Happy New Year!
I hope you have all recovered from the holiday season and are back into the swing of things to start 2012 off on the right foot.
The December stats showed the expected dips in sales volume and new listings we would expect for this time of year and the numbers were consistent across the board. So, rather than looking back this month, let’s look forward to what we can expect in the coming year:
Kitsilano Real Estate: What to expect in the coming year
1) Look for a strong start to the year. There are a lot of eager buyers out there looking for good product and inventory levels have disappointed many of them the past few months. They are ready to buy if they can find what they are looking for.
2) Listing inventory will climb. And it’s about time. Those eager buyers from the previous point should finally have some options to choose from come February.
3) Mortgage rates remain low. Likely right through to the end of the year and possibly beyond.
4) The chaos in the global markets will not have a huge impact in Vancouver… yet. I would bet that we make it through the first half of the year unscathed. I will have to re-evaulate as we move forward before making any predictions beyond that point.
5) 2012 will be a great year. Make it so!
Graphs after the jump.
Last modified: January 10, 2012
“2012 will be a great year!”
For who? Buyers, it seems…
We’re a third of the way through the month and sales have crumpled compared to last year over the same period.
Here are some numbers from the beginnig of the month to now for Vancouver
Total Listings 1371
Total Sales 259
Ratio: 19%
Last year, from beginning of the month to now
Total Listings 1125
Total Sales 388
Ratio: 34%
Things seem pretty slow on the westside, too. Yesterday, only five properties sold, while 95 new ones were listed (wow, is that just a freakish blip?).
RBC, BMO and TD recently came out predicting slow times ahead for the Canadian market generally, with Vancouver and Toronto leading the downturn.
See here:
http://www.theglobeandmail.com/report-on-business/economy/housing/rbc-bmo-warn-on-housing/article2297346/
and
http://www.theglobeandmail.com/report-on-business/top-business-stories/is-the-end-of-the-spectacular-us-housing-bust-in-sight/article2290845/
Interesting times ahead!
Thanks for the response ‘sidelines’. One of the things to remember at this time of year is that it is very typical to see a surge in new listings in January as most people put off selling a home over the holidays and instead wait for the first couple of weeks of January. Also, many home that were already on the market at the end of the year, get cancelled and re-listed as new listings in January.
I would anticipate those numbers to even out as February rolls around. It is purely subjective at this time, but the number of buyer inquiries coming through right now is extremely high and most of them are pre-qualified and ready to go.
We won’t fully be able to judge the Spring market until April or so, but I do foresee a busy start to the year. As for a downturn… not likely in the condo market. What we may see is that prices and activity rise to start the year and tail off a bit towards the end of the year, which creates an effective ‘flatline’ in the market. We saw the same trend in 2011 and it would not surprise me to see a repeat this year.
Hey Ben,
Yes, it may be that there is generally some increase in January compared to December. However, it looks like the build up in inventory this month is shaping up to be the largest in 10 years. To be clear, that’s comparing year over year, so where comparing apples to apples. Therefore, this takes into account the overall inventory and sales (and relisting) tendencies for this time of year.
As for us not being likely to see a downturn in the condo market, where are you referring to exactly? Just to Kits? Some don’t appear to share your opinion, if you are taking about Vancouver, more generally. You undoubtedly have a feel for where things are headed, this is your bread and butter, after all – but the heads of RBC and BMO are no slouches and they’re saying that Vancouver (and Toronto) condo capacity is significantly overbuilt and that prices will be “cooling.” See links in my previous post.
You say this year may look like 2011. I’m thinking 2009. Or worse.
I guess we’ll see soon enough.
Sidelines,
I appreciate the comments. Am curious where you are getting your stats from… Would you be willing to share? By my count, inventory is actually quite low at the moment – to the point that it is a steady source of frustration for active buyers.
When I am speaking of the unlikely downturn of the condo market, in this case I was speaking just of Kitsilano (though it holds true for most of Vancouver). The difficult thing with the links you provide is that I can provide just as many links to opposing arguments. There are is no consensus.
My point is simply that condo prices in Vancouver have been flat for two years. In a lot of neighbourhoods, prices have actually declined slightly. The term ‘bubble’ just seems like an awfully large stretch for me, so when the speak of a ‘bursting bubble’. I’m not sure what ‘bubble’ the are talking about. The national media is famous for generalizing the Vancouver market without understanding the subtleties. Major banks included. This has been happening for years and is nothing new. Eastcoast media has been predicting a Vancouver market crash since 2004. Prices have more then doubled in that time. If that rate of appreciation was still active, I would be concerned. The fact that are prices have remained more or less constant since 2008 (in the condo market), doesn’t leave me particularly concerned.
And if you are thinking this year will look like 2009, then we can look forward to price increases of 12-17%. Did you mean 2008, when prices dropped 12-15% in the last half off the year?
Indeed, I meant to refer to 2008, thank you.
I get my daily/weekly stats from two realtors: Paul Boenisch and Larry Yatkowsky. Monthly stats from the REBGV.
What sources are you referring to for views that it’s looking good going forward? I’m sure you know that it’s not the quantity of sources that count, but the quality.
The only noteworthy dissonant voice to the increasingly loud chorus warning of a downturn in the condo market appears to be Sherry Cooper @ BMO (reported this week as saying “balloon not bubble!”), who herself would seem to be at odds with her own CEO, interestingly. What heavy hitters are saying otherwise? Mark Carney’s sounding the alarm in fairly explicit terms for someone in his position, even. That’s pretty noteworthy, wouldn’t you say?
You state that the media and banks don’t understand the Vancouver market. What subtleties exist with respect to it that major banks can’t seem to grasp? If banks can’t grasp those concepts, holy cow, the oft hailed Canadian banking industry may be in serious trouble. I think they’re pretty accustomed to analyzing issues at least as complex as Vancouver RE. Evaluating risk is part of their bread and butter. And given their profits, they seem to be pretty good at it.
As we’re demonstrating here, this discussion can go back and forth almost endlessly. The fact that it can, however, doesn’t mean that all probabilities/points of view are equal.
In the same way that it’s quite notable when media reports anything other than predominantly positive news/views on Vancouver real estate (recent pieces referred to above notwithstanding), it is also rare when a realtor does. It would seem that it might be risky to a realtor’s business to be anything less than positive (who wants a gloomy gus selling their home?). Having said this, though, to do so would be such a differentiating feature, one would think that there’s an opportunity there waiting to be leveraged.
Thanks for taking the time to engage in this chat. All the best to you.
Appreciate the well-written response Sidelines. I agree that this conversation can go on for ever, but I think that there is one major distinction to be made… For the purposes of this article, I am speaking solely about the KITSILANO market. And yes, I do believe that this market, along with others, when isolated are different than the VANCOUVER market as a whole. The banks understand the big picture very well and aren’t overly concerned with sub-markets. On the other hand, as a realtor and real estate investor, I am VERY interested in the specific trends of the sub-markets in which my clients and I are buying.
As for realtor’s not being willing to saying anything that isn’t positive, we’ve actually been mentioned on Garth Turner’s blog as realtor’s who say it straight. Tough to find a more negative opinion on real estate anywhere! So yes, while I am always positive about opportunities in the market (as there are always opportunities), I am also extremely realistic on where there opportunities are and the specific markets that scare me. It may not be the norm, but it does exist.
Again, thoroughly appreciate the dialogue and wish you all the best as well.