Please contact us to become a client so you can have Actionable Intelligence sent to you quarterly.
Jan 24 2019 Episode Summary
About Dane and Eitel Insights:
Dane is the founder and lead analyst of Eitel Insights, a real estate analytics firm based in Vancouver. Eitel insights has recently been involved analyzing the detached housing and condo markets in the greater Vancouver area.
On how his company is different from others that provide real estate analysis:
Generally, economists, banks and others that provide real estate analytics are purposefully vague on where the market is headed. They use fundamental data that inherently lags the actual market and they do not provide exact numbers. They talk about trends, but there is no exactness to their forecasts. Eitel Insights calls the bottom of the market and the peak of the market and can advise clients on when to buy and when to sell. They give real life numbers and forecasts that are useful for clients to make real time investments decisions. Eitel Insights is currently rolling out reports across Canada in the near future.
A recap of his report on the detached market in Vancouver from the last time Dane was on the program:
Dane was previously on the Vancouver Real Estate Podcast (Episode 142). The detached market in Vancouver is currently in a death cross. Dane relies on exponential moving averages, which are based on a 1 and a 2-year basis (short- and longer-term momentum). The detached market has been in a golden cross scenario over the last 5 years – resulting in a 60% increase in prices over this time period. In November 2018, this market crossed over into a death cross scenario, suggesting the market will be decreasing in near future. The average sale price for detached homes in Vancouver will bottom out at $1.4M, which would be approx. $300K or 17% decrease from where the average sale price is today (approx. $1.7M). Eitel insights uses analysis that is historically used to analyze the stock market.
How do you respond to people that argue that the stock market analysis you are using fundamentally doesn’t work in a housing market?
Dane is not aware of too many instances of people using the same analysis techniques that he is using on a housing market. Eitel Insights short term predictions have been very accurate (within 2-3%) and follow the technical indicator chart they created. He knows this is a viable way to analyze the Vancouver market. In a hot real estate market like Vancouver, even regular home buyers are riding the same wave as speculators and investors. Eitel Insights offers reports for $250 for anyone that is interested in purchasing in Vancouver – which will provide buyers will additional information that will be helpful to them. Regular people have their own reasons for wanting to buy a home that might not be determined by market projections, but by if they can afford to buy today, if they qualify for a mortgage, etc. These people may still want to buy real estate if it makes sense to them. For larger investors looking to make money on market appreciation, this is a different conversation and today is not be the best time to buy and they may need to look to other Canadian markets outside of Vancouver.
The methodology works because there are psychological factors that are prevalent in any market. Speculation in markets goes back to ancient civilizations where people would horde rice during the rainy season to sell during the dry season at inflated prices – which you can literally chart mathematically. Yes, the stock market is different than the housing market because it has greater liquidity than the housing market (you can sell a stock immediately) and the stock market has some people trading using technical analysis or others trading using fundamental information. In a real estate market, even with the investors and the home buyers both engaged in real estate transactions, if you use averages, you can still chart the real estate market just like you can the stock market and make accurate predictions about it.
On what the death cross scenario in the detached market looks like until 2021 until the market will enter a golden cross scenario:
At the end of 2018, the peak of the average price in the Vancouver detached market was $1.83M. Going forward, we will see the inventory and the demand start to separate themselves. December 2018’s supply / demand numbers are equal to the worst month of the recession of 2008 and 2009, but people are not panicking like they were back in 2008. This leads us to believe the worst is yet to come in terms of pricing and phycological factors in the market. Over the next year, the market will dip lower and the average price will continue to drop ($1.6m-$1.7m range). As we enter into 2020, the market will break the 11 year up trend, which should happen in the first quarter of 2020. This will break the $1.6M price and then drop quickly to the $1.4M average sales price for detached single family homes in Vancouver. In 2021 the price will hover in the $1.4M and $1.5M range – this will be the bottom of the market for a number of reasons: 1) In 2021 we will have filled out the selling range and the market can start to propel itself higher 2) this is when many people that purchased in 2016 at the zenith will be up for renewal on their 5-year fixed mortgages. The bank will work with you, unless you continued to leverage yourself by buying a speed boat, car or additional properties.
