Monday, May 14, 2018 Real Estate Stats for the REBGV/FVREB (plus a few ridiculous sob stories).

Monday, May 14th, 2018 Real Estate Sales Statistics for the REBGV/FVREB

Sales Snapshot:

Sales Snapshot 2018-05-14 at 8.52.39 PM
As I’ve said before, you’ll notice some differences between the Paragon averages and mine; mine break down averages after I’ve downloaded the numbers, and don’t include land or multi-family. They aren’t big differences.

Real Estate Board of Greater Vancouver (REBGV) Results

Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-14125$1,194,255$1,162,090$32,1652.6925

Fraser Valley Real Estate Board (FVREB) Results
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1455$750,479$739,877$10,6011.4119

Results for Both Boards
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-14180$1,058,657$1,033,080$25,5762.4223

Both Boards Snapshot 2018-05-14 at 9.02.29 PM
Sell/list 35.64%. Compare that to the end of last week (66.88%)

What about the attached market?

Real Estate Board of Greater Vancouver (REBGV) Attached Results

Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1482$930,246$923,654$6,5910.7118

Fraser Valley Real Estate Board (FVREB) Attached Results
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1432$538,342$537,549$7920.1515

Attached Results for Both Boards
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-14114$820,237$815,274$4,9630.6117

Attached Both Boards 2018-05-14 at 9.03.59 PM

Sell/list 40.71%, compared to Friday’s 89.80% Chopped in half over the weekend.

These are detached:

Real Estate Board of Greater Vancouver (REBGV) Detached Results

Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1442$1,727,208$1,645,062$82,1464.7633

Fraser Valley Real Estate Board (FVREB) Detached Results
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1423$1,045,626$1,021,378$24,2472.3224

Detached Results for Both Boards
Date# Of
Sales
Avg
List
Price
Avg
Sale
Price
Avg
Diff$
Avg
Diff%
Avg
DOM
2018-05-1465$1,486,033$1,424,373$61,6594.1530

Sell/list 30.09%. Friday was 50.65% while last Thursday was 29.05% – overall we’re seeing fairly low sell/lists for detached.

  • 13 properties sold for $2 million or more.
  • 36 sold for $500,000 or less.
  • The least expensive sale? Mobile home in Anmore for under $100k. Can you say “retirement”?.
  • Most expensive? Approximately eight million dollar waterfront on Point Grey Road. Can you say “Get a high paying job”?

Another interesting thing I noticed over the weekend. Last week there were 12 sales in North Van. 1 house, and 11 condos. The house sold a little over list, and of the remaining 11 sales 8 were over list, some substantially. That’s not a lot of sales, period, but it’s a very aggressive attached market.

Overall DOMS are low and the difference between list price and sale price is also quite low, but the detached market is giving the Vancouver Hot Market Look a bit of a bruise. 33 days and almost 5% off list price is not something we’ve seen for a extended periods since, well, for quite a while.

I’m on the record as saying we’re in a stagnant market, but if we see sales prices fall with volumes you’ll be able to look back to this time and say “We saw it coming”.

Inventory

REBGV Total

REBGV Total Inventory 2018-05-14 at 9.14.35 PM

Note the labels in the boxes. Status “A” means “Active”; Region is self explanatory; Class “RD” means “Residential Detached” (or “Attached”, as the case may be). There are slight discrpeancies between the total inventory and the sum of detached and attached – those discrepancies reflect multi-family and land sales.

REBGV Detached

REBGV Total Detached  Inventory  2018-05-14 at 9.16.24 PM

REBGV Attached

REBGV Total Attached  Inventory  2018-05-14 at 9.17.35 PM

FVREB Total

FVREB Total Inventory 2018-05-14 at 9.19.00 PM

FVREB Detached

FVREB Detached Inventory 2018-05-14 at 9.20.19 PM
FVREB Attached

FVREB Attached Inventory 2018-05-14 at 9.20.19 PM

Total Inventory Both Boards

Total Inventory Both Boards 2018-05-14 at 9.22.37 PM

Ok, Here Are The Ridiculous Sob Stories

I love Twitter. It’s always all over the place, but I think it’s gives one a sniff of the zeitgeist.

