Van West Single Family Homes are up from last week but lower than last year.
Downtown / False Creek North Condos are up from last week and much higher than the same time last year.
The Chipman area is up from last week and 25% up from last year.
Selected Fraser Valley areas are up marginally from last week.
Have a great weekend and we'll have a look at the March real estate board statistics next week.
11 comments:
Thanks for the wrap up Mohican.
I am always a bit puzzled when I see the SFH figures.
They haven't budged (yet).
What stories are consistent with this pattern? There is an explosion of boxy condos but the SFH on offer are very much the same number as last year. Is it real rationing? Is it something else?
One theory I have is that condos are more profitable for developers: still, don't you need a special building permit to develop a multi-units building?
Is regulation getting looser ?
One more question for you Mohican: why the steep gradient of new listings in the Chipman areas but the rather flat line of listings in the MLS (VHB-style) categories?
There is something I am missing.....they don't seem reciprocally consistent.
Any idea why?
domus:
The way I see it (and I'm also watching westside SFHs) is that those properties tend to be in what stock market folks would call 'strong hands'. There are a few held by developer/flippers who have to sell soon, but this represents a smaller percentage than in the condo market.
Most SFH owners in places like the westside will not budge easily or early when we see the first price shakeout.
So, I'm expecting condos to weaken first. But that will take out the moveuppers, and as SFHs come on the market (retirees etc), there will be downward pricing pressure (fewer buyers). And that pressure will likely scare some of the folks hoping to lock in their paper gains, and that will start the inventory climb in SFHs.
Timeframe? Who knows, but it will happen.
Once it all plays out, I expect that the % drops will be the same across all sectors of RE.
My feeling is that we will see the major inventory and price drops in the outlying areas and the less desirable properties (ie. condos) first. This is the signal to me that things are changing. This is already happening with a lot of anecdotal evidence of 'less desirable' properties generating little interest while 'more desirable' properties are still moving quickly. This was not the case even one year ago.
I keep looking at the markets like Cloverdale, Langley, Maple Ridge etc because this is where I believe we will see the first real price pressure. We saw the opposite of this in the run up (price compression) and we will see it in reverse (price decompression) whenever the market corrects.
Those are my thoughts.
Mohican,
if your theory is correct we should start seeing East Van SFH begin a downfall not too long from now.
Any signs of that?
I have a feeling that there is already a decoupling of condos between downtown and Kitsilano: the latter is holding up to levels close to the summer, whereas the former is going down in asking prices. I think you could save 40k on a 2bed downtown condo.
domus: Check the price compression chart out.
I would look further out than East Van for geographical decompression to start. Look to Mission, Chilliwack, Langley, etc first then it should move in fairly rapidly.
Where I see price compression more is in housing type. How many apartments does it take to buy a house. This is evidenced by the graph I mention above. I expect this to reverse and 'decompress' during the correction phase of the market.
We will see if any of my prognostications come true though!
Mohican:
it looks like prices have been compressing.
There is a reason for that: as buyers outnumber listings, you have not much choice but get whatever is on offer.
In a way, the price is set at the margin but the quality is not: everything becomes comparable as long as it is a dwelling. Large quality variation in small price range emerges.
In fact, one of the great advantages of a subdued market from the point of view of a buyer is not just price-negotiating advantage: it is that that advantage comes from a wider choice.
Quality differences must be sorted out through prices in a buyer's market.
If I was a buyer i'd be licking my lips now: time would be on my side and I'd be really happy to wait this whole thing to unravel (however long it takes).
Well, my wife and I sold our Kitsilano townhouse last night. Sold over asking after 5 days on the market. We had 3 offers, all over asking, all with no subjects. We just set the record in my building (in terms of price-per-square-foot).
Our place was spotless, completely de-cluttered, new paint and new carpets, and the asking price was sharp. It generated lots of interest from realtors. One potential buyer hired an inspector to check out the building even before placing an offer. The other offers never inspected. The eventual buyer hasn't even set foot in the building.
Two units remain for sale in the building-- they've been up for sale for over a month and a half now. There has been interest in them, and they're not extravagantly-priced (perhaps a little high, but not by much), but they're a bit bigger than my unit, so their total price is higher. Perhaps the extra $10K-$20K is just enough that buyers aren't able to make an offer on them.
Well, I'm sitting pretty here-- just two months till closing, and there'll be $260K sitting in the bank.
Hey congrats on the sale. There must be something else with those other units though, if its $10-20k difference, you think they would at least be in the offer range of yours, since yours went over list. Maybe a nice view?
Regardless, you got out at the right time...
"Perhaps the extra $10K-$20K is just enough that buyers aren't able to make an offer on them.
"
IMHO opinion, price compression is PROOF that there is a bubble. It is not like I have any doubt, but many remain unconvinced. Relative pricing between housing types and between geographic areas exist for a reason. The narrowing of the spread the works of the affordability wall, and glaring evidence of irrational prices. Irrational as in inelastic demand not concerned with value for money whatsover. What will end the impact of inelastic demand? Somebody taking away their financing, or a change in psychology. If nothing else, the flattening prices care of the affordability wall will take some heat off.
BUT: If price compression ripples down the food chain, so that eventually SFH, townhome and condo are priced a like Seven Eleven Big Gulps (double your size for an extra quarter), when will it end. Well, at the very latest when the lowest common denominator approaches its affordability wall. Then the tradeup market dies, and its game over. But me thinks it will run out of steam long before that happens.
One of the other units for sale in my building has the exact same view as mine, and a virtually-identical layout. The major difference would be that mine's an end-unit, and theirs is sandwiched between two units. I've only got one more window, though.
They had an offer (just under their asking price) that fell through on financing. That $10K extra compared to my sale would have bought another 27 sq.ft ($370/sq.ft), which is a relative bargain compared to the overall price-per-square-foot of my unit.
Yes, I definitely agree that there's price compression going on, even evident within my building. Interestingly, since last summer, all the 2-bedroom units that have sold in my building (which vary quite a bit in size, layout, view, exposure, etc.) have all sold within about $30-40K of each other.
As an aside, I have this great feeling of relief, knowing that I'm now de-coupled from the market.
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