What’s Really Going on in The Real Estate Market?
Today was an absolute whirlwind. Just wrapped up interviews with CBC, Global, and CKNW and I’m sure there will be plenty more following the release of The Real Estate Board’s monthly stats for August.
As predicted the Real Estate Board put a nice tone to everything. Although the stats are accurate, the way they are portrayed in my opinion is very bias. In fact they are dangerous when the publics financial decisions are relying on the information.
I’m going poke some holes in their data… Actually I’m going to drive a truck through them.
Still a sellers market?
Firstly, sellers absolutely do not have the upper hand right now. For detached houses it is 100% a buyers market. Across Metro Vancouver detached houses were down 45% compared to 2015. They were down 24% when you compare the typical average sales for the month of August between 2010-2014. It’s price reduction mania out there.
Yes, it’s still a sellers market for condos/townhouses. But definitely not for single family homes. Read my post on Is the Condo/Townhouse market cooling?
Detached Prices Increased Again?
Kind of hard to believe since sales have been on the downwards swing for the past 4 months. A plethora of price reductions and a 45% drop in sales yet we some how managed another price increase in the MLS HPI Benchmark.
As i’ve mentioned before the Saretsky/Davidoff pricing index is in the works, which shows prices have been dropping. We’ve shown our preliminary data here. Further The board also forgot to mention the huge drop off in Median sales price, and average sales price. Yes using those two methods are not flawless but they should still be considered.
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Processing the wrong Data
Most people don’t know, in fact most Realtors don’t even know that the board releases sales data based on when it is processed! One more time, Processed. I’ve discussed this before with the Vancouver Sun.
Which means deals which are signed and agreed upon sometimes months ago could count as an August sale. In fact roughly 1/4 of August sales were deals that were agreed to BEFORE the announcement of the foreign buyers tax on July 25. At least for these areas I studied:
Vancouver West: 26% of sales from pre tax announcement
Vancouver East: 26% of sales from pre tax announcement
Richmond: 27% of sales from pre tax announcement
Burnaby: 27% of sales from pre tax announcement
If you want real time market info you have to look at when a contract to purchase is actually agreed to by both parties. Agreed upon date (sales date) shows the current market value and the psychology of both buyer and seller when they entered into contract.
Deals are supposed to be reported within 7 days as per requirements from the real estate board. However, things happen, Realtors get lazy, offices get swamped in paperwork, etc.
Here’s a sale which went under contract in November of 2013. November of 2013 but was finally processed in August 2016 and counted as a sale this month. I can’t even explain this one honestly.
If you want real time data and current market conditions then we need to look at the sales for the MONTH. I’ll pull those numbers next week. As Jason, the stats guru at Zolo (real estate brokerage) has discovered, 50% of deals take a week to be processed by the board so it wouldn’t be accurate for me to pull the numbers today.
Areas Covered by the board
The Real Estate Board releases numbers combining all the above areas. Which means all the data gets lumped together which can blur things. Each area reacts differently. For example, Vancouver started getting multiple offers long before Pitt Meadows and Maple Ridge. Vancouver also corrected first.
Also I personally don’t think the Sunshine Coast market has any relevance on the Vancouver market. The Sunshine Coast actually sold more houses this August than August 2015.
Now let’s look at 4 major markets in the lower mainland. Vancovuer East, Vancouver West, Richmond and Burnaby. I wrote a whole post on it here.
Quick summary for those major areas, sales were down 57% compared to 2015. They were down 44% compared to 2010-2014 averages. However the board says “home sales return to typical August levels.”
Anyways, I could go on and on. Stats can be interpreted and portrayed differently depending on who’s giving them.
Me personally, I would rather caution my clients thinking of buying and sacrifice a couple deals in the short term than pretend things are better than they really are. I’ll keep playing the long game… Interpret as you wish.