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Vancouver real estate buyers waiting for a price collapse in 2013 could be in for a long wait Sales remains strong despite cool condo market

News Release Provided by Vancouver Sun

" While prospective home buyers appear to be waiting for an ever-elusive real estate bubble to burst in Vancouver, people thinking of selling their homes also appear to be willing to wait.

The most recent numbers show that home sales dollar volumes are down, unit sales are down and average prices are falling in the Lower Mainland.

Typical prices are also falling in some areas, particularly among single-family homes in more expensive areas like the west side of Vancouver or Richmond.

The 10-year average for home sales in Metro Vancouver is 88,000 units per year, while the 15-year average is 79,000 per year. So far this year, 64,000 units have sold and the total could be 68,000 by the end of December.

Alongside sales volumes, the number of new listings has dropped.

“That’s consistent with sellers saying, ‘It’s not a good time to sell, I’m not selling if I don’t have to,’” said Tsur Somerville, director of the centre for urban economics and real estate, Sauder School of Business at the University of B.C.

While prospective sellers are waiting, the numbers indicate that prospective buyers are a bit shy as well. “The market right now is both slow and tentative. There are a lot of people out there being very tentative because they’re not really sure where things are going,” Somerville said. “I can’t say how many buyers are in the market — I want to differentiate between that and the prices they are willing to pay. Maybe there are people who are actually interested in buying, but they’re either waiting for prices to be at a certain point, or they’re making offers that aren’t being accepted. I can’t differentiate between those things.”

Concerns about the global economy may be another reason for the “tentative” market, Somerville said.

“My general sense is that it’s hard to see where a market turnaround is going to come from in the short run until there is more confidence and clarity about the American economy,” Somerville said. “Even without the fiscal cliff, the American recovery is very slow. Given the state of things in Europe and China, you’re not looking at any dramatic economic growth that’s going to pull the Canadian economy along. Part of the story is for the housing market to pick up, there has to be more juice to the economy.”

While a pickup in the market may require more “juice,” a crash would require a significant event, Somerville said.

“To get prices to really tank, you’ve got to have something happen. Either you’ve got to have overbuilding, or you’ve got to have some big change in the world of finance, such as large movement in interest rates or a financial disruption, or you’ve got to have a real negative economic shock,” Somerville said. “You’ve got to have some combination of those, or one of those to make prices drop dramatically.”

Overbuilding of single-family homes in Metro Vancouver is difficult because land is so limited, Somerville said.

“On the condo side, even though starts have picked up, it’s nowhere near where they were during the peak. The yield curve for interest rates is very flat so the market isn’t expecting interest rates to rise dramatically,” Somerville said. “But if I could predict interest rates, I could be really, really rich.”

Cameron Muir, B.C. Real Estate Association chief economist, thinks if buyers are waiting, they could be waiting a long time.

“Three years ago we saw the largest financial crisis since the Great Depression and an ensuing global recession. If that’s wasn’t enough to trigger a correction in an asset bubble, I don’t know what is,” Muir said.

“The condo market in Vancouver has not been ‘hot’ since 2009, and perhaps even earlier than that. Prices on the condominium side have been relatively flat for three years, so that doesn’t signal any kind of asset bubble welling up,” Muir said. “There has also been little speculation in the marketplace over the past few years and home builders have been kept in check in terms of their total units in production.

Like Somerville, Muir said the market won’t crash unless there is a recession or a spike in interest rates.

“In order to have a significant price decline — you’re hearing a 25 to 40 per cent price decline that some pundits have thrown out there — in order to see that materialize, you need to see household disaster writ large, such as what we saw in the United States,” Muir said.

As an example, in the early 1980s, house prices in some areas in Metro Vancouver dropped sharply, but that was after interest rates went up 10 percentage points within a year, Muir said.

“In 1982, the five-year posted mortgage rate was, I believe, 21.5 per cent at its peak. You can imagine what that does to a housing market,” Muir said. “Housing prices fell dramatically — they fell 40 per cent in some markets.

“But are you willing to sell your house at 60 cents on the dollar? Why would you do that? You have to have a reason for prices to fall dramatically. You don’t have to sell and people have to have somewhere to live.”

Muir said he believes the U.S. will find a compromise on the fiscal cliff tax increases and spending cuts before the U.S. is thrown back into a recession.

