Wendy’s been trying to sell her house in Burnaby for a couple of months now. ‘It’s cheap,” she says, “because we were thinking of asking a lot more. But we opted for a quick sale.”
Fat chance. Even at a bargain price of $1.4 million, there are steady showings, but no offers. She’s started to fret. A lot. They’ve already bought a new place – for more – down near the border in White Rock. “Another month,” she says, “and I’m dropping the price. What choice do we have?”
I spoke with her on the same day the latest, official, shiny REALTOR®-approved statistics came out, with the media hopping on board. But for Wendy, and a lot of other people who sure wish they could sell their houses, there’s something weird about what they’re reading here, or in places like the Financial Post:
Vancouver existing home sales, prices continue to climb in July
The number of homes sold in Canada’s most expensive market topped 3,000 in July, marking a fourth straight month sales have hit that level. The Vancouver sales market has not been this strong in three years, according to the Real Estate Board of Greater Vancouver.
“The Greater Vancouver housing market continues to see slightly elevated demand from homebuyers, steady levels of supply from home sellers and incremental gains in home values,” said REBGV, in a release.
Sounds bullish, right? You bet. All kinds of bull, in fact. Property sales were down a substantial 10.1% in July from the month before, and prices appear to be stalling. The benchmark Frankenumber for all properties last month was $628,600, which was virtually identical to the month before, and compares to $602,000 during the summer of 2013, which was 3% less than the summer before, when the benchmark price was – surprise! – virtually the same as it is now. The sure looks to me like we’re at 2012 prices
But there’s more for Wendy to worry about. Sales of properties listed over $1 million – which constitute the majority of houses now for sale in wide swaths of Vancouver – are starting to flame out, at least in the burbs like Burnaby.
“My realtor is still sending me a monthly stats package and I find it very telling,” writes Aman. “Yes, average prices are up for single family detached homes but it seems to be asymptotic with $1,000,000 being a line in the sand that most homes are marching towards but not crossing with the same vigor. Essentially it looks as though the “lower end” of the market is moving up but then, kaput, volumes die off sharply. Therefore yes, the average price moves up but it is far from uniformly spread across the market.”
Aman Bhangu should know. He’s VP of research and a portfolio manager with Pacifica Partners, a Van-based capital management company known for its cutting-edge statistical analysis of the delusionally bubblicious local real estate market.
In three major suburbs of Vancouver – where extreme development has been going on and half a million people live – Bhangu sees the same pattern:
- Over $1mm, 386 homes were listed, only 50 sold, or 13%
- Under $1mm, 140 homes were listed, 63 sold, or 45%
New Westminster (A more affordable and smaller municipality):
- Over $1mm, 16 homes were listed, 2 sold, or 13%
- Under $1mm, 90 homes were listed, 31 sold, or 34%
Tri-Cities (Port Moody, Port Coquitlam, Coquitlam) home to over 200,000 people
- Over $1mm, 202 homes were listed, 20 sold, or 10%
- Under $1mm, 364 homes were listed, 166 sold, or 46%
“Notice the drop-off after cross the million threshold?” he asks. “So, where is the HAM buying all the expensive homes? I don’t see it. I do see the locals getting squeezed into home values based on the maximum amount the banks are willing to freely lend.”
Of course, he’s right. More evidence of what this pathetic blog has been yapping on about for a year or two. A market in which average prices are ridiculous, incomes are sub-par and debt bloats daily cannot be saved by a relative trickle of foreign money finding its way into a handful of specific neighbourhoods. The smartest people in Vancouver are those who can read behind the headlines. Which obviously do not include reporters.
Finally, Alberta. Ah, the smell of testo and greasy truck nuts in the morning!
Sales last month in Calgary leveled off, as have prices, while the number of listings has swelled by 14%. It all points to a calmer ride ahead. But with the average SFH now at more than $511,000, prices have soared well over 10% in the past year – even as a barrel of oil has weakened. But, of course, everyone thinks house values will go up forever. And what a price they’re paying.
While people in the East have been paying off debt, Albertans have been piling it on. Cowboy household indebtedness has risen by 40% in the past year, and the average family there now has twice the debt load of those in metrosexual Ontario.
Says BeeMo economist Sal Guatieri: “Part of the reason household debt in Alberta is so much higher than in other provinces may be due to rapidly rising house prices, which have caused some home buyers to take on larger mortgages.”
Meanwhile, Alberta’s first Rolls-Royce dealership has just been announced, which will take up residence in a new development opposite the Calgary Tower. You know what this means, right?
You bet. Rolls nuts!