantial price drops?
Activity levels have dropped off a lot from last year, but sale prices have actually held quite stable. Within 1-2% for most areas.

 

^Not substantial yet. You are right, prices are pretty stable still but I meant that there are a few cases where sellers are lowering their prices. Just from my own observations of MLS listings. There was also that blog that tracked price drops? (edit: http://vancouverpricedrop.wordpress.com/)

There was also a random surge in sales early this month, might be due to slight price drops attracting some buyers.

 

I'm not saying there is , or will not be reduction of prices, but the generalizations about massive corrections and predictions of 40% drops are absurd and simplistic.

Even community vs community, and home type vs home type is showing substantially different "markets" right now. People (us realtors included) oversimplify a complex industry for the sake of catchy headlines, and everyone seems to take the bate.

A blog that nitpiks the stats to show homes with price drops is no different than starting a blog called VancouverMultipleOffers.com and only highlighting those. We had a listing in Kits sell over asking with multiple offers after 5 days on market this week. I guess that mean the Kits market is on fire!! Call the Newspapers!

 

Adjusting the numbers for seasonal trends, September's sales edged up 2.5 percent from August, the Canadian Real Estate Association (CREA) said Monday. That marks the first monthly increase since March. Even Greater Vancouver showed a month-over-month rise in sales on a seasonally-adjusted basis, the association said.

According to the Real Estate Board of Greater Vancouver, there were 1,516 sales in September, down 8.1 percent from the 1,649 sales in August. But sales tend to peak in spring and can often fall in September. CREA's figures, which seek to account for those seasonal variations, suggest that on an adjusted basis there were the equivalent of 1,903 sales in Greater Vancouver in September, compared to 1,827 in August, a rise of 4.2 percent.

On a seasonally-adjusted basis, September's sales were higher than August in about 60 percent of the Canadian markets that CREA gathers data from, including Calgary, Edmonton, Greater Toronto and Quebec City, the association said. The national average price for homes sold in September was $355,777, up 1.1 percent from a year ago. Excluding Vancouver the average price of a house sold rose 3.4 percent.

Regardsless of these numbers we are confident in the Vancouver Waterfront real estate especially in Coal Harbour, so much so that KanaVero Real Estate Group will be opening our dedicated storefront very soon to capitilize on the fear in the market.

 

Analysts in the industry are largely commentators, rather than instruments with any convincing positive predictive capacity.

Their predictions are noteworthy to the extent that up until very recently there was a broadly held belief that housing prices would not fall at all. So, for the media to be announcing even the idea of coming drops is significant. But, from a quantitative perspective, their consensus about price drops being relatively benign reflects characteristic hope over substance.

Based on the size and all-consuming pervasiveness of the speculative mania, and on price levels determined by fundamentals such as rental incomes, we foresee larger than 10% drops for the nation and far, far larger drops for Vancouver (50%-66% real, peak to trough).

Aren’t we already at about 10%-12%-off for most RE sub-types in Vancouver?

And another point: it took 25 years for real prices from the 1980-81 peak to be regained in Vancouver, not 10.

- vreaa

 

Silver Condo is offering $10,000 off purchase price and $10,000 decorating allowance.

 

Aviara in the Brentwood Mall area has $20K discount.

 

Got some emails about "Black Friday" sales on condos .

 

Who on earth would want to live in a condo and pay those freaken maintenance fees. It's like a mini rent fee every month. You buy a place to be free of monthly rents fees, then you get hit with condo fees. Better to buy a house or duplex.

 

Great news, prices for Duo at Port Royal, New Westminster has been reduced. Up to $30,000 price reduction.

 

There is another thread related to this here:
http://www.forumvancouver.com/threads/vancouver-real-estate-is-overpriced.3589/

 

TD Bank reported that prices will remain stable..

 

Something that we all forget from time to time: look at the climate, not the weather .

 

Figure and quote from Maclean's:


Data out of Vancouver is simply dismal: home sales were down 29 per cent compared to February 2012. Detached homes are leading the downfall, with sales a whopping 36 per cent below year-ago levels. Condos, normally the whipping boy of Vancouver’s housing excesses, managed to outperform the market — though that still means sales recorded a 25 per cent decline from February 2012.

 

Prices are not dropping as much..