There’s a new tax. Perhaps you’ve heard of it. It’s a surtax on properties assessed north of $3 million.

Property Purchase Transfer Tax is also going up on the same properties.

There’s a lot of fans and a lot of critics. I don’t have a big problem with the increased PPT. It might slow the market a bit, and if you don’t like it you can avoid paying it.

The surtax is a different story. It seems like the wrong tool for the expressed goal, and perhaps the right tool for an unstated goal. It doesn’t strike me as fair, and a lot of it’s supporters seem motivated by envy. Say that out loud and you’ll get some pushback. In terms of smelling the zeitgeist, I can’t help but notice how many people seem to be cheering the taxman.

I said “zeitgeist”, but there’s also a whiff of schadenfreude, or at least anticipation of same.

Property tax is an old, well established tax tool. It probably dates back to the times when only white men who owned property could vote about how affairs of state (i.e., collection and expenditure of tax money) could be run. It has some problems that can create unfairness, nay, even sob stories. Here are a few.

The Simplest Scenario

A couple buys a house in the early 90s for the mid $200s at 11% interest. They work hard and play the property off, at which time the value of the house has about doubled. For sake of argument we’ll say it’s worth $500,000, and they own it free and clear. House rich, cash poor.

They decide to tear down the 1930s 900 square foot rancher and build a 2700 square foot home with two bathrooms. They get a mortgage for $300,000, get the job done (employing people and contributing to the economy through their spending of after tax dollars) and end up with a house worth $800,000.

Before construction they had a house worth $500,000 and owed nothing, for a net real estate worth of $500,000.

After construction they have a house worth (for sake of argument and to keep the numbers simple) $800,000, but they owe $300,000, so their net real estate worth is still $500,000.

The government math, however, determines that they’re now richer and so their property taxes ago up accordingly.

Of course, they’re not richer, and their capacity to pay has not increased. Yes, they paid off the property with dollars they’d already paid taxes on, and yes, they’ll pay off the new mortgage with dollars that they earn and pay taxes on, but they’ll also pay, yearly, for the privilege of spending their after tax dollars on their own property, and they won’t do it because they are richer or earn more income.

They’ll do it because you can’t run away from property tax and the taxman knows it.

The Old Guy Who Didn’t Earn His Windfall

A guy is born in the ’20s, grows up in the Depression, never finishes school, goes to work as a teenager in the sawmill, is rescued from that by the Second World War, hits Juno Beach, fights through to Holland where he’s captured, spends 7 months as a POW, loses his teeth to scurvy, but survives, comes back and…tell me when the sob story gets too melodramatic.

Oh, I can carry on? Great. So, he works hard, gets married, they raise a family, start a business but run into some bad luck in their 50s and go broke. They pick themselves up, buckle down and get it together and in the 80s, after the ’81/’82 crash, they buy the third house of their lives together for the mid $100s. Good times.

Fast forward to 2018. The house is probably worth $1.6 million. Talk about windfall. Doesn’t matter. The guy’s been dead for over 20 years.

Of course, his lovely bride, just turned 90 and with the health challenges that the winter of life brings, is still in the house. Medical professionals recommend keeping her in it, but the takes more than some bars on the tub and the removal of throw rugs. It now takes full time care. Her RRIFs are gone, her survivor pension from her husband’s military service is pretty small (he got out before fully indexed pensions were invented – hell, we hadn’t even had the inflationary ’70s when he got his package), the RRSPs are being depleted, but she can at least defer her taxes.

Nobody’s saying she’s in tough straits. There are people living on the streets of our fair city, and based on what I see on TV there are people in Syria who really have it tough. However, full time care costs a lot of money, and she needs to get a mortgage back on that house (if someone can figure out how to do that, because she sure can’t) because she’s burning through more than a hundred grand a year.

Of course, she could go into a home, but that’d cost just as much, and remember, the medical professionals said she’d last longer in her own home, surrounded by familiar things.

Mind you, given that windfall there’s no reason why the government shouldn’t get more of it now. After all, when she goes she’s just going to split that windfall up between four kids. Say she lives another 4 years and costs don’t go up and real estate values don’t fall. $1.2 million split four ways? Windfall like that those kids could each have a downpayment on a condo, once they pay the taxes…

The Guy Who Inherited All His Real Estate Wealth

A guy has good and bad luck. He’s an only child and inherits a lovely property on three city lots with one heritage house cut up into several suites. He also has a brain injury that keeps him from working.

It’s not so bad. He can live off the rental income, and he doesn’t even live in Canada anymore, although he doesn’t live somewhere cheap; he lives somewhere that offered better medical treatment for his injury and now he’s deteriorated and can’t travel. He pays all the income tax due in Canada and consumes no services here aside from those related to his property.

About a decade ago he was in a cash flow crunch and a realtor told him that if he sold the whole property he’d get about a million, as some lawyer would undoubtedly buy a 99′ lot with a heritage house on it, get rid of the tenants and renovate it.

He didn’t want to do that. He had no desire to give the banks a bunch of money to hold on deposit while being instrumental in putting a bunch of happy tenants enjoying rent controlled accommodation out on the street. Instead he sold one of the lots, paid off some debts, re-arranged his affairs and kept on. The tenants still enjoy his property.

Of course, the property is now worth way more than $2 million, even if it’s only two lots and a heritage house. He’s got a windfall. He hasn’t sold, and when he does he’ll pay capital gains on a substantial portion (or his heirs, if there are any, will pay the tax).

He doesn’t deserve that paper windfall. He’d agree. Which is why he doesn’t sell and doesn’t put the tenants on the street.

The Guys With Their Wealth In Another Asset Class

A couple buys a home and raise family. The kids leave to start their own lives. The other gets ill and dies. The husband, never a clean liver, dies soon afterward. It seems he just lost the will to live.

Sad days indeed for the two kids. They lose their parents at a relatively young age. On the bright side, they inherit the house, which had mortgage insurance. They sell it and bank the proceeds. Soon after their grandmother dies, and again, its sad, but on the financial side of the ledger they each end up with about a million in the bank when all is said and done.

That’s a windfall, it was unearned, and it’s a result of the local real estate market.

And there’s no tax on their capital. It’s almost like they’re not even on the radar.

Imagine.

Strange Bedfellows Indeed

These are all true stories, and I think they illustrate some of unfair aspects of property tax in general. Still, death and taxes, right? But what I find interesting is the justifications made for the taxes. The people with the wealth that can’t be hidden apparently don’t deserve the good fortune, so some if it should be taken away, or so the story goes.

I think there’s some envy at play, and lack of imagination. The people I’ve described above have done nothing wrong. Taking their wealth won’t help others buy homes. It won’t make housing affordable.

And yet there are people cheering the taxman. Given the choice of lining up with Robin Hood, Friar Tuck and Little John, they choose to side with Prince John, and argue that it’s the right thing to do.

Go figure.

How to read these tables:

The first column is date, which is self-explanatory. The second is the number of sales in the specific area. Sales include detached, attached, apartment, land only and multi-family. Multi-family tends to include smaller multi-unit buildings rather than apartment buildings, which usually turn up on the commercial MLS system. There are also few multi-family sales each week. The third column is average list price for the day – in other words, the total of all list prices divided by the number of new listings. The fourth column is the average sales price of all sales reported that day. The sales are reported after subjects are removed, and can be from 0 to perhaps 14 days old. Listings, by comparison, are generally brand new, and lag by at most 3-5 days (in times of high listing volume the lag can be a little more, but not as much as with sales).

The fifth and sixth columns show the difference between average list price and sell price in dollar figures and percentages. Hot markets see properties sell within 1%-1.5% of list price.

The last column is days on market (DOMs). In most real estate markets 60 DOMs is by no means bad, and would often be regarded as great. In the Lower Mainland, especially compared to the last decade, it is high. Hot markets see DOMs like 30.

Vancouver real estate sales statistics are courtesy of the Real Estate Board of Greater Vancouver, and while all efforts are made to ensure their accuracy, neither the REBGV nor Rob Chipman are liable for any errors.

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