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Detached Housing Market Update

Record Breaking Month in Greater Vancouver for Home Sale Prices & New Monthly Listings

Yet another record month for the Greater Vancouver housing market. The average cost to purchase a detached property inside of REBGV increased by $89,000. Bringing the average to $1.958M. This was aided by the continued high sales totalling 1,973. Accumulating the second largest sale total in the history of Greater Vancouver real estate. In attempts to capture the newly minted growth phase in home prices, sellers came to the market in droves. Setting the new record with 3,368 newly listed detached properties in March. The record amount of activity to kick off the spring market is likely to continue as March through May are typically the busiest months of the year.

Home sale prices continued their escalation beyond the previous market cycle. Amazingly, another $89,000 was added to the average sales price from the previous month. The new record price of $1.958M represents a 7% gain over a two month span. The 7% growth is the first increase above the previous market cycle which had held home values range bound for 5 years.

The biggest gainers this past month were Pitt Meadows up an incredible $233,000 month over month, representing an astonishing 20% increase. The average property in Pitt Meadows is selling for $1.44M. Vancouver West rose $500,000 up 14%, bringing the average price to $4.025M. The standout of the gainers over the past two months is Whistler. This past month over $600,000 was added to the average price. Couple that with the $900,000 increase from the month previous, and Whistler has increased over $1.5M in just the past two months. The recent spike in value has increased the averages price to over $4.325M for a detached property in Whistler. The massive increases to these areas have aided the REBGV average price to gain distance between the price point and the aggressive uptrend instigated during July 2020.

Breaking beyond the 5 year price boundary has been clearly aided by the supply demand imbalance. March 2021 just recorded the second largest imbalance between the two market metrics on record. The total gap between the supply versus demand during March was 3.6. Falling just 2 basis points below the all time high which occurred during March 2016 with a 3.8 gap. Interestingly, previous to the past month the second largest discrepancy occurred during April 2016. This implies buyers are unlikely to receive any reprieve in the short term.

As forecasted over the previous months, sellers are entering the market with full force. A record setting total of over 3,300 properties were listed in last month. March 2021 represents only the 4th instance where new listings accumulated over 3,000 in a single month. Should the high new listings count continue to rise through spring and into the summer months, home values will likely realize a near term price peak during the summer.

Even with a record amount of new listings, the total inventory continues to remain in the doldrums of the chart. A glimmer of hope would be the total inventory of 3,886 is attempting to break out of the 3 year immediate downtrend (Red trend line). Established during June 2019 when there was over 6,700 active listings. The enormity of new listings only resulted in a net of 880 total active listings compared to the previous month. However should inventory continue to grow a the 29% as was the case in March. The key figure of 5,700 active listings is well within reach by the late summer, or early fall.

Sales fell just short in completing a trifecta of records during March. The 1,973 sales were only 177 shy from the all time high achieved during March 2016 of 2,150 sales. With the abundance of new listings coming to market, the buyers snatched up the choice properties, and continued in the bidding war mentality which pushed the average sales price to over 101% of the asking price. This is only the 9th instance in which sales price was over 100% of the asking. Of those previous 8 instances they all occurred between December 2015 – July 2016. Implying the next several months of data could result in a continuation of the sales prices being higher than the asking prices.

Importantly, all subsections of the market are now selling. Over the past year the entry level homes have been selling at a frenzied pace, that has worked all the way up to the luxury market. March realized 49 properties that sold over $5M. The 49 sales is an increase of 250% compared to the preceding 3 year average of 14 sales per month. The prices of the luxury market is still not quite back to the peak conditions of 2017. As the averages sales price was $8.6M. However the average sales price in March of $7.6M, is up over $1.6M from the low recorded in May 2020 of $6M.

Dane Eitel
Founder & Lead Analyst

The skyrocketing cost of lumber, explained


Low supply and high demand have pushed lumber prices through the roof, but European beetles are helping.

Wood is typically used for building roofs. Now it’s known for blasting through them.

Lumber prices are up nearly 260% since April 2020, following a perfect storm of surging demand and diminished supply.

And it all started with a simple backlog…

At the start of the pandemic, sawmills anticipated weak demand and limited production by up to 30%. To their surprise, demand turned out stronger than ever:

  • DIY boom: While the US economy shrank 3.5% in 2020, spending on home improvements and repairs grew 3%+
  • Low interest rates: In December, US new housing starts hit a 14-year high

Despite wood production hitting a 13-year high in February, supply hasn’t caught up with demand — and now ~70% of builders are raising home prices to slow demand down.

The result is a $24k+ increase in the average price of single-family homes since April 2020.

European beetles are now coming in clutch

Not those European beetles. A literal beetle infestation across Europe is boosting logging there, and Europe’s share of US lumber imports reached a record high of 13% in 2020.

Those imports are critical to the US lumber supply as British Columbia has reduced production by over a third in 5 years.

In conclusion… (We wanted to end this piece with a joke about lumber, but we just couldn’t think of any that wood work.)



