The city of Vancouver condo owners, especially investors have taken it on the chin recently. As mentioned in our last condo market update, Vancouver proper condo values were down to $861,000 in October. Then news broke, vacancy homes tax will triple to 3% for 2021. Fast forward a couple of weeks and the average sales price has dropped to $765,875. A $96,000 lost month over month. Doubtful the substantial decrease in prices resulted from the tax increase, which could be a sign of more losses to come during 2021.

From zenith to current prices the city of Vancouver condo values have lost more than $325,000 (-30%). To be fair as evidenced by the chart below the sales price of $1.1M occurred for one month only. In the name of fairness, let’s take prices that were tested multiple times, and call that the peak: $970,000 (top green line). Using that as a true market top the losses are still substantial. The resulting loss after 3 years of ownership is $205,000. Also important is now that Vancouver prices being at $765,875, implies all previous gains since 2017 have been erased. As prices during Jan 2017 were $774,227.

The established losses, has resulted in the average price entering into the low echelon Eitel Insights forecasted market cycle. As noted previously, we believe the market cycle would test as low as $725,000-$775,000. With prices dropping to $765,000, many markets inside of Vancouver proper, are ripe for purchase. Especially for those who are planning to owner occupy.

At current price levels, owner occupied purchasers who have been advised to wait by Eitel Insights can finally begin to hunt for purchases. With many areas inside of Vancouver entering into their forecasted market lows, signals excellent purchasing opportunities based on our analytical interpretation.

A 10% drop from peaks is considered a correction, a 20% is a recession, and 30% drop has no definition other than, “ouch”. From the zenith to current levels condo values have dropped 30%. The true peak of prices occurred during Feb and April 2018 at $970,000 (top green line) indicating a 21% loss. Any way you slice it the city of Vancouver’s condo market has hit recession levels.

Point of interest. After a significant trend line is broken as is the case for the city of Vancouver price chart, the market tends to become volatile for a short period. This could result in some wild swing in the price chart. These swings could result in prices temporarily returning to the middle threshold or hurl prices to the lowest edge of the market threshold. Over the longer term, the break of the uptrend will likely result in condo values selling in the lower half of the market cycle, until the market consolidates prices with a forecasted bottom between of $725K - $775K range.

Greater Vancouver overall, broke its’ uptrend as well. Condo values dropped to $657,000 indicating a 13% drop from the peak in prices. As stated after a trend is broken, volatility is likely to ensue in the short term. This volatility could result in Greater Vancouver prices possibly rising back up in an attempt to regain position inside of the uptrend, or could send prices down to test the low yellow threshold which is the near term low of $635,000.

If prices do decrease to $635,000 in the short term, that would create a very important test to the upper echelon of the prolonged uptrend (top black uptrend). Prices will likely find near term support based on the prolonged trend. Once the upper threshold of the prolonged uptrend breaks the overall condo market will experience intense volatility.

The overall condo inventory for Greater Vancouver during November was 5,669 active listings. At that level the data is challenging the yearly uptrend. It would be an odd occurrence if inventory increases during the month of December. However, during 2020, seemingly anything is possible.

During 2021 Eitel Insights anticipates inventory levels to surpass the 7,000 active listings a feat not accomplished since 2014. With the new additions from the completed presale, the notion of the total inventory surpassing 8,000 is a real possibility as well.

Sales dipped back into the established downtrend and low sales channel during November. The total sales were 1,373. There has been a clear cut difference between the detached and condo purchasing mentality that was born out of the Covid pandemic. The pulled forward demand never arrived in the condo market. The rise in data was merely the pent up demand experienced during the initial lock down. As more and more inventory is brought to the market at decreased price point, the notion of overpaying for a depreciating asset will result in buyers becoming hesitant to purchase. This will exacerbate the supply demand dynamics, which have been changing from the sellers favour to the buyer.

As the overall market indicates the Greater Vancouver condo market is in the middle of the projected market cycle and down 13%. While areas inside of Vancouver proper have dropped closer to 30%.

Individual markets inside of Greater Vancouver prices, and trends vary. To receive actionable intelligence for your personal or investment property become and Eitel Insights client.

The recent announcement that the City of Vancouver will triple the vacant homes tax for 2021 comes as more negative news for condo investment owners. Condo values have already dropped over 21% in Vancouver proper. The zenith price point occurred during January 2018 at $1.092 Million. As of October 2020 the average price has dropped to $861,000. As if prices being down $231,000 didn’t hurt enough, now the city has passed a vacant home tax increase from 1% to 3% of the tax assessed home value for the upcoming year.

The early investors are still up in terms of their investment, prices were $750,000 during 2016. Late investors who purchased during 2018 are already underwater. The average condo purchase price inside of Vancouver was $915,000 during 2018. Signaling a current loss of $54,000 over a three year investment.  

Eitel Insights forecasts prices inside of Vancouver will ultimately retest the $725,000 - $775,000 price threshold during the upcoming years. Which would again leave the 2016 investors roughly even after a 5 year investment, but indicate a loss of $140,000 - $190,000 potential loss for the 2018 purchases. Based on the 2018 average price of $915,000.

The exodus out of Vancouver proper has been a real event due to the Covid induced “work from home” movement. Condo’s for sale in Vancouver are at the highest level since 2014 with over 2,600 condo in October 2020. The inventory levels will increase over the upcoming years with the continued completions of presold properties, the vast majority of which were sold to investors.  

On average a foreign owner of an empty unit during 2021 based on the current condo values of $861,000 would incur a tax bill of $25,830 from the city of Vancouver’s raised empty home tax, and another $17,220 in the provincial empty home tax. Total of $43,050 just in the empty home applicable taxes.

