Here, we will cover just some of the emergent trends for the Vancouver real estate market during 2012. The year was a key one for buyers as for the first time in several years, the tides shifted in their favor. But swirling through real data were also reports in the media about shifts in the market that weren’t truly validated by the real situation, which distorted buyer and sentiments alike and may have actually altered the mood in favor of one over the other.
As a general trend, Vancouver real estate sales showed a definite lean towards the buyers’ market. For example, Vancouver West showed a near-consistent drop in sales by about mid-year –14% to 18%, depending on which 12-month period you’re looking at. While this was not by any means a definitive indication of the trend for the rest of the year, the third quarter data for Vancouver West showed a 27% drop in year-to-date sales against only 16% for Vancouver East. Again, definitely trending towards a buyers’ market but spread out unevenly across Vancouver. Linked sale prices, however showed that by the end of Q3, housing was cheaper in on the west side by 7% against 9% for the east.
The peak sale prices was around the beginning of 2012, so a relative dip in subsequent months may be an indication of the market gaining stability rather than sellers losing ground. During that time, the average home price in Vancouver East ricocheted between the $600,000 and $700,000 marks, and in Vancouver West, the price spiked past the $1.25 million mark – a trend that was nearly matched only twice in the preceding 12-month period, and that too by a $100,000 margin. The dramatic dip since then took prices once again below the $1 million benchmark, but it has since recuperated to more stable levels. The price spikes are likely responsible for the sudden media panic around the middle of 2012.
According to the Canadian Mortgage and Housing Corporation (CMHC), Q4 is expected to follow the general trend maintained so far – a nominal increase in homes sold and number of housing starts, and a similar magnitude of decrease in average price. The MLS HPI (Home Price Index) also corroborates this data; for example, for Greater Vancouver, all types of residences (detached, townhouse and condo) show a greater 6-month dip than a 1-year dip – inference: the sluggishness has mostly been in Q2 and Q3 of this year. The main culprit was the month of June, which is normally the busiest in the year for the industry: figures show that there was a drastic 17% drop from May 2012 and nearly 30% drop from June 2012. With very few major deviations – such as North Vancouver, Squamish and Whistler - this has been the trend across most of Vancouver.
Trends in Housing Starts
Inventories in the market showed
a fair amount of stability across the whole of Vancouver, averaging about +0.5%
overall for the first three quarters against 2011 figures. Again, this is
validated by CMHC forecasts on the housing starts, which are expected to be
stable for multiple-housing properties and on a growth path for single-family
detached and townhouses. But even though projections for the latter are
positive, they are expected to stay well below the 10-year average. The resale
market on the other hand, which has been relatively unstable during the year,
as seen, is expected move to a more balanced scenario around mid-2013. The
positive outlook is based on both current and forecasted economy and employment
trends in the area.
So what we’re seeing is the nexus between price drops and stability at this time, with positive forecasts all around and a steady market in 2013. But the race isn’t over yet, and anything could happen between now and then. Q4 data is still being collected so more comprehensive hindsight should be available by the beginning of the New Year 2013.