*This version has been edited because it was deemed by some of my colleagues to be disrespectful to the industry of which I am a part.
I’m a REALTOR and I sold my own home 4 weeks ago. It wasn’t too big or too small. It’s only 6 years old and still feels new. I sold because in 6 months my home will be worth less than it is today. I think its time to cash out! Let me explain…..
To ignore the truth doesn’t change the truth. And so it is in the Vancouver real estate lately. The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look. However, the good times pass like the bad ones do. I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.
Here is a great example of where the real estate industry loses the public trust. The headline of the June 2012 Real Estate Board of Greater Vancouver Newsflash is “Greater Vancouver housing market favoured buyers in June”. The opening line was a bit more accurate: “The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.” But what does “relatively stable” mean in a market as hyper sensitive as Vancouver where real estate is a hobby, sport, profession, retirement plan and cocktail party conversation all rolled into one?
The Greater Vancouver real estate market is anchored on the west side of Vancouver. With its limited land supply and stunning views of English Bay and the north shore mountains, the west side of Vancouver from Main St. to UBC has always been a hot spot for Canadian real estate. It has been 2 generations since owning a home on the west side of Vancouver made sense for an average income family and I doubt those days will ever return. The west side housing market is a great bell weather for the rest of the lower mainland because it drives media headlines and experiences the largest swings.
Two key factors drive real estate activity – Supply and Demand. These factors work together to determine volume and prices. The equations looks like this:
Low supply + low demand = Prices are stable.
High supply + high demand = Prices are stable.
Low supply + high demand = Prices go up.
High supply + low demand = Prices go down.
Remember, according to the real estate board of Greater Vancouver, prices in June remained “relatively stable”. Stability is a result of low supply and low demand or high supply and high demand. And in a dynamic real estate market such as Vancouver one month does not determine “stability”.
Lets look at the numbers:
WEST SIDE MLS DETACHED LISTINGS 2003 – 2012
There are only 4 months in the last 10 years where the number of available houses on the west side of Vancouver was higher than 1000 – September and October 2008 and May and June 2012.
The truth of the supply side of the equation is:
There are more sellers competing to sell their home on the west side of Vancouver now than at any time in the last 10 years!
WEST SIDE MLS DETACHED SALES 2003 – 2012
Demand for homes on the west side of Vancouver is falling. In fact, it has been falling for 5 straight months. Demand has actually been about 35% – 40% off of the 10 year average for 4 months now. If this trend keeps up the number of sales in July will drop below 100 – which it has only done once in the last 10 years – July 2008 – which was just 4 months before the worst month ever which produced one of the sharpest price drops Vancouver has ever seen.
The truth of the demand side of the equation is:
Lowest June home sales on the west side of Vancouver in the last 10 years!
So the new equation looks like this:
More sellers than ever
+ Less sales than any previous June
Today’s real estate market
As a REALTOR, I can assure you people are still buying homes. In fact, 2362 homes were sold in June in Greater Vancouver (Remember, this is the lowest number of sales in the Real Estate board of Greater Vancouver in 10 years). There are all sorts of reasons people buy and sell homes – not just price. Whether it is a newly married couple who want a place of their own, a lower income buyer taking advantage of mortgage rules before they change, growing families, empty nesters, downsizing seniors or people moving up and down the property ladder who don’t want to rent, there will always be sales. Demand will never reach zero.
Right now, supply is up. Way up. Demand is down and trending lower. I hate to point out the obvious, but prices are a result of supply and demand. In today’s real estate market, the equation looks like this: High supply + low demand = Lower prices.
There is still lots of opportunity to sell your home. I’m just not sure how much longer it lasts. Prices have started to fall but demand is nowhere near the levels it dropped to in fall 2008. Different product types have different dynamics. Condos, townhomes and luxury homes are all markets unto themselves. But its the west side houses that make the news headlines. If the media picks up on this story, you can be sure the rest of the market will follow the west side. If you are on fence about selling your home, thinking of cashing out, nearing retirement or need your equity to buy your next home, now might be the right time to call a REALTOR. Otherwise, I’d plan to hold on for another rough ride. I think 2012 will be another one of those years where Summer is better than Fall.