Vancouver West Side Homes Say It’s Different
Posted September 2nd, 2012 in Real Estate, Statistics | 
It Is Different
If one is to believe in economic theories then accordingly recent activity of detached homes on Vancouver’s West Side have thumbed their nose at theory proclaiming that in this neighbourhood they have their own theories and they are different.
L.A.P.S.
It needs to be clearly understood that I am not an economist. I do remember taking some economic course at U.B.C. for which I paid almost as much the recommended text book as I did for the course. That didn’t make much sense to me then and this casual observation doesn’t make much sense to me now. This LAPS graph shows the number of Units Listed, Units Sold, Active Listings and Average price in a 2 year snapshot. It seems that Vancouver’s West Side detached homes didn’t take the economics course and for all intent couldn’t give a damn about a traditional basic economic premise.
Supply Demand
Consider this graph – let’s call it the holy grail of economic theory where there are lines of supply, demand and price in operation over a period of time. The concept dictates that as supply (S) increases and demand (D) decreases then price (P) should reduce. Well — that’s what the economists would have us believe.
Counter Culture
If one was looking to raise a little cane against prevailing theory the reality of the LAPS graph is tantamount to the Vancouver West Detached market thumbing its nose at the established holy grail proposition.
On a number of occasions during the past two years that counter culture has rallied in dispute of established theory. It happened in December 2011 and is again taking place now. Supply is way up, demand (read sales) is way down, yet prices are screaming up. That is not what the economists say should happen. No doubt they will tell us it is an anomaly which most of us will understand as – it is different on the West Side.
Making Sense
If you are student of such things then you are probably scratching your head in wonder as you recall things the U.B.C. professor and text book claimed as the holy grail. It’s simply not so and simply doesn’t make sense – at least on the West Side of Vancouver. Which of course leads me to think that this entire market isn’t making a lot of sense. One month were are headed for the tank and the next month it says it ain’t so. Confusing you bet! Does this leave you with an impossible task of making a wise decision – most certainly.
Our Different World
This however, is our world today. Global financial crises, ultra low interest rates, ultra high home prices, relatively lower income levels all combine to say that not much makes sense except that I know it is different.
If average price went up, and sales went down, then it’s likely that there were some larger homes offed in fear of the times which are a changin. Can you tell us anything about the top end of the sales in August. Were there more 12million dollar homes offed for 8million? This Deep Cove North Vancouver home is an example that comes to mind, in terms of expecations around the listed price being dashed. http://vancouverpricedrop.files.wordpress.com/2012/08/v892989_13.jpg?
Yet if there were even a few really large sales, even whilst the price they sold for at peak would have been more, that can skew the average quite a bit.
I am not interested in the benchmark price, though am intersted the median price trends also, if you have it.
Lastly, I’d just like to point out that the Steve Keen found at least one MLS in Australia to have data skued upward from what the government records say. Is it possible to export all of the data from the MLS automatically? I know it can be done for comparables, though I’m guessing there is a data cap on exported data? How do you compile these numbers ahead of the MLS?
The current massive jump in MOI in Van West SFH to well lover 12 from your graph above from about 5 last Aug/11 indicates the major over supply relative to demand is now occurring and will lead to FUTURE prices declines. Also, the massive plunge in sales to very low number (around only 70 or so homes sold in all of August, 2012) results in very low sample size from which to take the avg price, so this is one rare instance in which the avg. price could be very misleading.
@vanpro
“avg. price could be very misleading”
Not sure you can say that. It is what it is. Whether it has value in making home buying/selling/financial decisions is another question.
@Bryan
“Were there more 12million dollar homes offed for 8million? ”
probably
“I am not interested in the benchmark price, though am intersted the median price trends also, if you have it.”
I’ll get right on that
“Steve Keen found at least one MLS in Australia to have data skued upward from what the government records say”
Imagine that happening in Australia.
“Is it possible to export all of the data from the MLS automatically?”
Not within my purview.
“How do you compile these numbers ahead of the MLS”
I wake up early.
RE: Avg price:
I guess I meant “change” in avg price is misleading (given the very small sample size) – a rare instance in which avg price changes can be misleading. But, yes, I agree that “it is what it is”.