How much is Epic Games worth? Well, we’ve long ago surpassed the realm of dollar figures regular humans can contextualize. With its latest round, the gamer hit an equity valuation of $28.7 billion. Yes, “b” for “billion.” That’s a lot of micro-transactions.

Time to start talking metaverse!

Best known for the wildly successful battle royale title Fortnite, Epic just announced another $1 billion funding round, featuring a $200 million Sony Group Corporation investment. The rest of the list is, predictably, a long one, including [deep breath], Appaloosa, Baillie Gifford, Fidelity Management & Research Company LLC, GIC, T. Rowe Price Associates-managed accounts, Ontario Teachers’ Pension Plan Board, BlackRock managed accounts, Park West, KKR, AllianceBernstein, Altimeter, Franklin Templeton and Luxor Capital.

Epic vs. Apple

“We are grateful to our new and existing investors who support our vision for Epic and the Metaverse,” CEO and founder Tim Sweeney said in a statement tied to the news. “Their investment will help accelerate our work around building connected social experiences in Fortnite, Rocket League and Fall Guys, while empowering game developers and creators with Unreal Engine, Epic Online Services and the Epic Games Store.”

Sweeney has plenty of reason to be grateful, as the controlling shareholder.

It’s been a busy several months for the game maker. The company has been waging an on-going war with both Apple and Google over in-game payment revenues. A trial likely to feature some of the biggest names in tech is expected to kick off early next month.

Epic has also been using its already extremely deep coffers to purchase game developers and publishing studios, including its March acquisition of Fall Guys-maker Mediatonic. It’s clear the company is amassing a large portfolio of titles through acquisitions, a trend that is almost certain to continue with this latest massive round.

The funding also looks likely to strengthen the company’s ties to Sony, as well. Here’s Sony Group Corporation CEO Kenichiro Yoshida, also quoted in the press release:

Epic continues to deliver revolutionary experiences through their array of cutting edge technologies that support creators in gaming and across the digital entertainment industry. We are excited to strengthen our collaboration to bring new entertainment experiences to people around the world. I strongly believe that this aligns with our purpose to fill the world with emotion, through the power of creativity and technology.

Prior to this round, the company had raised $3.4 billion, including a a $1.78 billion round last August.

The robots are coming, and they’re bringing pizza.

New York (CNN) – This week, Domino’s is rolling out a robot car delivery service to select customers in Houston. For those who opt in, their pies will arrive in a fully autonomous vehicle made by Nuro.
Here’s how it works: Customers in the Woodland Heights neighborhood of Houston can choose robot delivery and receive texts with updates on the car’s location and a numerical code that can be used to retrieve the order. Once the car arrives, the customer enters the number on the bot’s touchscreen, and the car doors open up to serve the food.
Nuro’s robot car was the first completely autonomous, human-free on-road delivery vehicle to receive regulatory approval from the US Department of Transportation last year, Domino’s said.
This isn’t Domino’s first foray into the world of autonomous deliveries. In 2017, the Michigan-based company used a self-driving Ford Fusion hybrid to deliver pizzas to randomly chosen customers in Ann Arbor, Michigan. And in 2013, Domino’s tested out pizza delivery via drone in the United Kingdom.
While these experiments are useful to get the ball rolling when it comes to innovation and building buzz for the brand, consumers shouldn’t expect a seismic shift in the way food is delivered. For now, at least.
“There is still so much for our brand to learn about the autonomous delivery space,” Dennis Maloney, Domino’s senior vice president and chief innovation officer, said of the new initiative. “This program will allow us to better understand how customers respond to the deliveries, how they interact with the robot and how it affects store operations.”
Domino’s isn’t the first pizza chain to play around with this technology. In 2018, Pizza Hut announced that it was working with Toyota to release a fully autonomous delivery vehicle.
But self-driving vehicles are far from mainstream. For years, self-driving car companies operated under the belief that their technology and current road infrastructure would be enough. But self-driving has proved harder to get off the ground than expected. Companies have missed deadlines for deployments, and the industry has consolidated, with even a company as big as Uber selling its self-driving vehicle program.

Rabo: When It Comes To Inflation, What One Does And Doesn’t See Is All Political

CPI Basket Case

On Sunday on ‘60 Minutes’, Fed Chair Powell said “We can wait to see actual inflation before we raise interest rates.” Well, today is the US inflation report. The market consensus is headline prices will rise 0.5% m/m, which would be around 6% y/y annualised, and on a straight y/y basis CPI will go from 1.7% to 2.5%. Of course, excluding food and energy CPI is seen rising just 0.2% m/m, or around 2.4% annualised, and up from 1.3% to 1.5% y/y. Yet the Fed won’t see any actual inflation in those numbers. When it comes to inflation, what one does and doesn’t see is all political.