“I understand (the fiscal cliff) would shave most of the growth out of the Canadian economy, if it happens,” Muir said. “While it all sounds ominous, and it is, barring a meltdown in the U.S. political system, I don’t see conditions here in B.C. warranting such a shock to real estate.”

Muir talked about the late 1990s, a time when he said the economy was in the doldrums, thousands of people were leaving the province in search of jobs and B.C. had a leaky condo crisis.

“That was a localized shock to the real estate market,” Muir said. “We saw prices fall, but they only fell a few per cent a year for a few years and then they came right back.”

Another sign of strength in the Lower Mainland market is that prices bounced back quickly after the recession, Muir said.

“January 2009 was pretty gloomy, with home sales running at low levels we hadn’t seen since the early 1980s, and we ended 2009 approaching record levels of sales. That was quite a turnaround,” Muir said.

Muir expects sales numbers to pick up in 2013, because the market fundamentals are strong.

We’ve seen some pretty strong growth in full-time jobs, we have interest rates at or near historic lows and we still have an expanding population base, Muir said.

“All of those things point to consumer demand running in the longer-term average levels at least, and right now they’re quite far below that,” Muir said.

“My expectation is that next year we will likely see some increased homebuying activity than what we’ve been seeing these last several months, that is more reflective of overall economic conditions. Overall home sales are expected to trend toward their long-term averages,” Muir said, adding that pent-up demand could contributed to increased sales activity in 2013."

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Vancouver real estate buyers waiting for a price collapse in 2013 could be in for a long wait




最近的数字显示,房屋销售的销售额下降,销售单价和低陆平原(Lower Mainland)的平均价格都在下降。


10年的平均水平,大温哥华地区的房屋销售是每年88,000辆,而15年的平均水平是每年79,000。今年到目前为止,已售出6.4万辆,总能68,000 12年底。



虽然潜在的卖家都在等待,这些数字表明,潜在买家是一个有点害羞。 “市场现在是既慢又试探性的。萨默维尔说,“有很多人在那里是非常初步的,因为他们真的不知道事情会。 “我不能说有多少买家在市场上 - 我想,他们愿意支付的价格之间的区分。也许还有谁是真正有意购买的人,但他们要么等待价格是在某一个点,他们正在做的是不被接受的报价。我不能区分这些东西。“


“我的总体感觉是,这是很难看到市场好转是怎么回事来自在短期内,直到有更多的对美国经济的信心和清晰,萨默维尔说。” “即使没有财政的悬崖上,美国的经济复苏是很慢的。鉴于目前在欧洲和中国的事情,你不看任何显着的经济增长的拉了加拿大经济的同时。故事的一部分,是为住房市场的回暖,必须有更多的果汁经济。“


“要获得价格,真正的坦克,你必须有一些事情发生。要么你得有过度建设,或者你有一些在世界金融大的变化,如利率变动或金融动荡,或者你有一个真正的负面经济冲击, “萨默维尔说。 “你必须有一些组合的人,或那些使价格大幅下降。”


“在公寓方面,即使开始纷纷拿起,它远不及他们在繁忙的。萨默维尔说,“利率收益曲线非常平坦,因此市场预期利率将大幅上升。 “但是,如果我能预测利率,我可能是真的,真的很丰富。”



温哥华公寓市场没有“热”自2009年以来,甚至早于。公寓侧的价格一直比较平稳三年,这样就不会发出任何一种资产泡沫涌了上来,“缪尔说。 “在过去数年,房屋建筑商也已经在市场上稍炒他们的单位生产总值一直保持在检查中。


“为了有一个显着的价格下降 - 你听到了25%到40%的价格下降,有一些专家纷纷抛出 - 以看到,实现,你需要看家庭灾难令状大,如我们看到在美国,“缪尔说。


“1982年,五年公布的抵押贷款利率,我相信,在其高峰期的21.5%。你可以想像这对房地产市场的,“缪尔说。 “住房价格急剧下降 - 他们在某些市场下跌了40%。



“我明白(财悬崖)会刮胡子加拿大经济的增长,如果它发生,”缪尔说。 “虽然这一切听起来很可怕,它是,除非美国的政治体制崩溃的,我不看条件,在BC房地产值得这么大的震惊。“


“这是一个本地化的房地产市场的冲击,”缪尔说。 “我们看到了价格的下降,但他们只下降了几%的年率增长了几年,然后他们就马上回来。”

实力的另一个迹象是,在低陆平原(Lower Mainland)市场价格迅速反弹后经济衰退,“缪尔说。








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