Overall, Greater Vancouver condo values are down 9% from the market peak during January 2018. Current prices have dropped from September’s $699,000 average sales price to $685,000 in October.

That decrease in prices has resulted in a technical test of the uptrend which began after the market found it’s near term bottom of $643,000 in June 2019. If prices indeed break the uptrend, price volatility will likely ensue which would send prices lower in the upcoming year.

Investors in and outside of Vancouver proper are still going to be paying higher tax assessments due to the year over year increase by 3% on average across Greater Vancouver Condo market. This will result in a higher 2021 tax assessment invoice than what was paid during 2020. All home owners pay property assessment taxes.

Owners of vacant properties outside of Vancouver proper will continue to pay a provincial tax of 2% for vacant homes owned by foreign ownership & satellite families, or 0.5% for vacant properties owned by Canadian citizens or permanent residents.

Inventory across Condo market of Greater Vancouver remains at the highest level compared to the preceding 5 years. The growing level of inventory will not stop after 2020, this inventory count will likely test as high as 9,000 active listings before the market bottoms out. With just under 6,200 active listings currently on market this may seem farfetched, but when you add in all the new completions set to transpire in the near future, and notice a significant fall off of investment purchasing. The upcoming oversupply of condo units will force competition amongst sellers to significantly intensify.

Eitel Insights featured on Mornings with Simi on CKNW 980

Link to interview: https://omny.fm/shows/the-simi-sara-show/real-estate-supply-boom-underpins-strong-sales-fig

We’re seeing lots of action in real estate right now, but something that’s not getting much attention is the number of new listings. September set an all-time high for the total number of properties up for sale, and not just since last year, it’s the highest ever with over 3,200 units up for sale. 

GUEST: Dane Eitel, founder of Eitel Insights

Host: Simi Sara, Mornings with Simi

The newly active listings in September set another all-time high with over 3200 properties going up for sale. This marks the 6th straight month that newly active condos have doubled the sales totals. The oddity is the sales were loudly spoken of, but the new inventory was whispered. Prices were able to inch up despite a majority of the areas inside of the Greater Vancouver condo market off double digit percentage points, with 2 outliers being off 50%+ from their individual market peak’s.

Prices have come down from the peak by 7%. The surprising part of this data point is, when you take the current data of the 19 regions which make up Greater Vancouver, there are 12 regions down 10%+ from their individual peaks. Of those 12, 5 of them are off 40%+.  Understandably the Real Estate Boards recorded data kicks out an outlier or two to give accurate data. It is just surprising that the data indicates only a 7% drop from peak.

The data does have room to run higher before testing the possible downtrend. There could be room for some unusual price activity during the remaining portion of 2020 and into 2021. As those presale completions close. They will inevitably come to the market to be resold. Many will experience losses, some getting out by the skin of their teeth, and the fortunate will walk away with profits.

Technically speaking the downtrend indicated by the yellow line has never been tested since the inception, coupled with a second test to break above the upper echelon channel. The first attempt during March failed.

The preceding two years had clearly an up and down effect on prices. 2018 achieved peak prices with an average sales price of $751,632. 2019 prices fell more than $100,000 from the highs in 2018. Currently the 2020 prices are $50,000 higher than the low in 2019. The probably scenario is the market is creating lower highs coupled with lower lows which will see the market bottom occur during 2022.

Those presold condos could affect the data in a unique way over the short term. Presale prices do not count towards the MLS monthly average sale price data. Meaning those high valued, small square footage properties will be calculated into the average sales price for the first time. Even as the majority of sellers will lose based on their original purchase price, carrying costs, commissions, the high average sales price could bump the data higher, possibly even as high as the previous peak due to the artificially added value of high valued product newly added into the data metrics. If this does occur, this will likely be a temporary head fake. The growing need to sell has already pushed inventory to the highest levels in the past 5 years. Look at the price chart and the last time inventory was above 7000 actives, price action was very volatile, and could not propel beyond the technical price range. This is what will continue to occur over the upcoming 2021 and 2022 as inventory grows with the need to sell intensifying.

As mentioned active listings are at their highest point in the past 5 years. The seasonal norms, will likely take hold, but given that it is 2020 anything is possible. Due to the lockdowns during the spring the normal activity has been pushed back to later months. September ended with 6279 available condo listings.

The market has continued its record breaking ways again in September with over 3250 brand new listings on the market. Again seasonal norms should take hold, however over the upcoming two years the market is likely to experience 8000+ active listings, with a high probability of 9000 available units which would be an all-time high for Greater Vancouver.

The cannibalization of the market will begin after the majority of presales have completed. Once that occurs and inventory is 8000+, any unit in an older building will have very little chance of selling. The new warranties that come with the new buildings, along with the lower insurance fees, and just the overall new penny effect, will cause older units to be left with very little ammo in the chambers other than lowering their asking prices. This will ripple to the newer units, and the chase lower will have begun.

Sales did finally come through higher sales compared to the past 3 years. Which has had some perennial real estate bulls very excited. But only if you compare the data directly with past September’s. Not when you compare it to previous high water marks of any calendar year. The 1598 sales which took place in September did break out of the stagnant sales range, however when compared with previous years high water data points the sub 1600 sales is hardly anything to write home about, let alone be the headline. Add on the fact that there was the highest availability in 5 years and the newly active listings has doubled the sales for 6 months running. Eventually there will be a straw that breaks the condo’s back.

Eitel Insights featured on Mornings with Simi on CKNW 980

Link to interview: https://omny.fm/shows/the-simi-sara-show/has-the-pent-up-housing-demand-been-spent

A strong return to activity in the real estate market might be about to cool off according to real estate analyst Dane Eitel.  His latest market update predicts the pent up demand from early in the pandemic has been mostly spent, and things will mellow out with the school year now underway. 

