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December Real Estate Statistics Release From the REBGV

The REBGV has released the December real estate statistics press release. I’ve copied it below and will include my comments below that.

Prices hold firm as home buyers and sellers conclude 2012 from the sidelines

VANCOUVER, B.C. – January 3, 2013 – The Greater Vancouver housing market experienced below average home sale totals, typical home listing activity and modest declines in home prices in 2012.

The Real Estate Board of Greater Vancouver (REBGV) reports that total sales of detached, attached and apartment properties in 2012 reached 25,032, a 22.7 per cent decline from the 32,387 sales recorded in 2011, and an 18.2 per cent decrease from the 30,595 residential sales in 2010. Last year’s home sale total was 25.7 per cent below the ten-year average for annual Multiple Listing Service® (MLS®) sales in the region.

The number of residential properties listed for sale on the MLS® in Greater Vancouver declined 2 per cent in 2012 to 58,379 compared to the 59,539 properties listed in 2011. Looking back further, last year’s total represents a 0.6 per cent increase compared to the 58,009 residential properties listed in 2010. Last year’s listing total was 6.1 per cent above the ten-year average for annual MLS® property listings in the region.

“For much of 2012 we saw a collective hesitation on the part of buyers and sellers in the Greater Vancouver housing market. This behavior was reflected in lower than average home sale activity and modest fluctuations in home prices,” Eugen Klein, REBGV president said.

Residential property sales in Greater Vancouver totalled 1,142 in December 2012, a decrease of 31.1 per cent from the 1,658 sales recorded in December 2011 and a 32.3 per cent decline compared to November 2012 when 1,686 home sales occurred.

December sales were 38.4 per cent below the 10-year December sales average of 1,855. Since reaching a peak in May of $625,100, the MLS® Home Price Index composite benchmark price for all residential properties in Greater Vancouver has declined 5.8 per cent to $590,800. This represents a 2.3 per cent decline when compared to this time last year.

“We saw home prices come down a bit during the latter half of the year. During the same period, we saw fewer home sales and listings,” Klein said.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 1,380 in December 2012. This represents a 15.3 per cent decline compared to the 1,629 units listed in December 2011 and a 50 per cent decline compared to November 2012 when 2,758 properties were listed.

Sales of detached properties in December 2012 reached 425, a decrease of 32.5 per cent from the 630 detached sales recorded in December 2011, and a 44.7 per cent decrease from the 769 units sold in December 2010. The benchmark price for detached properties decreased 2.7 per cent from December 2011 to $904,200. Since reaching a peak in May, the benchmark price of a
detached property has declined 6.5%.

Sales of apartment properties reached 504 in December 2012, a decline of 34.9 per cent compared to the 774 sales in December 2011, and a decrease of 37.9 per cent compared to the 811 sales in December 2010.The benchmark price of an apartment property decreased 1.9 per cent from December 2011 to $361,200. Since reaching a peak in May, the benchmark price of an apartment property has declined 12.8%.

Attached property sales in December 2012 totalled 213, a decline of 16.1 per cent compared to the 254 sales in December 2011, and a 33.2 per cent decrease from the 319 attached properties sold in December 2010. The benchmark price of an attached unit decreased 2.6 per cent between December 2011 and 2012 to $450,900. Since reaching a peak in April, the benchmark price of an
attached property has declined 4.4%.

“Activity continues to vary depending on area so it’s important to work with your REALTOR® and other professionals to understand the trends in your area of interest,” Klein said.

From the top:

We all know that sales were quite low last year. Anyone listing a property in January or February got a shock as sharp market prices changed to over-priced, even if only by $20,000. The phrase “Sellers need to adjust to the new reality” came into common parlance. Sellers didn’t get the memo, with the result being that inventory in 2011 almost passed the record year of 2008. The reason this time was less that sellers wanted to exit the market and more that the number of sellers wanting to enter the market dropped substantially. I think Eugen Klein’s observation that “we saw a collective hesitation on the part of buyers and sellers” is pretty accurate.

Is 25% below the ten year average sales level a bad thing? That question has to be asked. Right now we have an essentially stagnant market. Most people in Vancouver don’t seem happy with that, but consider the two alternatives: the market keeps posting gains like we saw through the oughts, or the market drops considerably. The first option can’t be sustained. The second option, as we’ve seen from the example of the US, is very, very painful.

The second question that comes to mind is: are sellers and buyers going to continue with their collective hesitation? In other words, are sellers going to continue to not drop prices? All things being equal I suspect that they will, however it’s tougher to predict whether all things will remain equal. Changes to mortgage rules translated into a real interest rate increase for first time buyers, and that has had an undeniable effect on the local and national market. While that, in itself, is not a bad thing, it does indicate what we could see if the whole market experienced an interest rate hike. Minister Flaherty’s rules can be figured at something between 1.5% and 2.5%, depending on which figures you use. The outlook for rates continues to be low, but as we’ve said for the better part of 10 years now, they can really only go up. The question is not if, but when.

December sales numbers were worse than other months in 2011, by which I mean the rate of decrease in sales was greater than the average for the year. The question here is whether we are witnessing the start of a downward trend. I haven’t crunched the numbers to determine if December sales numbers are generally markedly lower than the yearly average, but it is worth noting that we’re between 33% and 44% off sales in December of 2010, and that 2010 was a year of relative weakness.

In short, December results were not surprising. They aren’t cause to panic, but they are certainly cause for attention. It’s instructive to note that the sell/list for late December was in excess of 100%. That’s because people keep buying and selling over the holidays, but they stop listing. We’re already seeing the sell/list drop below 50% now that the New Year is upon us, and that’s just a function of people re-starting the listing process. You have to wonder: how much will listing activity pick back up this month? I haven’t got the inventory number for December 2012 yet, but if you look at the chart you can quickly see that unless we had a very large inventory drop in December we’re beginning the New Year at 2009 levels. If we see a repeat of 2009 we’re looking forward to another 12 months of digesting stale inventory. If we see a repeat of 2008, 2010 or 2012? Big trouble!


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