In 2021, the market will have dropped $430K from the average price high of 2018 and investors will start to dip their toes back in. Prices will start to increase in late 2021 and 2022 ($1.5M or $1.6M). By late 2023, the market will be back to the $1.83M level.
On what sales volumes will look at during this time:
November took a massive drop from November to December. This generally happens at Christmas and you will see a natural effect of people listing their homes in January, as people know the best time to sell is in the Spring. Sales volumes will increase from December, but we will not get anywhere near the frenzied activity of the past. Eventually, the inventory volume will be too great, and their will be houses on nice streets available for extended periods of time that were not available before. The psychological factors will kick in and people will decide it is not a great time to buy real estate because there are 2-3 houses on that street where there were never any listings available before. The market will dry up due to the overload of inventory. Not everyone needs to sell, but some people do need to sell. The people that are overleveraged will just take what they need to get out of their situation, and this will propel the market lower. Inventory volume will increase to levels we have seen in previous recession times. It will be normal to see nice homes on the market for 30-60 days. If you don’t have to sell – ride it out, you don’t have to sell.
On specific areas in metro Vancouver that will weather the storm better than others:
If we are talking investors, Vancouver is not the only game in town. There are other areas in Canada that are poised for growth right now that would be a better investment than greater Vancouver. Eitel Insights can break down the stats for areas of Vancouver if someone wants that information but can also offer Canada wide stats.
The long-term forecast for Vancouver is still positive – by 2028 detached homes will be at an average price of $2.8M.
On Eitel Insights’ long-term forecast for the Condo market in Vancouver:
Eitel Insights has recently released their analysis on the Condo Market in Greater Vancouver. At this time, the condo market has peaked and there will be no more price increases. There was a growth phase from Q4 of 2016 to Q2 of 2018. The top average price was $750K. We are currently seeing a base of $650K threshold where the condo market will begin to test this price. The definitive downtrend will need to establish itself over the next couple of months. The bottom will be the same as Q4 2016, which will be $550K. When this price is reached, the market will eventually start to run again. The condo market timelines will lag the detached market and take a bit longer to turn around. Overall it will be approximately a 30% decrease in prices. The condo market is currently at the end of the golden cross scenario but will enter a death cross scenario soon. The condo market is not investable at this time, so investors should look to other markets.
In 2021, 2022 there will be a lot of new condo inventory entering the market due to presales completing. Some new presales are not selling out at this point and it will be difficult for developers to meet their numbers and continue to build. When the new condos are available for sale at reduced prices, the older 15-year-old condos that may need some work will be tough to sell versus the new condos. This will force the lower prices to the resale market, which will propel the market lower. When the buildings are a little bit older, after the building has undertook some renovations and updated the amenities, those older properties will start to become attractive to buyers over the new condos – mainly because they are similar a new building with larger square footage. Buyers will turn to older condos, forcing the price of the new condos to decrease. This will lead to a race to the bottom for the condo market. The stress test also affects the condo market and the people that might have helped you with your down payment in the past will be more reluctant to pull equity out of their property to help you now.
That being said, new home buyers today that plan to purchase and live in a good condo property can ride out the market. It is still advisable to buy real estate if you need to. It is still better to be paying down your own mortgage than your land lords’ mortgage.
On the biggest factor that might disrupt Eitel Insights’ analysis:
Nothing that we can see that the market would zero or that the market would run away. The analysis is unemotional – based on averages of large numbers of people. This is what people in the market on average think. In terms of the market rising in the short term, there is nothing in the analytics to support this, but you can also look anecdotally. Is there anything on the horizon that would support a price increase in the market like a new building or the Olympics? The answer is no so this suggests there will not be a short-term price increase for Vancouver.
On good areas for investment in Canada:
Eitel Insights offers reports for any city or area for $250 on their website. They will be releasing Toronto very soon – where the market is stable and decent and trending higher at this time. Toronto looks similar to 2017 in Vancouver. They have had short term-losses, but the market appears to be poised for some growth. Going forward though, ultimately Toronto will see greater inventory and lower prices. Toronto and Vancouver are each to their own markets and do not lead each other.
A positive area of note is Halifax. Halifax has recently broken through its peak pricing threshold from the past. The prices in Halifax are a lot lower than Vancouver, so investors can buy 2-3 units in an area that is poised for growth right now. It is also the next city getting a CFL team, which suggests the technical analysis agrees with the fundamentals.
Fort McMurray is another positive area. It has recently had some issues with the oil patch and forest fires. The market had dropped $350K but it has now bottomed. It is currently in the basin for prices and it will rise back to the pricing levels before it fell on hard times. The fundamentals are not quite there yet, but in two years, you will see economists touting this area as a place to invest after the fundamentals catch up with the technical analysis. This is where the advantage lies by using Eitel Insights – Eitel Insights can tell you to buy there now before the rest of the real estate community determines this is an area to invest.
Eitel Insights sits down with Tyler Orton on the BIV podcast (13:10) dives into potential real estate investment opportunities for British Columbians — if they’re willing to examine Canadian cities beyond the West Coast. We cover the Toronto Market along with Fort McMurray and Halifax.
Eitel Insights begins our conversation with Tyler Orton at 13:10
Toronto Market Trends.
Looking at the Toronto aggregate average price points and constructing our technically analyzed chart, we see a current trend is known as a “flag” or “pennant”. This could indicate a continuation of an uptrend, and at first glance appears to be what is transpiring. However, because of the lack of any new highs being put in place above the $810,000 pricing threshold, we took a look at Eitel Insights’ proprietary supply/demand study and what becomes apparent shows a different side to the story; the Toronto aggregate market is in the midst of change, leading to a lower aggregate average sale price in the near future.
In September of 2017 the lockstep movement between the supply and the demand dissipated. Since that point the sales numbers have dwindled without any of the high numbers that have been evident in past years. Not so coincidentally, the active listings are growing with each passing quarter once again in comparison to past years.
The upcoming downward movement of the average price will inevitably come as a shock to much of the Real Estate market as most economists / analysts have seen this steady selling pattern as market stability. However Eitel Insights noticed the lack of momentum as a longer term reversal. The all-time highs in pricing occurred in April 2017 with an aggregate average price of $920,000. Since that time the prices have backtracked to the $810,000 becoming the more recent upper echelon in the aggregate average sales price. Eitel Insights predicts that the ceiling in prices will continue to go lower until the market ultimately breaks the uptrend instigated in March 20116. This will lead to lower average prices for the upcoming years.
Additionally, by looking at the average sales price of Greater Toronto, there is a noticeable run up in pricing that occurred in the first quarter of 2016 seeing a price increase from $630,000 - $739,000. This price range will inevitably need to be more thoroughly filled out before the overall market can progress higher.
An additional note on the Toronto Real Estate Market: Eitel Insights has performed the Exponential Moving Average study on the current aggregate prices. This study indicates that the death cross has been in place since April 2018. This is only the 4th time that Toronto has been in a death cross since 1982.
Halifax Market Trends.
Using our technically analyzed charts we notice divergent trends present in the aggregate average prices with higher lows and lower highs being put in month after month. These divergent trends will ultimately be resolved around the $300,000 price point. This number is a psychological level that will forever change Halifax, with no going back. Halifax is in the midst of welcoming a CFL team which marks its value across Canada as a growing city. That is the expectations of Eitel Insights as well. We believe that ultimately the $320,000 threshold will be broken and prices will experience another growth phase, with active listing levels lowering to numbers not seen since the 2004 market place. Over the next couple of years one could even anticipate those inventory levels decreasing further, possibly as far back as 2001 levels. Additionally we see all positive signs with regards to the sales numbers.
Eitel Insights sees the demand peaking again over the next couple of years as prices soar past the $320,000 pricing threshold, making Halifax a great investment.
Fort McMurray Market Trends.
Fort McMurray has seen better days and the Real Estate Market has been in free fall since the break in the low end of the selling range. This selling range had an all-time high in pricing of $660,000 in May 2012 and the low end of the range was $585,000. This selling range held firm from 2011-2015. Since then prices dipped below $585,000. The prices have continued lower until we have reached aggregate sales prices as low as $350,000. Good news. The bloodletting has stopped. The prices have fallen to 2006 levels. This is, technically speaking, the rationale for why the market will finally find its base. Over the upcoming years the base will be fully formed and Fort Mac will regain its value over time. While the downtrend is still currently in place, this is a natural event when picking markets at or near the bottom. Once this base, is firm prices will rise quickly leaving this as an excellent opportunity
When we look at Eitel Insights’ supply/demand study there is evidence of changing market behaviour. The active listing levels had been steadily at the highest end of the spectrum since 2013. However, over this past year the high level of active listings has been lowering, and not so coincidentally the demand has picked itself up off the floor. There had been a strong downtrend in the sales since 2008. The long-lasting downtrend has been broken in Jan 2018 and we are seeing an uptrend beginning to form with the sales signalling a recovery is on its way.
All Real Estate Regions highlighted in our release are for sale for only $250. In each report you will get our full projections with forecasted dates and price points for optimal investing. Here, we present a cursory summary. Each report comes with a full list with all of the Analytic Studies we offer, and our analytical interpretation of each study.
To see a full list of available reports please visit our request out analytics page
Real estate analyst Dane Eitel (1:00) of Eitel Insights explains how Metro Vancouver’s housing market is entering a “Death Cross” — an event that has occurred just seven times since before 1978.
Dane Eitel, a Vancouver realtor and analyst, took Vancouver house price data going back decades and plotted “death crosses,” which are basically when the line representing short-term average price crosses below the line for long-term average price.
It’s an indicator that immediate demand and price momentum are fizzling and there is the coming of longer-lasting decline. The method is used by some to gauge stock market trends, but it’s sometimes dismissed for putting aside all other factors except the relationship between short-term versus long-term average price.
Eitel says there have only been eight “death crosses” in Vancouver housing since 1978, which is as far back as the Real Estate Board of Greater Vancouver keeps numbers for average pricing. The last one was in 2012, but it only lasted a year. Eitel thinks the current death cross, which he plotted in November, is more like the one seen in the 1990s due to a more similar run-up in pricing.
Eitel predicts Vancouver detached homes that are currently averaging $1.7 million will bottom out at the $1.4 million mark in 2020-2021 before starting a new run-up in prices that ends with the average detached home price hitting $2.8 million in 2028.
Eitel Insights featured on The Lynda Steele Show: (03:14)
“Death Cross” is a technical term that means the long term exponential moving average has crossed past the short term exponential moving average. This event has only transpired 7 times before since 1978. Eitel Insights believes this death cross will last until late 2021 or early 2022
Meanwhile, number crunchers at the Eitel Insights group have been looking at the average house prices in the Greater Vancouver area, and they believe that some recent trends can tell us a lot about what to expect over the coming years.
Guest: Dane Eitel - Founder and Lead Analyst, Eitel Insights
Greater Vancouver Detached Market signals dreaded Death Cross.
Exponential Moving Average Study performed by Eitel Insights
This is only the 8th time since 1978 this long term exponential moving average indicator has crossed over the short term exponential moving average indicator forming what is known as a Death Cross, technically speaking.
This last occurred in September 2012 lasting until June 2013. What Eitel Insights anticipates is a much longer occurrence of this cycle, we analyzed late 90’s market where the Death Cross lasted from April 1996 – December 99. This is more along the lines of what Eitel Insights expects for the Greater Vancouver Detached market.
The Chart Demonstrates the Moving averages behavior since the last Golden Cross which occurred July 2013. At the peak point of separation in July 2016 the Short term EMA was priced at $1,683,000 and the Long term EMA was priced at $1,489,000, a difference of 11%. The Long term EMA has since eroded that differential and has subsequently made the jump over the short term EMA, where we believe it will remain until for a lengthy period of time.
Link below to article written by Josh Sherman Featuring Eitel Insights EMA study.
Link below to article featured on Huffington Post. Written by Josh Sherman
Eitel Insights featured on The Huffington Post.
“Perhaps the most dramatic prediction comes by way of Eitel Insights, which used stock market-style analysis to forecast the future of detached home prices in Vancouver. While the benchmark price of a detached home was $1,524,000 last month, Eitel Insights anticipates that number will fall to $1.4 million between next year and 2021 at the latest.
Like Capital Economics and Central 1, Dane Eitel, the owner of Eitel Insights, bases his bearish take on the impact of the federal government's move at the beginning of the year to extend stress testing to uninsured mortgages. “
Written by Josh Sherman of Livabl
Link to Full article below: These Canadian Housing Markets Took A Beating In 2018. What Does 2019 Have In Store?
Eitel Insights Featured on BIV Today...
We cover a wide variety of topics including the Vancouver condo market, stress test affect and touch on the Detached market as well. A big thank you to the Host Tyler Orton, it was a great conversation.
Real estate analyst Dane Eitel: explains why the zenith of Vancouver’s condo market has come to an end and whether we can expect some sort of rebound anytime soon.
Metro Vancouver condo prices to plunge 26% by 2021: analysis
Condo market will take three years to slump to average price of $550K, but will be back up to peak prices three years after that, predicts Eitel Insights.
Link to Full article below
Metro Vancouver’s average condo sale price will fall from its peak of $750K in 2018’s first quarter to as little as $550K by late 2021, according to a trend report from a local real estate analyst.
That’s a drop of 26.6 per cent, similar to previous troughs seen in prior real estate market downturns, said Dane Eitel of Eitel Insights.
Eitel Insights Featured on The Lynda Steele Show.
“According to recent research from Eitel Insights the condo market has officially broken the uptrends - and if your dream is a freestanding home with a white picket fence… it might be more within your reach than you think but you’ll need to wait a couple years.”
GUEST: Dane Eitel
Founder and Lead Real Estate Analyst for Eitel Insights
Eitel Insights can now alert the public to what we have shared with our clients over the past year. The condo market has officially broken the uptrends. The uptrends have been propelled the market over the past several years as you can see in the chart. The zenith in pricing has come and gone, when the average sales prices for the condo market in REBGV was $750,000. The Condo market will not experience a $750,000 pricing threshold for years to come.
Eitel Insights offers you actionable intelligence that can still acted upon. However becoming a client has benefits that will open your eyes to opportunity where there is only perceived chaos.
While the zenith in pricing is over, which is bad news for sellers the worst is yet to come. I know that doesn’t sound like particularly “Good News”, but imagine if you didn’t read this, or we didn’t offer our analysis to the public… the boards certainly would not alert you to such activities in all likelihood you wouldn’t even know that the uptrend existed, and has been subsequently broken…. Or even more incredulously, the worst is yet to come. Again our clients notice how easy the Real Estate Market is to participate in once we perform our analytics, and compile you a report.
If you decide to list your condo now, you need to be realistic to the current market conditions and one can achieve a sale, and I would recommend the old adage of your first loss is your best loss will hold true over the upcoming years. Meaning, the process of selling will be a process again, many open houses, tough negotiations, and you will feel like you are settling for a price. However a year out you will be glad you took the offer you came to terms with.
If you list your condo now and are not realistic, inevitably after one of your many empty open houses, your realtor might be honest enough to let you know they accidentally fell asleep for “just a moment or two”.
Even if you have the “best unit” (which every seller believes the own) Buyers are not in a rush, the inventory is beginning to increase. Leading to the buyers having more choice, leading to waiting longer, thus perpetuating the cycle, the condo market is about to experience.
Good News, Bad News: Stress Test Affect on Real Estate in Vancouver
Here is what the Detached Market of Greater Vancouver will experience in the upcoming years.
The Detached properties on Average will drop
In fact Eitel Insights predicts a drop of 26% based on from their zenith in pricing.
Even with the stress test in place, there will be an opportunity to purchase detached homes, even if it be only temporarily.
Say our prediction of the 26% correction will occur, in our example that would bring the house price from $1,400,000 to $1,075,000. Price drop of $325,000
For the Eitel Insights clients during this time of perceived chaos is where we show opportunity. While the masses are running around like chickens with their heads cut off. We have prepared you for this exact place and time. This is when the bottom will take place and we can achieve our goals of buying in at the lows of the Vancouver Market.