Guest: Dane Eitel, founder of Eitel Insights

Host: Simi Sara, Mornings with Simi

Article Written by Mark Ting CBC NEWS

Link to Full Article: https://www.cbc.ca/news/canada/british-columbia/bc-condo-market-pandemic-1.5740269

Greater Vancouver condo prices peaked in January 2018 at an average price of $751,632 which is approximately eight per cent higher than today's average.  

There are now more than 6,000 active listings, thousands more than we saw in March or April of this year. Granted, would-be sellers were reluctant to list at that time as they didn't want strangers walking through their homes during a pandemic.

As COVID-19 restrictions relaxed, the number of listings increased.  Both July and August had approximately 2,900 new listings each, compared to only 1,400 sales.   

COVID-19 exposed us to the limitations of condo living and also changed how condos are used.

Pre-pandemic, homeowners used their condos maybe 12 hours a day, eight of which were spent sleeping. Much of their work and entertaining took place outside their homes, particularly if they live downtown. That changed with the onset of the pandemic. And as people spent more time at home they missed "space" — green space or a dedicated area to work.

Some people also became uncomfortable sharing common areas such as elevators and hallways.

And much of what makes downtown condo living desirable such as the energy of living in a busy area, nearby culture and entertainment, has been put on hold.  For these reasons and more, those who could afford it have been listing their condos and buying detached homes in the suburbs.   

Pre-pandemic, the expectation was that a wave of boomers would sell their detached homes and downsize to a condo to help fund their retirement. COVID-19 has delayed this move.

For example, my parents were considering downsizing, but the lockdown made them realize just how lucky they are to have a backyard. It allowed them to safely spend time with their friends and family in person — not over Zoom.

Recently, many would-be sellers of detached homes have taken their homes off the market which has limited the supply and driven up prices.  

Add to this an expected surge in condo inventory created by owners forced to sell because of job loss and the end of the mortgage deferral program, and lower prices should be the result. Speculators who have overextended themselves and hundreds of pre-sale units expected to be completed in 2021 could also push prices down.  

Today's condo buyers are very different from the people purchasing during the peak of 2018. Back then prices were rising and there was a lot of greed and speculation in the market. Today there is a lot less speculation and most buyers are local who are purchasing for personal use.

Several forecasters including Moody's Analytics, Canadian Mortgage and Housing Corporation and Eitel Insights, are expecting further weakness in the real estate market (detached and condo) until 2021 and possibly 2022. If these forecasts come to fruition, it is good news for buyers. However, a forecaster's prediction, while often useful and insightful, should never be the sole reason to buy or sell a property. Forecasts are constantly being "revised" as new information comes to light.

Over the next few months, or year, I'm expecting to see further cracks in the condo market. Many investors who bought multiple units near the peak of the market that no longer provide cash flow will be forced to sell at a loss.

If you are in the market for a condo, their crisis could be your opportunity. If the condo inventory continues to trend higher and prices drop, it should result in a strong buyers' market.  If that's the case and you find a home that works for you, negotiate hard and write an offer. 

Eitel Insights first video podcast, we hope you enjoy the content.

Historic government stimulus and mortgage deferrals not to mention the eviction ban has held prices buoyant in the intermediate, these stimuli’s are all coming to an end. Eitel Insights does not believe prices will hold their current level as the months continue to progress and the economic climate nationally, and locally worsens.

Inventory is the headline of the August market update. The Greater Vancouver condo market has just risen over 6000. The first time the inventory has been that high in over 5 years. Eitel Insights has warned that need based sellers would continue to force inventory levels higher.

The new normal has people working from home and the need to live downtown has diminished. This trend is likely continue, the old draws that had young working people moving to the city’s core are as gone, as the handshake. With businesses allowing more employees to work from home, no social gathering after work at the favourite watering hole, and no exciting weekends at the night clubs. These and more factors are leaving the downtown real estate market with a glut of inventory.

The rising need to sell is best exemplified through the new monthly listings, which once again was over 2900 new listings. Which marks the first time that has occurred in over a decade. What makes this data and chart interesting is the higher highs along with the higher lows over the previous 2 years. As technicians say the trend is your friend. Higher inventory out of a need to sell, will create intense competition amongst sellers of comparable units which inevitably leads to lower sales prices.

Historic government stimulus and mortgage deferrals not to mention the eviction ban has held prices buoyant in the intermediate, these stimuli's are all comi...

Dane Eitel, founder of Eitel Insights, shares his technical and timing analysis with Michael. As well as his forecasts for the bottoms of the detached home and condo markets.

Host: Michael Campbell

Guest: Dane Eitel

Link to Eitel Insights interview

Link to the full Money Talks September 19th Program.

Dane Eitel, founder of Eitel Insights, shares his technical and timing analysis with Michael. As well as his forecasts for the bottoms of the detached home and condo markets.

Historic government stimulus and mortgage deferrals not to mention the eviction ban has held prices buoyant in the intermediate, these stimuli’s are all coming to an end. Eitel Insights does not believe prices will hold their current level as the months continue to progress and the economic climate nationally, and locally worsens.

The Greater Vancouver price chart is testing the long term conservative downtrend which was initiated during the markets peak of January 2018. Prices during peak conditions were $751,000 current prices are $692,978 indicating an 8% decline from the peak. The current test of the downtrend is the second test in the past 6 months. During March 2020 the previous test of the downtrend resulted in a $38,000 price drop the following month.

Inventory is the headline of the August market update. The Greater Vancouver condo market has just risen over 6000. The first time the inventory has been that high in over 5 years. Eitel Insights has warned that need based sellers would continue to force inventory levels higher.

