14 Years Ago Vancouver Home Buyers Waited

Buy Low Sell High

Buy low sell high is the age old mantra of market wisdoms. If you rely on statistics to tell you when the low has arrived you have a problem – data is historical. The implication – the low you were waiting now confirmed via higher market values says you missed the low point.

With an HPI price of $588,790, fourteen years ago Vancouver home buyers also waited for that low to arrive. According to this 1998 REBGV report, prices on the west side of Vancouver were down 17.5% but, “buyers still hesitated to make a purchase” – those buyers were waiting!

Today

It is hard to define what makes a market turn. That knowledge remains uncertain. It may be a function of domains such as murmuration.

Observation suggests that things such as global economic issues, changes to mortgage rules, relative lower income, lack of financial stability, higher debt levels or simply the summer sun have impact and may singularly or as a group, influenced today’s buyer to wait.

Not an Option

When life slows and money gets tight humans tend to stay home and let nature provide the entertainment. Vancouver real estate’s September numbers are but a week away – a gestation period much shorter than the nine months it takes to produce a child.

Notes from collegial conversation suggest that some buyers have decided that they can wait no longer. Birth and future sales records may prove this notation incorrect but while buyers in 1998 may have had different reasons to wait, empirical observation finds that when it becomes increasingly difficult to navigate your way in stores aisles or sidewalks due to the influx of buggies and prams crammed with small people or distended about to be mothers – waiting to buy a Vancouver home at the all time low fades when there are soon to be new kids on the block.

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:

vanpro Says:
September 25th, 2012 at 1:07 pm

Just because it may have been a good time to buy in 1998 (due to homes being “very” affordable after major price declines in the mid to late 1990’s), does NOT imply today is a good time to buy (at record high UNaffordability even at record low interest rates). Forget location, location, location. It’s all about timing, timing, timing….See the RBC Affordability report historical graph on page 5 for Vancouver (link below): 1998 was just about the MOST affordable time in Vancouver in the last 30 years – today, it is about TWICE as UNaffordable as 1998. Footnote: as you can see from the REBGV’s April 1/98 press release that you posted, even though it was the most affordable time to buy, buyers were still “hesitating” – as you can see and as the US crash and rest of world home crashes illustrate, when prices decline, it is VERY difficult for people to pull the trigger and buy even when it makes great economic sense to do so – i.e. irrationality cuts both ways thereby leading to long periods of both booms and busts….US example: Right now it is the MOST AFFORDABLE time in history in the US to buy, yet very few are buying due to fears of continued price declines…

http://www.rbc.com/economics/market/pdf/house.pdf

Purp Says:
September 25th, 2012 at 1:14 pm

“Notes from collegial conversation suggest that some buyers have decided that they can wait no longer.” — Interesting observation considering it looks like September sales will come in at the lowest level in a decade.

September 25th, 2012 at 3:43 pm

@purp

“looks like September sales…”
makes sense to me since we are only a week away from the end of the month. Most of these if any won’t be reported as ‘firm’ till next month.

September 25th, 2012 at 3:49 pm

@vanpro
“very few are buying due to fears of continued price declines”

that is not entirely true – Miami, Santa Cruz, San Jose are examples. Someone a few days ago was also commenting about multiple offers in Seattle I have not verified that comment. For me the US Realtor types I know in various areas around the land seem pretty happy in the last few months. A guess would be to point a finger at high rates of unemployment in other areas.

Dave#1 Says:
September 25th, 2012 at 4:12 pm

Larry, back in 98 I waited, but I was a seller. Sold in 2001 for even less……

Dave#1

eastvanspecial Says:
September 25th, 2012 at 4:30 pm

1992-2002 vs 2002-2012. A totally different ball game!
http://www.yattermatters.com/2012/08/three-arrows-down-vancouver-average-prices/ Your graph does not lie.

Smoking Man Says:
September 25th, 2012 at 5:14 pm

Thank you for the ‘coffee talk’ update Larry, much appreciated.

Sounds like we can expect October to start off with a flourish.