People were mocking me previously about west side sales, but this stat makes it clear that the Mainland Chinese are back and buying up high priced real estate.
You can’t lose on the westside of Vancouver, historically it’s never dropped. Even in the 80s it just flatlined for a couple years. (I had an aunt who had a house in Kits back in 1981 and she told me it never dropped….when everything else was dropping in the Lower Mainland it just stayed the same).
CMB,
Your aunt’s house price never changed because she did not list the house for sale and take the best offer from the market, hence know what the price would be. Did you fall onto your head when you were a baby?
Westside is SLOW, without question. It’s sales mix. Prices are falling, right now.
Although if you get your news from your Aunt (did she drop you as a baby?), you’ll probably never really clue into what is happening.
This market is melting (prices) right now, and I see no end in sight for some time. It won’t be a straight line, but my guess is that we fall at least another 20% from here (my guesstimate is prices are 10-15% off their highs right now, although I imagine Aunty has no clue).
CMB,
Add me to the list of your mockers, you deserve to be mocked.
IMHO.
@smoking man
Did CBM attack you?
Almost everyone here including you have an opinion.
That’s a good thing.
However, when opinion given frustrates you try to stick to reason. Taking personal shots makes discussion difficult.
Please remember that civility costs nothing.
CMB:
Contrary to the myth you are clinging to, Vancouver West SFH (i.e. houses) LED the downturn in prices in 2008 – plunging 25% from July/08 to Oct/08. this is juts one example – you can go back to early 1980′s, early 1990′s and find similar trend (see graph at bottom of this page for the 2008 plunge in prices of Van West SFH):
http://www.rebgv.org/home-price-index?region=Vancouver+West&type=Detached&date=2008-12-01
“Whether it has value in making home buying/selling/financial decisions is another question.”
Isn’t that why we are here?
“You can’t lose on the westside of Vancouver, historically it’s never dropped. Even in the 80s it just flatlined for a couple years. (I had an aunt who had a house in Kits back in 1981 and she told me it never dropped….when everything else was dropping in the Lower Mainland it just stayed the same).”
That’s not true…
Thanks for the defense of my right to have an opinion Larry. It is unfortunate that people need to resort to personal attacks during an academic discussion.
All I’m suggesting is that historically the most desirable areas of a city will hold up best in a downturn.
I could retort to Smoking Man’s comments, however, considering he seemingly cannot even get the order of the letters of my name correct in his response I won’t comment further on who was dropped on their head as a baby
Evidently the Mainlanders are back hence the large average price increase. The GVREB even stated that it was summer vacationing offshore investors who purchased these high priced properties. I really wish people would wake up to the reality that Vancouver prices are here to stay. The city has changed it the last 10 years, and people don’t realize how much money is out there. Just look downtown at all the expensive cars (many worth over six figures) you didn’t see that here 20 years ago, certainly not in the volumes now. The city is full of offshore money.
Prices are sticky. It takes awhile for sellers to realize that their homes are not worth what they thought. Once they do, they drop the price or they pull it off the market.
I also heard from several reliable sources that there were a number of large home sales that could have skewed the average (some 10+ million?). If that’s the case then we should be looking at the median.
I have been watching the WS market and I can say that what I have been seeing is price drops AND new list prices that are much lower than they once were just 6 months go. I’m still not crazy enough to buy. Instead, I sit and wait in my new rental that I pay fat less for in rent than I would be paying in interest to the bank for the same place
There were two $12m sales on the west side last month and an $18m sale this week. Clearly skewing results. HAM may be back but they are the only ones out there then. Three open houses within a block of us on the west side last weekend… No visitors.
Time will tell.
@SINI
thanks for the update
Hrm.. cant find the other 10M+ one…
MLS# V964787 Sold Aug 9 $5.25M
MLS# V957177 Sold Aug 17 $4.85M
MLS# V925600 Sold Aug 2 $12.2M
MLS# V927443 Sold Sep 2 $16.16M
@sini
and so?…..
It was just a response to Anon.. putting numbers to the comment about big sales skewing averages especially in a thin market and the last two months have had a few very large sales on very low volume. I wish I could find the other 10M+ sale..