For example, we are currently seeing a housing boom in many economies, most so in Australia, on the back of ultra-low interest rates. What do central banks and regulatory bodies say when house price inflation is, say, 5%, or even 10% – let alone 30% as in Oz? Answer: nothing. Once upon a time they had to do something – but then we removed accurate measures of house prices from CPI, so now they don’t. It isn’t happening, or isn’t their remit. True, they can waffle about financial stability, and in the case of the odd outlier like New Zealand (and on/off in China), the government can force action from the central bank. Yet until that revolution is imposed globally –in the same ‘yes,-that-is-going-to-happen’ way the US wants minimum corporate tax rates to be– house-price inflation just is what it is. As such, is it any wonder that such a vast slice of the US, Chinese, European, Aussie, etc., economies are focused on endless property speculation?

How about stock prices? Can anyone remember back to Alan “Bubble Boy” Greenspan and his empty warning of “irrational exuberance”? Indeed, can anyone remember the last time a major central bank deliberately raised interest rates in order to slow down an ascent in stocks, because this was inflationary? Conversely, does anyone seriously think that stocks could ever fall significantly before our monetary authorities slashed interest rates (where they still can), or boosted QE further, or did “whatever it takes” to get them to go back up again? So clearly not much fear of inflation there – just deflation.

Of course, there is wage inflation. Nowadays there are more frequent and widespread calls to ‘Build Back Better’ and ‘level up’, and recognition that this involves higher pay. (Just not for NHS workers in the UK, who were initially offered 1%). Even the US Treasury Secretary is using quasi-Marxist terminology of “labor vs. capital”. However, since the neoliberal reforms of the late 1970s/early 1980s, wage inflation has not been tolerated by central banks – outside of finance and after-dinner speaking fees of USD250,000 a pop. Any sign of general salaries going up to, say, 5% or even 10% is terrifying, was met with an immediate response of higher interest rates.

Yes, central-bank rhetoric has now changed: but it’s easy to say one is willing to let wage rises happen when one is also aware that the economic structure will not allow it! You can’t sit on rates or yields or talk about “labour vs. capital” and expect wages to just go up. You need to *strengthen* the bargaining power of labour vs. capital. How do you do that without empowering unions/weakening the power of firms? How do you do that while allowing off-shoring and free trade, because the logical response will be to shift production elsewhere. And how do you stop capital replacing labour, i.e., automation? Our global system is designed to ensure we don’t get general wage inflation. Slashing rates, QE or even YCC are performative in a political vacuum: but, handily, they produce higher house and stock prices.

Meanwhile, expensive Aussie house prices and cheap rhetoric are not the only things growing 30% y/y. As the US CPI report will probably only partially show, so are food and energy costs. I wrote recently about geometric vs. arithmetic means and hedonic adjustments made to the CPI basket that keep it lower than it feels for most people. One other what-you-see-and-what-you-don’t impact in the same basket I didn’t mention is periodicity.

How often do you buy a TV, for example? The price of those has come down when one adjusts for quality, and even in absolute terms. Yet my own experience is that if I am buying more than one every five years, I am pretty angry about it. The same goes for key pieces of furniture and lots of other items where our neoliberal system *has* seen prices come down (and Western supply chains and jobs shift to Asia in tandem). By contrast, how often do you buy food? How often do you fill up your car with petrol/gas, or buy something delivered by somebody who did? Inflation fails to capture this time distribution effect. Everything around you that you need to buy today is going up in price rapidly – but don’t worry: something big you might not need to buy until 2028 is going down in a hedonic-adjusted price. Sit back and feel the savings.

Earnings Growth Not As Strong As Advertised

As markets surge to record highs, analysts are rushing to ratchet up earnings estimates as optimism explodes.

“The first quarter of 2021 marked the largest increase in the bottom-up EPS estimate during a quarter since FactSet began tracking the quarterly bottom-up EPS estimate in Q2 2002. The previous record was 5.4%, which occurred in Q1 2018 after tax reform was passed.” – FactSet

Of course, with market’s at record highs, Wall Street needs drastically higher estimates to rationalize bullish allocations. However, before we get into the risks of forward expectations, let’s review what happened.

A Disappointing Past

Through the end of 2020, quarterly operating earnings increased $0.01 to $38.19 from $38.18 at the end of 2019.

You read that correctly.

Quarterly operating earnings, which are mostly useless as companies exclude all the “bad stuff” and fudge the restincreased by just $0.01 while markets exploded 16.28% in 2020.

It is far worse when looking at “real” reported earnings, which declined -11.4% from $35.53 to $31.45.

However, the good news is these are very sharp recoveries from the Q1-2020 lows of $19.50 and $11.98 per share, respectively, as the economy reopened.

Earnings Growth Not As Strong As Advertised

Analysts always over-estimate earnings by about 33% on average. As discussed in “The Problem With Analyst’s Forecasts:”

“The biggest single problem with Wall Street is the consistent disregard of the possibilities for unexpected, random events. In a 2010 study, by the McKinsey Group, they found that analysts have been persistently overly optimistic for 25 years. During the 25-year time frame, Wall Street analysts pegged earnings growth at 10-12% a year when in reality earnings grew at 6% which, as we have discussed in the past, is the growth rate of the economy.”