The new normal has people working from home and the need to live downtown has diminished. This trend is likely continue, the old draws that had young working people moving to the city’s core are as gone, as the handshake. With businesses allowing more employees to work from home, no social gathering after work at the favourite watering hole, and no exciting weekends at the night clubs. These and more factors are leaving the downtown real estate market with a glut of inventory.

Lest we forget the upcoming onslaught of inventory that has been scheduled to complete during 2021, along with eviction bans being lifted and government stimulus to be rolled back. Eitel Insights forecasts the need to sell continuing to rise.

The rising need to sell is best exemplified through the new monthly listings, which once again was over 2900 new listings. Which marks the first time that has occurred in over a decade. What makes this data and chart interesting is the higher highs along with the higher lows over the previous 2 years. As technicians say the trend is your friend. Higher inventory out of a need to sell, will create intense competition amongst sellers of comparable units which inevitably leads to lower sales prices.  

August sales of 1336 were lower than what occurred during July. The sales have remained inside of the Identified market cycle since 2017. With the August data concluded thus ends the seasonal hot market. Historically, April to August are the 5 hottest months of the year. During 2020 the sales over the 5 months averaged just 984. Some analysts and the Greater Vancouver Real Estate Board have touted 2020 as a great year simply because it was better than 2019. What a great year looked like was 2016 with the 5 months of hot selling season averaging over 1850 sales per month.

There was good reason for why sales did rise during the past two months. With the second wave of the Corona Virus long talked about, there was a rush for those who had a need to buy to do so, before a potential second shut down occurred. Another reason for the rush, is the extremely low interest rate environment. Now that the US Federal Reserve has stated there will not be any rise to the interest rates until inflation rises well above 2% for a sustained period of time. There earliest projection for accomplishing the 2% breakeven is 2023.

Eitel Insights does not see any reason to rush into the Greater Vancouver condo market especially as a strict investment. Location matters, but timing is everything. There are 20 markets which make up the Greater Vancouver data, and each area has its own velocity inside of their market cycles. Become and Eitel Insights client to find out which market trends are dominant in your neighbourhood.

The Greater Vancouver Condo market is experiencing another stagnation period in price movement. Over the past three months prices have remained within a three thousand dollar bracket. Current prices are retesting the higher echelon of the middle threshold in the current market cycle. The average sales price is down 9% from the peak, signalling there is plenty of room to drop. Eitel Insights forecasts that during 2022 prices will have dropped nearly 30% from the peak experienced during 2018.

Prices have remained in another very tight range similar to the previous tight cluster of prices during 2019. The previous cluster sent prices higher pre pandemic. What is different this time is the Inventory is on the rise and growing much faster than the sales. Once the buyers eventually learn that they are in the driver’s seat, prices will begin to drop with gusto.

New listings grew at the highest pace since 2010 for the condo market, with over 2900 brand new active listings. Which is roughly 750 more new listings than the average over the previous 5 July data points. The sales did grow no denying that, but only by 159 sales from July 2019. Also over the previous 5 year average the July sales were actually down over 250. Seems like there is more of a need to sell than a demand to buy. The last two months of newly listed properties equals over 5700 new listings, the highest two month span in a decade.

With the abundance of new listings, the overall inventory grew by another 600 compared to June’s inventory. While sales did rise, not enough to mitigate the growing need to sell. Inventory numbers have risen to the 2nd highest peak in the past 5 years, with over 5600 active listings. Still to come is monstrous amounts inventory to be introduced to the market from the presales. Worth mentioning is the end to the evictions ban will likely be occurring in September. While the CERB is also seemingly coming to an end, and those whose are still without work who qualify for EI will be getting less money and some simply will not qualify. None of this bodes well for the demand sector of the Condo market.

The notion offered by some perennial bullish market watchers that due to the higher sales numbers in July, the Covid-19 effect has been nullified is erroneous. Yes sales have increased, but ever stop to wonder why? One answer is prices are down 9% and the price per square foot continues to drop signalling properties are selling for less money. Secondly those who had been pre-approved, pre Covid have followed through with those rate holds. There is usually a 90 -120 day prequalification rate hold. The idea that someone would purchase a home before they are about to lose their job is seemingly farfetched, but in this ever indebted society that is exactly what has been occurring. The 1404 sales which occurred in July, hold a distinct possibility that some of those new owners would not have qualified for that mortgage if they applied today. Those CERB payments helped greatly with the first mortgage payment but what happens to that owner once the free money era comes to an end. As stated the last two months had over 5700 newly listed properties, while the sales have achieved just over 2400. The trend is in the buyer’s favour.

Business’ that have been on hold are eager to get back to work, the challenge that most business are experiencing is, the market isn’t as eager to purchase as they are to sell. This will result in staff returning to work, only to be let go in short order. The economic impact of the first shut down is still in its infancy, imagine a second shutdown and the long term effects that would hold. Even if there is no second shut down the economic landscape will remain changed. With personal job, wealth, and health uncertainties not to mention those in your family who you may need your help. The idea of buying another expensive pair of shoes or a new watch, just because, are days gone by for most.

The market has been artificially propped up with free money, once that comes to an end, taxes will inevitably be raised to refill the governments desolate coffers, the full impact of Covid will be felt. With a glut of inventory and a lack of potential renters and purchasers, the roll out of this recession is well underway. Ultimately resulting in assets being sold, primarily secondary condo properties.

In summary, Eitel Insights cannot wait to offer a positive outlook for the Greater Vancouver Condo market, but the analytics of the current data projected into the future is not positive, we believe it is our obligation to offer actionable intelligence through analytical interpretation not pie in the sky optimism.

Not all markets in Greater Vancouver are created equal, some areas are closer to the bottom. While others still have significant percentage losses upcoming. Become an Eitel Insights client to find out which are which.

