Market Dynamics and the Big Fan
The Greater Vancouver Real Estate Board’s latest monthly report said it in a gentle manner – “market dynamics are changing”. If you are a Donald Trump ‘deplorable’, you might say “dah shit has hit the fan’.
Sales in October YOY were down 38.8%! If you are a fan of averaging and have doubled down on your shoveling of real estate numbers you will that the 10 year average sales hole is 15% deeper.
A Spade Full of Official Words
“Changing market conditions compounded by a series of government interventions this year have put home buyers and sellers in a holding pattern,” Dan Morrison, REBGV president said. “Potential buyers and sellers are taking a wait-and-see approach to try and better understand what these changes mean for them.”
Translated: The market is frozen, winter is near and there will be more snow to move.
Digging Deep for Listings?
The board says that new listings dropped 3.5% compared to October last year and 9.5% below the 10 year average. However, the hole got deep a lot quicker than you might think. The the drop in listings between September’s 4799 units and October’s 3981 units is a whopping 17%. This might mean one of these things. Canadian Tire set a record for shovel sales or it’s slim pickings for potential home buyers.
The board will tell you that “the sales-to-active listings ratio for October 2016 is 24.4 per cent. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below the 12 per cent mark for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.”
Translation – in general sellers have bought some of those shovels and have dug in. They are willing to wait till they get their asking price. Board minions translate this to mean that it is a lack of “home buyer demand”.
Demand and Provincial Affordability Mesiahs
It’s not the buyer’s fault. They want to buy homes but greater powers aren’t helping. Let’s not forget that our provincial government claims to act as chargers in the ’cause affordability’ and yet they are implicit in killing the very thing for which they claim purpose.
Property purchase taxes play a large part in making purchases unaffordable and by extension determine demand. In 2012 Jordan Bateman of the Canadian Taxpayers Federation said “the transfer tax ($12 billion paid up to 2012) is a cash cow that hurts B.C. families, but the Liberals can’t easily cut it because it’s a substantial earner.” The key here is $155 million (2016)of joint Federal and Provincial funds is a long way from Bateman’s notation that up until 2012 the B.C. government has collected $12 billion. Seems untoward that they still need to dig into the Fed’s stash of cash to afford the glory.
Provincial Mesiah Math Squeezes Demand
Here are the numbers – you do the math. The amounts make a difference quickly shrinking the total cash you have to buy a home.
For locals that could mean up to 6% of your purchase. If you are a foreign national from ANY country the total could be 21%. Nice gratuity for nothing methinks!
Significant are the dollar amounts such that do they play a part in deciding whether you buy a home – the demand side. The impact being greater if you reside in the average income domain. Without first time buyer support the market fails.
October sales totalled 2,233, a decrease of 38.8 per cent compared to the 3,646 sales in October 2015Detached
- October 2016 detached sales reached 652, an decrease of 54.6% from the 1,437 detached sales recorded in October 2015
- The benchmark price for a detached property in Vancouver increased 28.9 per cent from October 2015 to $1,545,800
- Apartment property sales reached 1,178 in October, an decrease of 23.7% compared to the 1,543 sales in October 2015
- Apartment Benchmark price increased 20.5 per cent between October 2015 and October 2016 to $512,300
- Attached property sales reached 403 in October, an decrease of 39.5% compared to the 666 sales in October 2015
- Attached Benchmark prices increased 25.7 per cent between October 2015 and October 2016 to $669,200.