The first data of 2020 is in; the averages sales price for Greater Vancouver is down $80,000 from the previous month, and down $40,000 year over year. No sense for optimism from where we sit.
The price point is in the middle of the current market threshold. After a successful defense during 2019 of 1.5 million, Eitel Insights anticipates the next test of 1.5 million will break through and prices will indeed test he 1.4 million threshold. Previously established in 2015. At that point all equity gained over the previous 5 years will be erased.
Sales are significantly lower than a quarter ago. Of course, there is a seasonal factor at play and the 444 sales were higher than the previous January when only 344 detached homes sold.
We feel a need to point out what occurred during 2018 and 2019 for the sales activity. In 2018 the stress test was introduced which diminished purchasing ability by 20%. That forced a major segment of buyers to the sidelines. In 2019 prices had indeed dropped to 1.5 million which is 18% from the peak in prices. Basically nullifying the stress test for the first time. It took the market dropping 18% for purchasing to begin. The 2 year backlog of buyers meant pent up demand that was finally able to release in 2019.
The current prospective purchasers are in a wait and see mode. We anticipate the sales numbers to again jump once the market reaches stress test mitigation. The Market sentiment will also begin to turn further negative as the introduction of the need based seller becomes prevalent in 2020.
The Inventory numbers have hit their lows and will begin to rebound during the upcoming spring and summer markets. Eitel Insights forecasts the detached inventory will again return above the 6000+ active listings by the beginning of the 2020 school year. Current inventory levels in January were 3947 the lowest amount since February 2016.
The notion that the demand has eroded the inventory is a fallacy. The inventory had dried up due to seller’s fatigue. Much of the inventory had a listing that was at expiration and rather than relist they took the 4th quarter off. After that time off, still with a need to sell, propelled on by the hyped sales numbers reported by the board the inventory will be loaded soon enough.
We advise to the sellers who will be in that need based situation begin to sell now before onslaught of similar stories hit the market. Need based selling will become necessary in 2020, propelling the market lower in price. Simultaneously the buyer’s trepidation will skyrocket. The only way to mitigate their pessimism will be time. Which is not something every seller will be able to afford in the upcoming market.
Not all markets are created equal while some fall other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada, visit our website. www.eitelinsights.com
A 90 thousand price increase from November to December! How? The one word answer is, Pemberton. Pemberton’s average sales price doubled in value over the one month. November had an average sales price of $695,000 then boom, $1.340 million, however this was the only sale and hardly a trend.
Greater Vancouver’s December average sales price came in at $1,670,893. Which is actually up from the beginning of the year when January realized a sales price of $1,615,953. However if you subtract the doubling of Pemberton and add a normal sales price for Pemberton the Greater Vancouver average comes out to $1,580,714, which would have resulted with the average sales price remaining close knit with November’s sales price of $1,583,878.
The 2019 yearly average sales price for Greater Vancouver Detached market was finalized at $1.565 million. Signalling a drop of $115,000 from the 2018 average of $1.680 million.
Eitel Insights anticipates 2020 will be another down year for sales prices, we predict prices to test the $1.4 million threshold. At that point, all equity that had been gained over the previous 5 years will have been erased. Also when the market tests $1.4 million that will realize a 23% loss from the peak in 2017 of $1.830 million. If 1.4 Million does not hold as a bottom the market’s next echelon will be $1.275, then $1.225 million. That is as low as we could see Greater Vancouver falling to by 2021 which would signal a 31% price correction from the peak.
In 2015 the average sales price broke the $1.4 million price point. By 2017 prices had escalated to $1.830 million, signalling an increase in equity to every home owner of $430,000. With that kind of whipsaw to the market, we will see a lot of “need based selling” upcoming in 2020 and 2021.
The sales in 2019 broke out of the falling knife trend that had been established in 2016. Rather than the market rebound touted by the Real Estate Board and other analyst, the rationale for purchasing was simple… stress test mitigation. With multiple price test of $1.5 million signalling an 18% price correction from the peak the sidelined purchasers who had been effected by the stress test were able to purchase for the first time in years.
The sales range held firm in 2019 with 950 holding as the most sales in a given month, which is amazing given we started the year with only 344 sales. We anticipate the 2020 market to again test the 950 high water mark.
Noticeable in the chart is the drastic difference between our new reality compared with the scorching hot market that greater Vancouver had become accustomed to.
The inventory finished 2019 at the lowest levels since January 2016. With only 3527 active listing in December 2019.
The 2016 levels were based on incredible demand from local and foreign investment.
2019 however we see as merely seller’s fatigue. The market has been evolving to a buyers’ market over the past two years and the seller’s can feel the change. After remaining on the market for months and no offers we believe a majority of the sellers took the Holidays off. In the first half of 2020 the market will again experience a new crop of inventory that will hit the market and push levels back above 6000 active listings.
An example of why sellers have given up, the Days on Market is at the highest point over the previous 6 years. Long gone are the days when a listing would sell in one weekend with multiple offers. However sharp listings still do sell in a reasonable time, which was true in 2019. The unfortunate side of that statement is there are increasingly fewer sharp listings.
As this market continues to push lower the purchasers are keenly aware. They will bide their time and be rewarded with increased competition amongst the listings for their valuable time and consideration.
Condo Prices in 2019 were Down 7% compared to 2018. What is the Forecast for 2020?
December’s average sales price for Greater Vancouver Condo market came in at $667,875. Which resulted in the overall sales price for 2019 of $661,387. Which is $52,000 less than the 2018 average total ($713,258).
2019 prices had multiple tests to the middle threshold of the current market cycle. Prices were in a 20 thousand dollar price band for most of the year, between $640,000 and $660,000. In the 4th quarter of 2019 prices produced a divergent trend which will likely be resolved with a significant price move in the first quarter of 2020.
We forecast further price losses in 2020, with prices likely breaking downward out of the current divergent trend. That will result in some volatile price movement, with a high probability of seeing prices test the $600,000 threshold.
Ultimately before the market settles at the bottom. Eitel Insights forecasts that the Greater Vancouver Condo market will test the $525,000 threshold. Which would signal a price correction of 30% from the peak..
The sales have been much better in 2019 compared to 2018, as is evident in the chart. This V shape reaction is hardly cause for celebration. As we have said before “picking yourself up off the floor doesn’t mean you will win the fight.”
Other analysts have touted the 88% increase to December’s year over year sales. True enough but what they conveniently leave out is that December 2018 was amongst the worst on record in the past 15 years. So beating that mark is less than impressive in our books.
Inventory during the 2nd quarter of 2019 was at the highest levels since 2015 with 5900 active listings. During the 4th quarter the inventory negatively broke out of the staunch uptrend, and fell quite precipitously.
We do expect the market to put in a higher low than was previously low recorded in December 2017; which would instigate a conservative longer term uptrend. With the abundance of inventory through presold units beginning to complete in 2020 and beyond. Eitel Insights anticipates the 2020 inventory will surpass the 2019 levels.
Notably we believe the lack of inventory during the 4th quarter of 2019 is due to seller’s fatigue. Many of the listings had been taken the property off the market to consider how to proceed in this new environment.
As backing to our thought process that the inventory has been disappearing due to seller’s frustration, rather than any ravenous demand. The Days on Market has continually risen over the past few years and even while the sales have rebounded, the days to sell a property on average is still rising.
This data is not all properties listed, only the sold properties. Indicating the cream of the crop takes well over one month to achieve an accepted offer.
Not all markets are created equal, while some fall, other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada, visit our website. www.eitelinsights.com
A divergent trend has begun to establish itself in the Greater Vancouver Condo Market. Beginning in June 2019 prices were at $643,471 which bounced off our technical line and began a minor uptrend that propelled the market higher peaking in September 2019 with prices reaching $673,220. The November data produced and average sales price of $670,811 indicating a lower high than the previous high in September. This trend will be resolved with a clear and concise winner, Eitel Insights anticipates seeing the Greater Vancouver Condo average sales prices take another leg lower in 2020 and beyond.
Overall the market is down 11% from the peak in 2018, and while year over year is only down 3% that is after this recent rally that began when prices were down close to 7% from the November 2018 sales price.
Sales numbers have been touted as a sign of strength by the Real Estate Board, however the chart above in our opinion does not share their sentiment. Yes, November sales are up 400 year over year. However they conveniently don’t mention that last year was one of the worst on record. Sales will not dissipate to nothing there is always a segment of demand in Greater Vancouver. Need based purchasers, however we anticipate the inventory will drastically jump higher over the upcoming two years and that will disarm any potential rebound believed to be occurring by optimists.
The inventory has seemingly taken the 4th quarter of 2019 off, after realizing an aggressive growth trend for the past 2 years. However the new monthly listed inventory is only lower by 300 properties on a year over year basis, and the overall inventory is lower by 800 properties. We attribute this to fatigue on part of sellers that haven’t been able to achieve a sales after remaining on the market for a lengthy period of time and simply removing the listing for the Holiday Season.
Eitel Insights sees a great imbalance currently taking hold in the Condo Market. As evidenced by the chart below which is the average days on market. Currently to achieve a property takes on average 44 days which is continually climbing higher. Indicating a real imbalance of “listed properties” versus “sellable properties”.
I will leave you with this analogy for the Greater Vancouver Condo market. Picking yourself up off the floor doesn’t mean you will win the fight. Again Real Estate cycles exist, we point out where we are in any given cycle across Canada. Here in Vancouver the market still needs to go lower before the cycle has been filled and the market can again see prices increase. For an individual report please visit www.eitelinsights.com
B-20 what? Never heard of him. Canadians are in a rush to take out mortgage credit once again. Bank of Canada (BoC) data shows a major jump in borrowing. The increase is some of the highest growth for mortgage debt, and is primed to explode even higher.
Canadian Mortgage Debt Grows At The Fastest Rate In Over A Year
Canadian mortgage debt held by institutional lenders made a huge leap. There was $1.61 trillion in mortgage debt outstanding in October, up 0.56% from a month before. That brings the balance outstanding 4.5% higher, when compared to the same month last year. This is both a new record for the dollar amount, and a multi-month high for growth….CLICK for complete article
Prices for Greater Vancouver are apparently headed higher in 2020. So says the Real Estate Board, unfortunately their forecasting track record is suspect to say the least. We cannot seem to recall a time when the GVREB had a negative forecast.
Prices in fact are down 7% from November 2018 or $120,000 dollar lower on an average sales price basis. Other marketing companies have recently come out with their “forecasts”…. maybe, just maybe they have an ulterior motive, rather than being objective market analysts. I remember another analyst saying “if you have a 20 year forecast you can buy now” so that portfolio is down $120,000, good thing for the long term outlook.
Eitel Insights clients and followers have been rewarded with lower prices and more inventory which is exactly what we forecasted, when the market was at the peak. Actionable Intelligence is our motto and those who have taken advantage of our analytical approach have saved time and money. Equally importantly a great night’s sleep. Not all markets in Greater Vancouver are created equal some areas are closer to the bottom while the majority still have significant percentage losses to come.
The time to invest is on the horizon however not at our feet yet. 2020 will experience need based selling as prices dip to 1.4 Million testing the current market cycle’s previously established prices. At the 1.4 Million price point the market will have correct a total of 23% from the peak. Indicated in our chart. Not to mention prices will be back down the 2015 level, indicating all gains over the previous 5 years will have been erased.
Sales ran like a scared cat from the near term high in sales indicated by the chart. One noticeable trend is there is an uptrend that has been established. We anticipate see the seasonal fall off over the next few months. Of course the buyers are still feeling the relief of the stress test mitigation. However patience is a virtue and those purchasers willing to wait will be rewarded with stiffer competition amongst sellers in 2020 and 2021.
The inventory came in at 4957 active listings which has broken out of the technical uptrend that had propelled the market higher since Feb 2016. The interesting factor with the inventory is, properties that were newly listed in November were 1,070 and the sales were 834. Indicating the newly listed properties that are appropriately priced are likely the ones receiving the acceptable offers. Properties that have been on the market for months are continuing to sit there, this is best exemplified by the chart below which shows the average days on market to before a sale is achieved. The days on market currently sits at 57 which would be lowering in the market was truly bottoming. 2020 will see the inventory tick back up and surpass the 7000 active listings that the market experienced in the summer of 2018. Largely due to the need based selling upcoming.
Money saved is money earned. Since our initial forecast that the Greater Vancouver Market had indeed topped out and prices would begin to trend lower. The market has realized a $360,000 price loss. For an individual report please visit www.eitelinsights.com
Canadians have been on a debt binge, and some cracks are starting to appear. The Office of the Superintendent of Bankruptcy Canada (OSB) saw an increased number of filings in October. Insolvency filings have been moving higher for the past year, especially in the consumer segment.
Canadians Filed Over 139,000 Insolvencies
Canadian insolvencies are rising very quickly from last year’s numbers. There were 13,512 insolvency filings in October, up 11% from a month before. The monthly number is up 13% when compared to the same month last year. In the past 12-months there were 139,194 filings ending in October, which is up 8.8% when compared to the same timeframe a year before. This implies growth could be accelerating even faster….CLICK for complete article