Vancouver Real Estate Buyers – Squeezed

Bounce

Lower mainland sellers have rebounded as active listings have regained the momentum lost throughout the last quarter of 2010 as the listing count headed for its low in the early part of January 2011.

“V”

Recapping: October 1, 2010 recorded 24,457 active listings. This inventory dropped by almost half to January 5, 2010’s 13,965.

Since that low, the last 50 days has witnessed sellers coming out in full force as the active listing count has climbed steadily to reach today’s total of 19,023. At this velocity, April’s count may exceed October’s.

If the market repeats itself, we may re-experience the market pattern of last fall with a few new twists.

The Reversal

Added to the growing inventory, reflect on these additional economic twists that may coalesce to construct a reversal of local market fortunes.

Consider:

  1. the end of the 35 year amortization – eliminates many first time buyers
  2. increased living costs – hydro (soon to be up 50%), heating, gas, food
  3. political turmoil in the middle east and it’s economic effect via trickle down on our slow to recover economy
  4. depending on your perspective – impending or assured interest rate increases
  5. no substantial wage increases in all sectors to offset these base increased living costs

Squeezed

Expected is that we will see higher average sale prices recorded in February. Selling now may prove to be a wise decision for if the influences noted prove true, the Vancouver real estate market could be in for a long slower sales summer as buyers begin to realize that their home buying budgets are being squeezed.

About Larry Yatkowsky

Larry is a recognized real estate expert. A veteran professional, his experienced counsel leads Vancouverites in his west side community to place their trust in a man passionate about his work. Uncompromising ethics bring a balanced approach to realizing your real estate dreams.

When Life Moves You - contact Larry:

*Disclaimer: Statistics Courtesy REBGV. While believed to be accurate they are not guaranteed.
**Numbers provided may vary as they are dynamically posted by the REBGV.

Reader Comments:

Paul Says:
February 24th, 2011 at 7:48 am

Isn’t this mostly normal seasonality? It would be much more useful to show a longer time series and y/y comparisons than to discuss sequential activity.

February 24th, 2011 at 8:44 am

@paul
Sorry Paul, I suspect that you are under the misguided impression that RE data is something RE boards spend a great amount of time amassing.
With the intent of blowing my horn you should know that it was I who first created the ‘Average Price’ graph 20 years ago on my old XT when Excel was introduced to the world on floppy drives. At that time, in Vancouver the averages were recorded on a single sheet of paper, filed and forgotten or lost. In the spirit of membership the tables were freely given to the board and have since been used to generate the graph which is in part the focal point of their monthly reports.

My point is, to my knowledge the “collective” single source of a daily total of active listings is not recorded by the lower mainland boards as it is a fuction of the IDX of which I understand only 2 or 3 out of 10,000+ Vancouver members individually subscribe to and pay for direct access – I’m one of them.
Bottom line what you see is what you get because that’s all there is at this time. Got a better source – show me.

Samsonite Says:
February 24th, 2011 at 9:06 am

Good post Larry, useful. Thanks.

Hmmm. Yes, good time to sell.

I wonder how higher rates, 30yr amorts, psychology will play out over the months ahead. Interesting times.

Between here and late March I suspect that there will be a lot of buying activity as the rush to the entrance due to mtg rules and low rates (anticipated to rise, so beat the rate increase, borrow to the max, etc.) impacts, but post this point and as we see a couple of hikes…then what?

I’ll stay tuned, and thanks again for this balanced post.

February 24th, 2011 at 10:22 am

@samsonite
yes there are many 35 year amortization buyers running hard to find their new home. They’ll need a firm deal signed by March 17.

Samsonite Says:
February 24th, 2011 at 2:42 pm

Hi Larry,

Do you expect a marked drop off (on a relative basis) in buying activity post March 17th? (at least for a while, if/as the demand pulled forward by this rule change will have been largely sated)?

February 24th, 2011 at 3:04 pm

@samsonite
ummmm I suspect a ‘drop off’ is a bit aggressive. No one really knows how many 35yr ams. are out there. The marginal buyers are the ones who will be set back. How many I don’t know.

vanpro Says:
February 25th, 2011 at 11:00 am

Larry said: “The marginal buyers are the ones who will be set back. How many I don’t know.”

“Marginal buyer” is relative isn’t it? When Greater Vancouver’s avg. SFH price is around $1.1M, doesn’t that make a lot of buyers “mariginal” by definition? Unless of course, you have data to show Greater Vancouver’s buyer’s avg. income is $300k-$500k and average net worth is $1M-$3M or thereabouts….Last time I checked, monthly mortgage and living expenses still have to paid in real $’s, unless you say that Monopoly money is acceptable to the sellers of your homes for sale….

February 25th, 2011 at 1:15 pm

@vanpro

vanpro says: “Marginal buyer” is relative isn’t it?

Exactly! The word marginal seems fixated on those at the lower end of the income stream. However, it also applies to those who earn much more who also feel ‘marginalized’ when they are not able to ‘move up’ to the next level. For some of them, the death of the 35yr amortization will also have an effect.

vangrl Says:
February 25th, 2011 at 5:14 pm

thanks for the post Larry!

Listings for Kits apartments just blew past 100 listings in the last week, haven’t seen that many in a long time!

serf Says:
February 26th, 2011 at 3:43 pm

I agree with the economic risk factors you listed above.

However, I suspect that in Vancouver, the fear of “hot asian money” pricing us out forever is the only issue the locals know or care about.

February 26th, 2011 at 4:24 pm

@serf
Really!
Everyone points to Asians as the problem that is “pricing us out.” Yet those same people conveniently forget that ultimately it remains the choice of the seller to sell – nobody is forcing them to do so.

Reflect if you will, that the “hot Asian money” may in fact, be a financial saving grace for many individuals and this city.

L8erdude Says:
February 26th, 2011 at 6:12 pm

@ vanpro
marginal buyers cease being marginal as soon as their names are on the title – and there are a lot of those lately, and at higher and higher prices. I’d define “marginal” as those who are actively seeking but not quite in the game yet – a.k.a the typical Vancouver real estate bear

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