VANCOUVER (NEWS 1130) — The same week B.C.’s finance minister said housing sales dropped a whopping 45 per cent because of the pandemic, some real estate watchers say the situation isn’t so bad, but others are convinced it will take several months for the Metro Vancouver market to rebound.

Carole James says prices fell four per cent between February and May, but Michael Ferreira who is the managing principal of Urban Analytics (which tracks data for developers) says prices are already coming back up.

“We may have weathered the storm pretty well and may not see much change in terms of pricing and given what’s happening in the new home market, a lack of new supply over the last two years could be seeing a different story in two years as far as upward pressure on pricing again.”

He says there’s no doubt the real estate sector has suffered during the pandemic, but it could have been worse.

“You would have expected with COVID that prices would have dropped, but we saw supply drop right off, demand get sustained –especially in May and June. Without that supply there, create situations where you have multiple offers again and puts that upward pressure on pricing.”

However, Dane Eitel with Eitel Insights predicts prices will continue to drop until at least next year.

“The truth is the inventory is rising. The condo market had 2800 brand new, active listings in the month of June. That was the highest month since 2012. There’s not a pent up need to buy, but there is a pent up need to sell.”

He adds sales in May were the worst they’ve been in 15 years with only 325 more detached homes and 450 extra condos sold in June.

“The inventory in the detached market grew more than 700 and the condo market grew over a thousand from the previous month, so you tell me where is the pent up demand?”

Eitel tells NEWS 1130 his research shows there’s more inventory now than there was eight years ago, so it could take several more months for prices to start climbing again.

“Most markets in detached properties will be in 2021, the condo market will likely be in 2022, so we will eventually be positive about this market, but as it currently sits, it’s very difficult to be an optimist, unless you’re a real estate activist. You’re not really acting as an analyst.”

Ferreira insists the situation has significantly improved since the last week of May when the lockdown was lifted.

“We certainly saw an uptick in sales. Even though it’s lower than the ten year average, we were still significantly higher than we were last year, as far as sales go.”

Ferreira also tells NEWS 1130 some owners of short-term rental properties may not be able to wait for the borders to open up, so they can book guests from other countries.

“A lot could pivot and switch that over to a long-term rental, so that’s an option that they have and I know, some probably already have because we are seeing a bit of a dip in rental rents. That could be a combination of –a function of more supply coming into the market as the result of some of those AirBnB units getting converted to longer term rentals, as well as a drop in the immigration, so you don’t have all the international students that would typically come and be renting product at this time –getting prepared for the school year in September, so the combination of those two probably softens the rental rate market a little bit. Certainly, there are some that might decide it’s not worth the hassle, so I’m going to put it on the market, but to date, I don’t think we’ve seen huge evidence of that so far.”

Even so, he admits what keeps him awake at night is what happens if there’s a second wave of the pandemic and the economy shuts down again.

Eitel insists some buyers are already taking their time because they’re worried about paying too much for something they can get for a better price next year.

“That is a fear of overpaying for a depreciating asset, so into 2021 when prices are attractive, buyers will be fearful that prices will continue to go lower and that will be a tragedy for those that miss out on this historic opportunity upcoming. Some sellers are seeing that they will need to sell, but praying and holding on for dear life that won’t come to fruition, but eventually it will. In 2021, you will see the roll out of foreclosures and that’s where the investor mindset starts to change and starts to purchase properties at a discount. And, that will force the average sale price lower because no longer are they looking at mansions that were selling for $17-million and actually selling at $12-million. They’ll be looking at properties listed for a million and maybe selling for $800-thousand.”

Despite warnings from Eitel, the president of Pilothouse Real Estate Inc says Metro Vancouver is so “desirable,” most people born and raised there can’t afford to buy a home in that market.

Vince Taylor, who specializes in pre-sale condos, insists demand is still stronger than supply.

“Just like you can’t live in Manhattan. You got to go live in Brooklyn. What we’ve done is created such a magnificent corner of the world, it is really hard to live here. This is one of the greatest cities in the whole world and real estate will be priced here accordingly.”

He’s also suggesting prices will go up when thousands of immigrants rush here once non-essential travel is allowed again.

“And in fact, there’s an enormous influx of people waiting to come to Canada –Vancouver in particular, but they can’t come because the airport is closed. This is the time when the professional real estate buyers are buying. When the airports open, prices are going to go crazy.”

Taylor agrees some owners –hoping to capitalize on short-term rentals for companies like AirBnB– are selling off those properties or turning them into long-term rentals which helps explain why vacancy rates are climbing in parts of Metro Vancouver.

However, he says he doesn’t believe many people will be forced to sell their homes because they can’t afford to cover their mortgage or they’ve lost their jobs during the pandemic.

“Add that to what’s going on in Hong Kong, you’re going to see about 80-thousand people arrive in Vancouver –one of the safest, most beautiful, world-class cities with no supply. If you don’t have many apples and you’ve got lots of people that want apples, the price of apples goes up.”

On Tuesday, the provincial government predicted a $12.5 billion deficit linked to the pandemic with Finance Minister Carole James saying, “This could be the worst downturn experienced in our province in recent history.”

Written By Marcella Bernardo News 1130 CKNW City News

Condo sales prices were higher in June compared to May and the year previous, similarly sales were higher than the previous month and year as well. However to say that the Condo market is forecasted to go higher and that there is pent up demand, is simply a fallacy. There will always be a need to buy and sell, currently that is the case there… some demand and a lower demand than previous years. As prices continue to trend lower beyond the 10% current drop there will continue be sales. The market will never flat line, but remember just because the Greater Vancouver Condo market has a pulse, doesn’t mean it is out of critical condition.

In reality with how the current market sits, it is very hard to be positive about the Greater Vancouver Condo market, yet some still are. We explain why we are not and you shouldn’t be either.