I for one would not be surprised to see sales tick higher, given that we’ve seen prices recede 15% or so thus far.

That said, these are early days of the (non-linear) decline…

For some, buying makes sense, no doubt. I wish them health, wealth and happiness, as I do to all.

SM

September 25th, 2012 at 5:39 pm

@Dave
if it’s any consolation you weren’t alone.

September 25th, 2012 at 5:40 pm

@eastvanspecial

I love ball games – you never know what is going to happen.

September 25th, 2012 at 5:42 pm

@SM

“expect October to start off with a flourish”

don’t know that the sales will be significant. As you say maybe a tick up which always makes ‘some’ people happy.

shopping Says:
September 25th, 2012 at 6:11 pm

“Don’t know that sales will be significant”

while appreciated as always, it is a vague post today Larry, little in the way of concrete information or insight. It’s interesting how there’s some separation opening up now between realtors who are telling it like it is, and those who find it difficult to do so. Not quite sure where your take falls, but some examples to support your suggestion of “more activity” would be helpful. Your posts seem more ‘cryptic’ by the day. There are certainly sales taking place everyday, no doubt about that. Also no doubt Vancouver will always demand a premium. On that we can all agree. However the evidence at moment also indicates sales are all on offers, on quality listings that are priced competitively to begin with, by motivated sellers. The other 80% of listings sit in a dreamworld, where sellers yearn for Spring 2011 all over again.

September 25th, 2012 at 9:02 pm

@shopping

“it is a vague post today”
try as I might it is hard being perfect in every way 🙂

vanpro Says:
September 26th, 2012 at 8:08 am

Larry: the US housing market has been so decimated in the last 5 years since their bubble popped that even the slight uptick in sales in the past few months has been a welcome relief from realtors, but sales (and prices) are still WAY below 2006/07 levels even though affordability is at all time high. Oh, and don’t forget you are talking about US cities w/ current SFH avg prices that are a mere fraction of Vancouver (i.e. 1/3 to 1/2 ) but w/ incomes actually higher than ours even after their economic downturn, so we are not even on the same planet in terms of current pricing relative to incomes….

September 27th, 2012 at 4:44 am
vanpro Says:
September 27th, 2012 at 8:41 am

Larry: that article only refers to sales of new homes (and does not discuss the resale home market that remains over-supplied and prices remain well below bubble peaks). Also, note that median price of a BRAND NEW SINGLE-FAMILY home reported in the article you posted is a mere US$256,900 (= $CDN 252,000) which is a tiny fraction of a new SFH home price in Vancouver – so yes, prices are finally increasing in the US, but from rock bottom levels…..

Groundhog Says:
September 27th, 2012 at 6:13 pm

@Yattermatters

Lets put this Bloomberg article in perspective, new home sales are at levels that, prior to the depression, were last seen in 1983. Sure, MSM can tout this as the highest in 2 years, but anyone with any credibility should show the entire picture.

http://www.calculatedriskblog.com/2012/09/new-home-sales-at-373000-saar-in-august.html

Year New Home Sales (000s) Change
2005 1,283
2006 1,051 -18%
2007 776 -26%
2008 485 -38%
2009 375 -23%
2010 323 -14%
2011 306 -5%
2012 362 18%

September 28th, 2012 at 12:15 am

@vanpro
Was I countering your point – don’t think so.

@groundhog
I’m not clear – were you taking a shot at me?
My perspective is that each author represents an opinion – some appear more valid than others. It is not my purview to decide what is right or wrong for each reader.
If you were taking a shot then I hope you recognize that it is impossible to read or comment on every opinion related to this topic that is out there on the web. That you do have the time to find this counter point and share your knowledge of it is what I consider important. Thanks.

Groundhog Says:
September 28th, 2012 at 7:04 am

@yattermatters

Yes, as a realtor, and as someone posting the article that you did, I would expect you to know what the full picture looks like.

I find it a bit misleading to point to that article as proof the US is in recovery.

vanpro Says:
September 28th, 2012 at 8:36 am

Larry: sorry, perhaps I misunderstood your point.