Once the lows have been put in for a year or so, the market will inevitably come back to the previous selling threshold and test that Resistance line. Resulting in the property we purchased at $1,075,000 regaining the value back to $1,400,000.
Purchasing power has been slashed by 20% due to the stress test.
Example pre stress test approved Mortgage buying power = $1,400,000
Example post stress test approved Mortgage buyer power = $1,120,000 loss of $280,000
Properties have not yet dropped to the point where the stress test affects have been nullified. Choices are either to change the asset class to be able to purchase, move out of the REBGV or simply wait it out until the affordability equals out.
Due to the stress test instead of picking up the total 26% of buying power you are left with the 6% net gain. From the 100% purchasing price of 1,120,000, you receive a discount of $45,000 of the total $325,000 price drop.
Once the reality set in of the new normal with extremely high levels of inventory compared to the past 5 years. The public and the media will report that the area of Greater Vancouver is in horrible circumstances with low average sales prices along with the relatively high numbers of foreclosure proceedings.
Eitel Insights Featured on Vancouver Real Estate Podcast
Will the average home price in Greater Vancouver double over the next decade? Dane Eitel thinks so. And if it does, this will not be the first time Dane has successfully forecasted Vancouver’s real estate market. Dane joins Adam & Matt of Vancouver Real Estate Podcast to discuss his methodology and confidently charts not only his prediction of a short-term market collapse but also a market resurgence that will take Vancouver into the stratosphere with major urban centers like New York & Hong Kong.
Dane Eitel of Eitel Insights featured on CKNW News 1130
Eitel Insights Founder and Lead Analyst Dane Eitel, shared his analytical analyses with the listeners of News 1130 while touching on his previous predictions and how the stress test will effect those still trying to get into the market.
Eitel says it’s difficult situation for first-time home buyers and those looking to move up in the market. For the rich, it’s not a big deal. It’s for the guys that are coming into the condo market trying to move up. They’re legitimately stress tests. To put a cap on this market and bring the prices down was for those people to be able to purchase.
“If you’re qualified for $1.2 million pre stress test, that has knocked you down to $960,000 post stress test. Prices haven’t come down that far yet,” he said. “Once these prices come down, that’s still effectively 94 per cent of the buyer’s purchasing power,” he added.
Eitel warns if first-time buyers don’t get in within a six to 12-month window in 2021, “they might miss this market forever."
Detached home prices will soar after three year slump: Eitel Insights, Featured in Western Investor
As published by Western Investor, Metro Vancouver's current housing slump will last until 2021, but will be followed by dramatic doubling in single-family prices.
Real estate market analyst Dane Eitel, of Eitel Insights: Metro Vancouver's detached prices will slump further over three years, but skyrocket far past previous peak within a decade
A real estate analyst, Dane Eitel, who accurately predicted Metro Vancouver’s housing crash a year ago says the current slump will stretch out for three more years.
Global News | Lynda Steele Radio Podcast
Thank you to the Lynda Steele Show of Global News for having Dane Eitel of Eitel Insights on their CKNW program.
We discussed the Real Estate Market of Greater Vancouver and shared our detached analytical forecast. We believe the market has two divergent trends that will be resolved in Q1 of 2020. We anticipate a break of the 10 year uptrend, due to the powerful and extended nature of the current down trend. Resulting in a 26% correction by Q1 of 2021.
Once again feel free to contact us for additional info.
Feature Article in the Western Investor
Our first published work. At the time of the article submission prices in the REBGV Detached market was 1,830,000 in May of 2017.
As you can see we predicted that the market had topped out and would begin to fall. Most Real Estate market “experts” thought we were incorrect and the overall market was just in a pause and would continue to escalate for the foreseeable future. Our analytics said otherwise. From a narrowing in our proprietary Supply Demand Study and a triple top technically speaking we knew prices would begin to see a decline.
Time since has proven that our analytics can predict momentum in any market and offers actionable intelligence.
Contact us for additional information