Prices as mentioned were higher in June with the average price finishing at $679,294 albeit a measly 1 thousand dollars from May’s sales price of $678,495. Hard to get excited about those numbers. Especially since June was the month when the supposed pent up demand was expected to be released, after being housebound for 2 months. Prices are still down over 10% from the market peak in 2018. The pent up demand is a whisper in the wind compared to the rising pent up need to sell.

As the market progresses to feel the effects of the Covid-19 the mortgage deferrals will eventually come to an end. The tenants that haven’t paid will be asked to leave. Not to mention all the presold properties that will flood the market as the completions continue which a whole beast on its own. The inventory has no choice but to skyrocket.

Another sign of a faltering market is prices remaining steady while the price per square foot falls.

The price per square foot has fallen from the peak in April 2018 when condos were selling for $847 on average, to currently selling at $767 PPSQFT. The month over month drop was $34 per foot, the largest drop since 2018. The per square foot prices has fallen back to the upper edge of the downtrend.

This is signalling larger properties are selling for less money. With the average price remaining steady and the PPSQFT dropping results in a negative forecast for the condo market. Once higher valued properties sell at discount there will be less willing purchasers at the lowered valued properties as they begin to perceive the market is headed lower.

While we anticipate the Condo average price dropping around 30%, while we anticipate a 19-24% drop in the price per square foot chart. As the newly completed units become for sale or resale, the buyers will want new properties with warranties as the insurance issue continues. As a result elder buildings with higher square footage will sit on the sidelines until they drastically reduce their prices.

Inventory has finally broken out of the prolonged downtrend that propelled the inventory lower since 2012. During 2019 the inventory had temporarily surpassed the downtrend only to relent and retreat back into the comfort of a long term trend. Going forward we anticipate the downtrend to be broken for good, as inventory works its way back up to 5900 active listings, the near term high achieved in 2019.

With inventory surpassing 5000 for the first time since September 2019. Market prices are undoubtedly headed into the buyers favour as inventory continues to rise in 2021 and 2022.

There were over 2800 newly listed Condos in June the highest single monthly total since May 2012. Which elicits our point of pent up need to sell being more prevalent than any supposed pent up demand to buy let alone, invest. Furthermore the inventory rose over 1000 from new listing in May as the rise in Sales only ticked up 451 during the same time frame. The data is indicating a doubling of the inventory rise to that of sales.

As stated the Sales for the Greater Vancouver Condo market did rise to over 1000 sales in June, a significant rise from 655 in May. The numbers are better but far from glorious. The sales were the 2nd worst June on the chart which goes back 15 years.

The chart depicts the sales data squarely in the middle of both the downtrend and the low sales channel.

Not all markets in Greater Vancouver are created equal, some areas are closer to the bottom. While others still have significant percentage losses upcoming. Become an Eitel Insights client to find out which are which.

Sales may be up but prices aren’t moving very much, real estate analyst Dane Eitel, the founder of Eitel Insights joins us with his thoughts.

Guest: Dane Eitel, founder of Eitel Insights

Host: Simi Sara, Morning with Simi 980 CKNW

The condo market just gave back the 5% gain in the previous month. After months sitting inside of a 1% range the condo market made its move in March. Only problem, it was the wrong way. Prices had shot up to just $699K, one month later the Condo market has recognized its mistake has come back to the $661K pricing threshold.

No so coincidentally, at the price point where the market spent 6 months deciding whether to rise or fall. The resulting short lived retest to the upper echelon got optimists excited. The challenge, the move was a head fake.

The technical feature of the divergent trend is over, next we forecast a prolonged downtrend of lower highs for the reaming months in 2020 and a further decline in 2021. Ultimately the Condo Market will test the $525,000 threshold, which hasn’t been seen since 2016. Signalling that 5 years of investment will have netted an investor zero increase of equity. 

The 2015 investor with a zero equity increase will be the envy of all those who invested during the market frenzy of 2017-2018. The average purchaser in January 2017 paid $584K (upper orange line) and by January 2018 prices had increased to $751,000(upper green line). Every Condo purchased during these times will technically be under water in the upcoming years as prices test the 2015 threshold of $525,000. Meaning the 2017 investor who purchased at an average price of $584K will be down $59,000 and the $751K Investors purchases during the peak, will be down $225,000 in 2021 on average.

Investing in real estate is not for the feint of heart. I vividly recall in 2017 the line ups for presales and the amount of complaining that occurred from those who didn’t get a chance to purchase because some investor bought multiple units. Thank your lucky stars those investors. Now it is them on the hook instead of you. In the upcoming months as those pre sold buildings are completed you can purchase that same unit at a discount. Crazy how life works out.

That being said we do not advise any investment purchases or even owner occupied purchases in the current market. We would prefer buyers wait until prices are much lower than $661K. Prices will continue lower as the inventory increases. Supply demand factors cannot be ignored.

As for the investor owners who are about to be caught in this chaotic market, our advice, sell in May and go away… for years. Wait until prices reach the lower echelon of the market cycle before re-entering the Greater Vancouver condo market.

The inventory remained similar from the previous month. April finished with just under 4000 active condos for sale across the lower mainland. Over the next quarter we anticipate an additional 1000 active listings to join and remain on the market.
Age isn’t just a number, by that we mean elder buildings will have a tremendously hard time in the upcoming years. As the presale properties work their way onto market which will cause added competition, add the insurance concerns, and common sentiment to like a new shiny object. The resale market will be living the hard knock life.

The April totals for condo sales across Greater Vancouver was 508. Marking the lowest April data on the record. April’s sales historically fall around 1100. The forecasts gets even worse, as we have stated in the past, sales numbers come from land titles meaning the recorded sales for April actually came from the previous months accepted offers.