In any case, as the CNN Money article below points out, although prices have risen recently in the US, they are still only back to 2003 levels. This again illustrates how brutally devastating a real estate crash can be….

http://money.cnn.com/2012/09/25/real_estate/home-prices/index.html

“The July reading matched levels last seen in summer 2003, when the market was marching toward its peak in 2006. The collapse of the market after that led to the financial crisis of 2008.”

September 28th, 2012 at 8:45 am

@groundhog

Sorry that your expectations haven’t been fulfilled.

Here is my consolation offer to you.

You appear to hold yourself up as someone who has great knowledge about the topic. I would like to hear what you have to say. As such why don’t you cobble a solid well researched 500 – 1000 word piece that is of course “not misleading” and I’ll put it up for all to read. You have my email for your submission.

The only proviso other that good taste is that you identify yourself in real life so that people know it is your opinion and not mine. I and others look forward to reading your thoughts.

September 28th, 2012 at 8:52 am

@vanpro

no harm no foul. 🙂
Both markets are very fluid and ripe for speculation as to their respective outcomes.

Groundhog Says:
September 28th, 2012 at 10:35 am

@yattermatters

Thank you I may take you up on this.

September 28th, 2012 at 10:38 am

@groundhog

Look forward to it. 🙂

bbcoq Says:
September 28th, 2012 at 1:12 pm

When we bought our house in 2000 we would go to open houses/ viewings and see the same people over and over with litle action. There were few looking at the time-it turned out to be quite good timing-by accident. Sold in 2012 and the market was quite different-many many people looking and lots of action-turns out it was close to the top. I would be looking as much at market action as I would at price.
FYI We also bought again-this time near the top-hence-either even or slightly underwater-timing is everything.
If I had to buy again or give advice-when you see realtors leaving the business you will close to the bottom. I have not seen or heard of that -yet.

September 28th, 2012 at 3:56 pm

@bbcoq

“when you see realtors leaving the business you will close to the bottom”

Sad but true to an extent – for the past while the revolving door for entering and exiting the business has been in overdrive making it more difficult to apply your thought.

Bo Xilai Says:
September 28th, 2012 at 9:40 pm

So what was the average price of a detached home to the average wage in Vancouver back in 1998? Wonder how that number compares to today’s stats.

I bought my first house in 1998 in Toronto and my mortgage rate was 5.5%… Today’s generational lows cannot last.

My point is the past to present is not a linear function. There will be much pain in the years ahead.

September 28th, 2012 at 9:54 pm

I am not sure if there is ever a good time to buy. You see, although I do not live in Vancouver, I bought many years ago in Las Vegas. I thought for sure that my home purchase was going to be a great investment and purchase. Wow, was I wrong. Prices have dropped to levels of 20 + years ago. I hope your market is stable.

September 28th, 2012 at 10:20 pm

@bo

what do you see as a possible solution?

Whitebear Says:
September 29th, 2012 at 1:40 pm

Just came back from a buying the US real estate seminar done by a Canadian. There are tons of good deals out there. That being said, he was adamant that there will be a flood of housing coming out after the election. No point flooding the market before the election. Not good for the incumbent. Let’s see.

vanpro Says:
September 29th, 2012 at 7:00 pm

Larry; perhaps “solution” is the wrong word. Result? maybe a better question – answer could be as simple as looking at what happened in the US and rest of world….

TNT Says:
September 29th, 2012 at 10:13 pm

Tell the people down south who lost their houses only to see them bought back at a fraction of what they paid that the market is recovering.

Recovering is not the right word considering the amount of casualties.

Ralph Cramdown Says:
September 30th, 2012 at 8:11 am

As to ‘the solution’ I think you’re either looking at more government involvement or less. It’s so easy to get in over your head with someone else’s money — and this applies just as much to the bank that lends at 5X and 6X income with CMHC backing as it does to the low DP borrower taking the loan. So either CMHC tightens lending requirements more and applies a straight loan to income limit in addition to the debt service ratio limits, or it stops backstopping loans and we see what ratios and rates lenders apply when it’s their money at risk.

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