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danny
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Re: Vancouver Housing Market Implodes:

Sun Sep 04, 2016 7:46 pm

Not sure I follow you Geyser. Monthly average sales price is not an accurate gauge of what is happening to an average home, especially during the summer when sales volumes are low. Way too noisy and skewed. I like Yatkowsky's blog and follow it, but I'm not sure how you're using it to make a point.

For better or worse, the REBGV benchmark price is the most accurate metric out there for assessing how prices are moving each month. I'm sure you must know this, you seem to be very intelligent for the most part. PS - I've seen a lot of your posts about REBGV benchmark price paranoia, so please don't link to other posts or quote them for my benefit. 
 
Geyser
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Re: Vancouver Housing Market Implodes:

Mon Sep 05, 2016 12:14 am

danny wrote:
Not sure I follow you Geyser. Monthly average sales price is not an accurate gauge of what is happening to an average home, especially during the summer when sales volumes are low. Way too noisy and skewed. I like Yatkowsky's blog and follow it, but I'm not sure how you're using it to make a point.

For better or worse, the REBGV benchmark price is the most accurate metric out there for assessing how prices are moving each month. I'm sure you must know this, you seem to be very intelligent for the most part. PS - I've seen a lot of your posts about REBGV benchmark price paranoia, so please don't link to other posts or quote them for my benefit.


Did you actually read what Larry so courageously posted?  They appeared to me to be the words of a genuine guy who is in the real estate industry for the long term, who is concerned about the financial well being of his clients and who is giving his honest opinion of the current situation, regardless of how it might upset those who continue singing from the industry hymn book.

Here it is again, pay attention to the heading and, if you really do believe that the so called "Frankennumber" or "Benchmark" prices are representative of current market activity, at least read his second paragraph which focuses on the lack of buyers. The point I was trying to make was that the SFH market has evaporated in every neighborhood in the city, most of the buyers have disappeared as supply edges upward and "average" prices tumble.

Chaos

In July 2016 the average price for a Vancouver detached was recorded at $1,764,682. In less than a month (post Tax proclamation), the average price gain over the year of approximately $300,000 has been wiped out. August 2016`s average price for a detached home flat lined at $1,470,265 to settle below August 2015`s average price of $1,474,475.

While that price drop is worrisome more critical is that the number of sales has tanked to 44% below August 2015. Price is one thing but when there are no sales you don’t have a market. A certainty rests in this dramatic lack of sales. Should it continue future market predictions become more tenuous than ever. More curious will be the evolution that is about to take place. What will be the result from the multiplier effect of this drop in price and sales?

I suspect that you may be a realtor so I will respect your request to avoid posting the numerous embarrassing links to how the "Benchmark" number has been widely ridiculed and discredited, but seriously, do you honestly suggest it gives an accurate assessment of the last few months of activity? If so, are you aware of how that number is manufactured? Are you aware of how it conceals market volatility? Are you aware of how far behind it lags as an indicator of market trends?

I don't know if the long awaited price collapse is already upon us or if it will come later, but the recent dramatic drop in sales numbers and the several months of declining SFH prices across the city do strongly suggest that the big correction may have finally arrived.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
eyesthebye2
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Re: Vancouver Housing Market Implodes:

Mon Sep 05, 2016 10:28 am

Larry doesnt care what direction the market goes, he cares about commissions. And he's pissed at the govt for "fiddling" with his livelihood.
The market is in a pause. When sales begin again we'll able to see what direction its taking.
Larry's own words, "when there are no sales you don’t have a market".
Should be interesting.
 
Geyser
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Re: Vancouver Housing Market Implodes:

Mon Sep 05, 2016 1:24 pm

eyesthebye2 wrote:
Larry doesnt care what direction the market goes, he cares about commissions. And he's pissed at the govt for "fiddling" with his livelihood.
The market is in a pause. When sales begin again we'll able to see what direction its taking.
Larry's own words, "when there are no sales you don’t have a market".
Should be interesting.

I expect that a well established guy like Larry can make his commissions in just about any market. Obviously it's harder in a falling market but some sales still occur and it's the folks with solid reputations who will survive. I believe that's why he routinely calls the market as he actually sees it and does not slavishly regurgitate the industry propaganda.