The 508 April completions could have possibly come out of the accepted offers earlier in the year. January had over 900 accepted offers, February had over 1100 while March saw just under 1000. The gloom and doom of April 2020 only realized 257 accepted offers across all of Greater Vancouver. Buckle up condo owners it’s about to become a bumpy ride.

* Not all markets in Greater Vancouver are created equal, some areas are closer to the bottom. While others still have significant percentage losses upcoming. Become an Eitel Insights client to find out which are which.

Chapter 1: It's a bleak outlook for homeowners, and there's a real concern about the foreclosures that will likely result from it. Guest: Dane Eitel, founder of Eitel Insights. Chapter 2: With restaurants, salons, and shops reopening this week, some are charging an extra fee.

https://omny.fm/shows/the-simi-sara-show/outlook-for-homeowners-bleak-charging-a-covid-tax?t=39s

It’s a bleak outlook for homeowners, and there’s a real concern about the foreclosures that will likely result from it. 

Host Simi Sara 980 CKNW

Guest: Dane Eitel, founder of Eitel Insights.

The average condo price in Greater Vancouver shot up 5% month over month, bringing an end to the divergent trend. Also sending prices to the highest price point since October 2018. March realized a sales price of $699,015 just below the upper echelon of the current market cycle.

Eitel Insights has suggested selling into this pocket of strength rather than purchasing. Unlike so many other analysts who proclaimed 2019 as the bottom. Sellers who heeded our advice should be overjoyed at achieving the highest sales price over the previous 20 months. While purchasers who took the advice of other analysts might not feel so enthused.

There is a notion that Greater Vancouver would be immune to any significant correction to our Real Estate market. That is a complete fallacy, a little history reminder. April 1981 Greater Vancouver (detached) prices were $181,200. Prices immediately took a nose dive and by August 1982 prices had declined 39% to 110,300. Equally as important the prices remained at correction levels until December 1984 when prices were still hovering at $113,000 -37% from the peak. Of course this occurred during the interest rate hike and that was an extraordinary time. But I would argue we are living in an extraordinary time now as well. 

Another live example would be how the equity markets have performed over the recent months. The Dow Jones peak was 29,500 the near term bottom was 18,275 (technically important level) which represented a 38% correction. The TSX has had a similar sell off, at the peak the TSX was around 18,000 and the near term bottom arrived around 12,000 a 33% correction.

Sales in March were nominal and came in just below 1200 completed sales. One point of interest, the sales numbers recorded by the Real Estate Board are completed sales, meaning the deal has completed at land titles. While the average price that is reported by the board is on accepted offers, which are legally binding contracts but not completed…. Enter the lawyers.

The level of sales Eitel Insights is interested in is 1425. That level of sales has not been eclipsed in the past two years and what we have our eye on during this upcoming quarter. The market will not likely surpass this level in 2020.

The economic landscape is clearly in a negative forecast, with no quick solution obvious. While the National and Provincial Governments attempt to mitigate the Covid-19 impact, inevitably there will be a real life impact for the condo market in Greater Vancouver. Purchasers who have waited this long, might as well continue to wait as the chaos is just about to ensue.

The inventory in March surpassed the 4000 active level. Eitel Insights anticipates the actives to rapidly rise over the upcoming 2 quarters. With job losses transpiring and likely to continue, the only option to accrue money, for most, might be to sell their highest valued asset, the property.

In the past we have mention a cannibalization of the condo market would be coming. That will begin to become more and more prevalent. By cannibalization, we mean the new buildings will trump older buildings. The insurance issues will only perpetuate this situation. Owners of older buildings will have to offer their units at low prices to merely compete with the newer buildings who have warrantees.

The desperation levels amongst sellers will continue to build as a majority of sellers will attempt to achieve the highest dollar amount and ultimately chase the market lower. Our advice bite the bullet. Offers coming in now will look amazing in a years’ time.

For Eitel Insights clients who have already taken advantage of this pocket of strength just achieved the highest sales price in the past 20 months and sold in the lowest amount of days since September 2018. The active days on market for sold listing in March came in at 29.

Stick with Eitel Insights for Actionable Intelligence through Analytical Interpretation.

Not all markets are created equal while some fall other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada.

Prices in February had an average sales price of $666,769. Signalling a 6th month in a row of a 1% price range. Prices have held in correction territory with prices down 11% from the peak which occurred January 2018 with prices at $751,632. We still expect volatility to impact the condo market in the upcoming months. Up first will be a retest of the lower middle threshold of $635,000, which would bring the market down a further 5% from current levels. Once that level fails the next price level test would be $600,000. Ultimately we forecast the bottom of the Condo market to occur in the early part of 2021 with around $525,000 a 30% correction from the peak.

Eitel Insights has heard that some condos have been receiving multiple offers. We are not surprised by this short lived reality. We have been stating that there is a great opportunity to sell. With low inventory in the market, there is a lineup of potential purchasers that are eagerly awaiting property priced listings. When one such listing has come to the market those buyers have entered into minor bidding wars. A warning though, as each listing is purchase that has the forced effect of lessening the potential buyer’s pool.

After this imbalance between supply demand is corrected prices will again decline to previously established prices. In other words continue lower in the current market cycle.
There were 1064 sold properties in Feb mirroring the number from December just a few months ago. A large portion of purchasing occurred in the 3rd and 4th quarter of 2019 that is in large part due to popular areas around Greater Vancouver had dropped 20% – 30%, which in turn brought the sidelined buyers back into the purchasing game.

The trend is your friend, there are powerful downtrends in play with the sales totals. While the sharp rebound uptrend has been nullified. Eitel Insights does believe a higher low has been put in place, however, the market also seems to have found an artificial top that the sales cannot overcome.

