September came and went without so much as a hello or good bye in Vancouver Real Estate. The Greater Vancouver data shows not much movement in September with prices moving slightly down from 1.560 million in august to 1.507 million for yet another re test of the 1.5 million price point. This is the highlight of the September data, as this shows we are back to the prices experienced in June and July. However this re test of the horizontal orange line is a break of the ten year trend. With this break we know by around the first quarter of 2020 the prices will dip below the 1.5 million threshold and re test the 1.4 million price point indicated by the lower orange horizontal line in Greater Vancouver’s current Market Cycle. This movement down could occur before the aforementioned Q1 of 2020, but due to the stress test we think that the market has some pent up demand that still needs to purchase. Once that blip is over prices do indeed test 1.4 million.
The result of this movement means those that will be up for the 5 year mortgage renewal in 2020 will have lost all equity gained over the past years. In Feb 2015 prices first surpassed 1.4 million. This is where the market will return in the near future. Even more troubling we forecast the market to continue in to be tumultuous until 2021 when the market sees a base. This means those who purchase properties during the peak in detached prices of 2016 will be in for over $400,000 loss of equity when they go for their mortgage renewals in 2021. We do not mean to instigate fear, however this is the reality many owners will face in the upcoming years. We believe it is better to know what you are facing rather than being an ostrich with your head in the sand.
Greater Vancouver sales seemed to have hit their heads three times around 930 sales indicated by the horizontal green line in the chart above. This has seemingly caused the sales to be range bound between 930 and 620 in a given month. We anticipate this trend to continue until the conservative downtrend in sales has been broken likely in 2021.
Again not much movement with the data in September for the Inventory. With just under 6000 active detached properties available, just below the middle of the uptrend. With the downward pressure of the market prices we have noticed that stagnant listings do not stand much of a chance in this current market. You need to separate your listing from the competition and really the only way to do that is by being sharp on your list price.
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 Eitel Insights online.
Greater Vancouver Condo Prices Realize the First Bump in Over a Year
Greater Vancouver prices rose over 20 thousand to $673,000, now that doesn’t sound like much and it isn’t only a 3% bump. What is interesting though, is this broke the initial downtrend that has been established since the peak occurred in April 2018 at a price point of $747,000. Also the first slightly significant increase to the average sales price over the past year. This is not cause for celebration however, the market has not bottomed nor close to it. What has transpired due to the break in this initial downtrend is the market will establish another likely more conservative downtrend.
As is common sentiment the condo market lags the detached market in most instances. Vancouver is no different, during the initial downtrend of the detached market when prices hit the middle of the market cycle then bounced higher as psychologically the market does not want to go lower than this point. Until reality sets in and forces to test lower previously established prices before the market reaches the bottom.
This is what is going on here and now in the condo market. Prices will attempt to stay above the lower of the two yellow lines ($635K) in the market cycle. Once this attempt fails, prices will again turn lower during 2020 and 2021. As prices continue to decrease the market will re-enter the ten year uptrend indicated by the black uptrend line. And ultimately will indeed drop to the anticipated bottom of $525,000 by 2022.
Sales over the past quarter for the Condo Greater Vancouver Market have been somewhat stable, staying above 1100 sales. Which is smack dab in the middle of the conservative downtrend. With the most recent sales prices coming in at $673,000 only representing a loss of 10% from the peak. The challenge in qualifying for a mortgage is difficult and will remain so as the major banks are planning on further losses to this asset class. As a result they are being very tight with their borrowing metrics. Not to mention the Greater Vancouver Condo market still needs to see an additional 10% losses from here before realizing the stress test mitigation that is currently going on in the detached market.
Inventory is right up against this aggressive uptrend that has been established since the beginning of 2018. Similar to what we forecasted with the price point when the data is up against the trends we will see an obvious reaction one way or the other. Indicating either there will be a break to the current uptrend and a creation of the next or we will see a snap upwards in October’s active listings numbers. Regardless of the short term trend the overall trend for the inventory indicates that during 2021 and 2022 inventory will be a record high levels.
Dane Eitel is the founder and lead analyst of Eitel Insights. Click here for more information.