The fact is that average SFH prices have been tumbling since February and sales numbers have collapsed across the entire Metro area. This all started happening well before we even got any hint of the new Crash Tax.  I can understand his irritation at a politically motivated tax which will probably add to the rapidly growing fear and negativity about our real estate market. They knew the market was already correcting but they needed to appear to be doing something. 
As you say, this "should be interesting".
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
danny
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 2:55 am

I read the post by Larry. The portion you quoted related to sales prices, rather than volume, which is what I addressed.

I'm not a realtor. I asked that you not post your many links to save you a bit of time. I'd hate to be the one responsible for another half hour of yours on RET.

I think it's endearing that you find Larry's post so courageous. The guy's probably cleared $500k/year during this bull run, and now he's complaining in lockstep with his organization about the new tax. Courage.

My view is that a correction is good for the market. But my point in this thread is that sales mix is the reason for the magnitude of drop in average pricing MoM. The reason for the magnitude of the sales volume drop is the new tax. Not as sexy as the wild headlines, to be sure.

The benchmark price is generally accurate. My city and housing class showed a small price decrease. That actually surprised me because the couple sales I saw were records. And that's why benchmarks are helpful. They take in the benefit from a large historical sample and place today's sales in context, to help us see past the limits of the "eye test" and issues with short term noise.
 
jimtan
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 9:52 am

I beg to defer. Yes, the benchmark price is usually a better indicator of the current price level. However, the quickly moving average price may be the better indicator of a trend; that is the future price.

This is particularly true when the market is gaping up or down.

As the high end market has led the general market up, the high end will lead the market down once the game has changed. The 15% foreign transfer tax is surely a game changer.  :?:
 
eyesthebye2
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 9:58 am

jimtan wrote:
I beg to defer. Yes, the benchmark price is usually a better indicator of the current price level. However, the quickly moving average price may be the better indicator of a trend; that is the future price.

This is particularly true when the market is gaping up or down.

As the high end market has led the general market up, the high end will lead the market down once the game has changed. The 15% foreign transfer tax is surely a game changer.  :?:


The avg price is useful. A decline like now tells us that if the benchmark is largely unaffected, then the top end of the market is seeing big price corrections. It says more about high end properties, and absolutely nothing about affordability.
 
reallyreal2
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 10:00 am

The benchmark number is a bogus number.

Average is much better.
 
VanBullBear
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 11:15 am

danny wrote:
The benchmark price is generally accurate. My city and housing class showed a small price decrease. That actually surprised me because the couple sales I saw were records. And that's why benchmarks are helpful. They take in the benefit from a large historical sample and place today's sales in context, to help us see past the limits of the "eye test" and issues with short term noise.

I don't believe this is accurate. The Benchmark price does not put into account historical data. It is "generally accurate" for typical homes - but the data is inherently a lagging indication of market conditions.
The Benchmark price is based on what CREA deems as a "typical" home. What this means is that they FILTER OUT the raw data from the extreme high end and extreme low ends of the market before applying their calculations to further smooth-en the data. Every time you apply a filter (or smoothening) to a raw signal (sales price in this case), the resulting signal (Benchmark) will always lag in comparison to the raw. This is inherent to filtering, because you are excluding actual market data that you consider as "noise".
The benchmark is a smoother and more accurate view of the market regarding "typical" homes, however it lags the true real time market data much more so than an average signal. I'm not saying it isn't useful, it's just not a good tool for trying to predict market turns because of it's slow nature.
The average price is a "faster" indicator because it just takes in the raw data (sales price) and gets the average out of it. It does not care if the sales were made at the high , middle or low end, the data is used in calculating the average. While the average is faster, it is also more susceptible to noise. A couple of sales in the extreme ends of the spectrum can shift the average signal. I would use average if I'm trying to predict market turns early. Note that predictions are probability based, just because an indicator such as an average indicates what is MORE LIKELY to happen, it cannot indicate what will happen.
To apply these two concepts to the Vancouver real-estate - the theory of trickle down effect is a perfect case to use. The trickle down effect claims (let us assume it is for this example) that high end houses are being bought out at high prices above the market which pushes out higher income individuals to purchase houses one step below. This ripples down all the way to the low end homes which results in overall higher prices. At the beginning of the trickle down effect when prices were going up from high end purchases, it is apparent on the average chart right away whereas the benchmark chart is not affected because it filters out high end purchases. Over time, as the trickle down effect works its way through the system, it's effect becomes more and more apparent on the benchmark curve.
If you compare the average signal curve to the benchmark on equal time frames, you will see that they follow the same trend with the benchmark lagging by about a year.
As a disclaimer - I'm not saying that the crash is here or that the crash is coming by my comments above, however; there are indicators such as average, volume decline in addition to fundamental changes (15% tax) that suggest that a market turn in benchmark prices is happening or likely to happen. Please keep in mind that nothing is 100%, indicators are used to get an insight on what is MORE LIKELY to happen based on probabilities against historical data.
 
reallyreal2
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 1:23 pm

Excellent post.

On point from top to bottom.
 
Geyser
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Re: Vancouver Housing Market Implodes:

Tue Sep 06, 2016 5:01 pm

Thank you VanBullBear, your explanation was clear, accurate and unbiased. The Benchmark Price can be useful for looking back at the last few years and seeing a graph without all the short spikes.

In response to the flawed claims that the plunge in average sale prices has been caused by a lack of sales at the "high end". I don't think anybody considers the East Side to be a "high-end" market when similar houses there typically sell for more than double the price. This begs the question of whether or not the East Side was unaffected. Let's see:

Vancouver East:
Total Sales
August 2016 Detached Sales: 47

August 2015 Detached Sales: 154

August 2010-2014 Detached 
Average Sales: 122

There were 53 price reductions this month.  Median sales price dropped to $1,450,000 down $100,000 compared to July. Saretsky/Davidoff index has found a 5% drop in prices since July 2016.

http://www.vancitycondoguide.com/detach ... et-august/

As for the new Crash Tax being responsible, SFH average prices were tumbling across the City months before the tax was sprung on us.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
tdma800
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Posts: 2977
Joined: Wed Jan 23, 2008 9:12 am

Re: Vancouver Housing Market Implodes:

Thu Sep 08, 2016 9:21 am

eyesthebye2 wrote:
jimtan wrote:
I beg to defer. Yes, the benchmark price is usually a better indicator of the current price level. However, the quickly moving average price may be the better indicator of a trend; that is the future price.

This is particularly true when the market is gaping up or down.

As the high end market has led the general market up, the high end will lead the market down once the game has changed. The 15% foreign transfer tax is surely a game changer.  :?:


The avg price is useful. A decline like now tells us that if the benchmark is largely unaffected, then the top end of the market is seeing big price corrections. It says more about high end properties, and absolutely nothing about affordability.



Its so dot on that its not even funny.  The sales dropping are from the high net worth side.  In addition, just abuot every tom d1ck and harry knows  Killarney, Collingwood, and so on is a sales area where the situation is very high end, in many cases exceeding the so called Main Street dividing line.   Just look at kingsway  lol
 
eyesthebye2
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Re: Vancouver Housing Market Implodes:

Thu Sep 08, 2016 10:59 am

sales continue to be scant.
As I mentioned, a couple more months of this, and without a reduction of inventory and we're going to see some noticeable discounting.
 
Geyser
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Re: Vancouver Housing Market Implodes:

Thu Sep 08, 2016 12:15 pm

eyesthebye2 wrote:
sales continue to be scant.
As I mentioned, a couple more months of this, and without a reduction of inventory and we're going to see some noticeable discounting.

Agreed, it's already clearly happening.
In fond memory of Taipan, a model of modesty, decency, dignity and tolerance. Long may we all prosper from the tremendous legacy of worldly wisdom and specialized real estate knowledge which he left in the "Arguments" thread.
 
reallyreal2
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Joined: Fri Jun 03, 2016 11:30 am

Re: Vancouver Housing Market Implodes:

Wed Nov 23, 2016 4:55 pm

Look out below... sales way down...prices way down... nobody is buying.

realtors will try to tell you otherwise but nobody believes them anyways....  :lol:

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