The Inventory increased roughly 700 listings from January. Totalling 3700 Active listings in Greater Vancouver in February. With spring rapidly approaching we anticipate a rather substantial jump in listings over the next few months.

Throughout spring and summer the inventory regain the 5000 active listing level, we are confident. A repeat test of 6000 is a likely possibility as well.

The frenzied presale market of 2016 is beginning to rear its ugly head. Those pre sold properties are just beginning to hit the market. Some buildings are seeing 25% of the building for sale while an additional 25% of the building is for rent. Meaning 50% of the building is available in one way or another. This does not bode well for the overall market as this is just one early example.

Major losses in the Real Estate portfolio could have been mitigated by all-time high levels stock markets. The Dow Jones (DJIA) recent decrease from 29,500 to under 24,000 which has a major impact to the bank account.

Add it all up and you shouldn’t be surprised to see prices decrease a few levels lower than they are currently selling for in the not too distant future.

We have stated the past few months have been a great opportunity to sell. Here is some proof we were correct again. The Days on Market of sold properties dramatically decreased month over month from 43 days in Jan to only 31 in February. We anticipate this trend will continue for the next few months until the inventory levels surpass 5000 active listings. This opportunity to sell with less competition is rapidly closing. Eitel Insights urges those thinking of selling to act now before you become another casualty of this upcoming chaos.

The Condo Market’s average sales price has not moved in the past 5 months. The initial portion of 2019 tested the middle threshold of the Condo market current market cycle. After a successful defense, property values rose in September for the first time in over a year. That resulted in the market average rising to $673,328 in September 2019. January 2020 prices came average came in at $665,190.

Lower highs, and higher lows in pricing since September 2019 have created a divergent trend that needs to be resolved. A market cannot sustain itself inside of a 1% range, expect some volatile movement upcoming to the condo market. The Condo Market has remained 11% off the peak in pricing since the September data point.

Inventory is inextricably linked to the sale prices. Since the September data point the inventory broke out of the uptrend, which had pushed inventory to 6000. Simultaneously instigated the divergent trend in the price chart. After Septembers break to the uptrend the inventory seemed to be in free fall. The inventory bottom occurred in December with only 3025 active properties while January came in with 3390 active.

Now would be an excellent time to take advantage of the nominal inventory level for sellers. Why wait until the market is again flooded with listings. Just as Eitel Insights guided sellers to take advantage of the stress test mitigation in the detached market. Which resulted in the detached average price increasing by $163,000.

The current opportunity to sell at higher prices will not last, as the completion of many newly built building begins. The market will flood with new units for sale that will debilitate the resale market. Take advantage of the calm before the upcoming storm.
Sales have broken out of the aggressive uptrend that had been prevalent in the latter half of 2019. In January 2020 the total for the Condo market came in at 815 sales. The sales numbers are quite higher on a year over year basis, and likely at the lower third of the newly forming market cycle in the Condo sales chart.

Eitel Insights suggests that buyers hold off until the inventory levels return. Once the inventory returns you will see the competition amongst sellers intensify. Resulting in more negotiating power and an abundance of listings to enjoy perusing during the weekends.

The Days on Market for sales in January was 43 signalling a lower DOM than December, which is to be expected. Eitel Insights believes that that DOM will continue to lower as we head into the spring market. Properly priced listings will be purchased. Again our advice to sellers is to take advantage of the current absence of competition before the wave of listings ensues.

Not all markets are created equal while some fall other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada, visit our website. www.eitelinsights.com

December’s average sales price for Greater Vancouver Condo market came in at $667,875. Which resulted in the overall sales price for 2019 of $661,387. Which is $52,000 less than the 2018 average total ($713,258).

2019 prices had multiple tests to the middle threshold of the current market cycle. Prices were in a 20 thousand dollar price band for most of the year, between $640,000 and $660,000. In the 4th quarter of 2019 prices produced a divergent trend which will likely be resolved with a significant price move in the first quarter of 2020.

We forecast further price losses in 2020, with prices likely breaking downward out of the current divergent trend. That will result in some volatile price movement, with a high probability of seeing prices test the $600,000 threshold.

Ultimately before the market settles at the bottom. Eitel Insights forecasts that the Greater Vancouver Condo market will test the $525,000 threshold. Which would signal a price correction of 30% from the peak.

The sales have been much better in 2019 compared to 2018, as is evident in the chart. This V shape reaction is hardly cause for celebration. As we have said before “picking yourself up off the floor doesn’t mean you will win the fight.”

Other analysts have touted the 88% increase to December’s year over year sales. True enough but what they conveniently leave out is that December 2018 was amongst the worst on record in the past 15 years. So beating that mark is less than impressive in our books.

Inventory during the 2nd quarter of 2019 was at the highest levels since 2015 with 5900 active listings. During the 4th quarter the inventory negatively broke out of the staunch uptrend, and fell quite precipitously.
We do expect the market to put in a higher low than was previously low recorded in December 2017; which would instigate a conservative longer term uptrend. With the abundance of inventory through presold units beginning to complete in 2020 and beyond. Eitel Insights anticipates the 2020 inventory will surpass the 2019 levels.

Notably we believe the lack of inventory during the 4th quarter of 2019 is due to seller’s fatigue. Many of the listings had been taken the property off the market to consider how to proceed in this new environment.

As backing to our thought process that the inventory has been disappearing due to seller’s frustration, rather than any ravenous demand. The Days on Market has continually risen over the past few years and even while the sales have rebounded, the days to sell a property on average is still rising.

This data is not all properties listed, only the sold properties. Indicating the cream of the crop takes well over one month to achieve an accepted offer.

Not all markets are created equal while some fall other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada