The Vancouver Market Guessing Game

[rofina]

Hello Everyone.

Lets play a game!

We all love to speculate, pontificate, guess, and sometimes argue.

Its May 22, 2019.

With all the facts we have on hand, status of sales, total listings, trade war, etc, etc. Account for it all as you may.

The questions:

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

2. Where are we in the cycle? Predict a bottom!

3. The long shot - when will YVR RE mark a new high?

Predict away everyone. Ill post mine when I have more time later on.

[jlousa]

Let's see how close my numbers land.

1) end of may2020 numbers down 7.8% from end of may 2019.
2) market bottom between March and June of next year. If I have to narrow it down I would say Jun 2020 is the last month we see decreases this cycle.
3)No numbers so just a shot in the dark I'm going with early summer 2025 before we reach last year's numbers and push slightly past them.

[WarrenC12]

1) Average down 10% (May 2020)
2) Aug 2021
3) Spring 2026

[misher]

Originally Posted by rofina

Hello Everyone.

Lets play a game!

We all love to speculate, pontificate, guess, and sometimes argue.

Its May 22, 2019.

With all the facts we have on hand, status of sales, total listings, trade war, etc, etc. Account for it all as you may.

The questions:

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

2. Where are we in the cycle? Predict a bottom!

3. The long shot - when will YVR RE mark a new high?

Predict away everyone. Ill post mine when I have more time later on.

What I see is a pile of fuel that keeps getting bigger waiting for a spark. A lot of people are holding off on buying but will buy as soon as it seems like the market has hit its bottom and will now recover. The ratio of housing units per a person is getting lower not higher. Interest+unemployment rates are still low and the economy is strong.

Long-term predictions point to rapid price increases before 2025. We just don't know when they'll start.

Liberals may modify the stress test pre-election. Conservatives may modify it post election.

I've seen signs that sales have picked up slightly this month but there still so bad so there's no rush to buy yet. However, sales are still happening at a decent pace, we say slowdown but the market is still decently strong.

The FBT summary trial has ended and thats a wild card depending on what the judge says in a few months.

So I'd say late 2019 we should see price gains. But so much depends on policy rather than the market so who knows.

The numbers are there, the demand is there, I feel we've put a dam in thats holding it back and its just building up now. We have huge government cash injections in BC with LNG, the pipeline, and the coast guard plan. There is a crazy amount of money entering our economy and eventually ending up in peoples hands and there going to want to spend that money on something. People only talk about foreign demand but local demand is huge and we're one of the wealthiest nations in the world so people have money.

The below is a great read.

https://chambermaster.blob.core.wind...esentation.pdf

[rofina]

My shot;

1. Prices on average are down 7% from May 2019.
2. We will see lowest prices before spring 2022, winter 21.
3. New nominal high printed Summer 2026

[rofina]

Originally Posted by misher

What I see is a pile of fuel that keeps getting bigger waiting for a spark. A lot of people are holding off on buying but will buy as soon as it seems like the market has hit its bottom and will now recover. The ratio of housing units per a person is getting lower not higher. Interest+unemployment rates are still low and the economy is strong.

Long-term predictions point to rapid price increases before 2025. We just don't know when they'll start.

Liberals may modify the stress test pre-election. Conservatives may modify it post election.

I've seen signs that sales have picked up slightly this month but there still so bad so there's no rush to buy yet. However, sales are still happening at a decent pace, we say slowdown but the market is still decently strong.

The FBT summary trial has ended and thats a wild card depending on what the judge says in a few months.

So I'd say late 2019 we should see price gains. But so much depends on policy rather than the market so who knows.

The numbers are there, the demand is there, I feel we've put a dam in thats holding it back and its just building up now. We have huge government cash injections in BC with LNG, the pipeline, and the coast guard plan. There is a crazy amount of money entering our economy and eventually ending up in peoples hands and there going to want to spend that money on something. People only talk about foreign demand but local demand is huge and we're one of the wealthiest nations in the world so people have money.

The below is a great read.

https://chambermaster.blob.core.wind...esentation.pdf

1,2,3 please.

[Changing City]

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

I'm guessing GVRD detached will be 6.6% lower in May 2020 than in May 2019, so a benchmark of $1.32 million. I think condos will lose more - 10%, so a benchmark of $575,000.

2. Where are we in the cycle? Predict a bottom!

I wouldn't expect to see any recovery before spring 2021, so nearly two more years falling, but less precipitously than in the past few months.

3. The long shot - when will YVR RE mark a new high?

I would expect at least six years before we reach $1.6 million for detached and $700,000 for condo benchmark prices again.

There are a lot of factors that could make those predictions ridiculous - all of them political, (except the earthquake scenario). Those aren't necessarily Canadian politics - what happens south of the border could throw another huge spanner in the Canadian economic works and see property vales take a much steeper turn down.

[whatnext]

Originally Posted by Changing City

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

I'm guessing GVRD detached will be 6.6% lower in May 2020 than in May 2019, so a benchmark of $1.32 million. I think condos will lose more - 10%, so a benchmark of $575,000.

2. Where are we in the cycle? Predict a bottom!

I wouldn't expect to see any recovery before spring 2021, so nearly two more years falling, but less precipitously than in the past few months.

3. The long shot - when will YVR RE mark a new high?

I would expect at least six years before we reach $1.6 million for detached and $700,000 for condo benchmark prices again.

There are a lot of factors that could make those predictions ridiculous - all of them political, (except the earthquake scenario). Those aren't necessarily Canadian politics - what happens south of the border could throw another huge spanner in the Canadian economic works and see property vales take a much steeper turn down.

I don't even think there will be a marked recovery anytime soon, barring some turn of events that allows a flood of foreign money to return to the market. Instead we will be like Toronto post 1989, where there is a stagnation lasting over a decade, until incomes rise to a point where prices can be justified.

Even if China relaxed rules on capital outflows, there is too much political pressure here now for any sane politician to welcome that money back with open arms.

The city should deal with Boomers whining about their property equity by leveraging it to push for density. IE "You can still get a good price for your SFH if you sell for multifamily development".

[Galaxy]

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

1.4 Million for detached homes and 578,000 for the condo market.

2. Where are we in the cycle? Predict a bottom!

Late 2020 or Early 2021.

3. The long shot - when will YVR RE mark a new high?

4-6 years before recovery to the previous highs.

There is also potential climatic issues where if there are issues with significant migration of people from other places running from droughts and or other issues that could throw a curve ball. I also wonder what will happen as more boomers retire around Canada as I have noticed more of them moving to Vancouver to escape the harsh winters in other parts of Canada.

[Alex Mackinnon]

Originally Posted by Changing City

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.

I'm guessing GVRD detached will be 6.6% lower in May 2020 than in May 2019, so a benchmark of $1.32 million. I think condos will lose more - 10%, so a benchmark of $575,000.

2. Where are we in the cycle? Predict a bottom!

I wouldn't expect to see any recovery before spring 2021, so nearly two more years falling, but less precipitously than in the past few months.

3. The long shot - when will YVR RE mark a new high?

I would expect at least six years before we reach $1.6 million for detached and $700,000 for condo benchmark prices again.

There are a lot of factors that could make those predictions ridiculous - all of them political, (except the earthquake scenario). Those aren't necessarily Canadian politics - what happens south of the border could throw another huge spanner in the Canadian economic works and see property vales take a much steeper turn down.

1. Down another 20+ % next year.

2. My guess is that the slowdown will take about 5 years to run it's course. I think we're 1.5 years in. First the market volumes dropped, then the prices have started to fall. Peoples stupid high leverage mortgages will renew at higher rates, and the myth of housing being a great investment will die. People with money will find other productive investments and not dump 100% of their net worth into housing.

3. 30 years+ indexed to incomes/inflation. I think it will take a long time for people to get excited about housing again. Millennials who were keen are going to be underwater and lose their crap. Boomers are going to be shedding RE to fund their retirement because all their net worth is in their house.

All it takes is one big crash for people to get scared for a loooong time.

[misher]

Originally Posted by misher

What I see is a pile of fuel that keeps getting bigger waiting for a spark. A lot of people are holding off on buying but will buy as soon as it seems like the market has hit its bottom and will now recover. The ratio of housing units per a person is getting lower not higher. Interest+unemployment rates are still low and the economy is strong.

Long-term predictions point to rapid price increases before 2025. We just don't know when they'll start.

Liberals may modify the stress test pre-election. Conservatives may modify it post election.

I've seen signs that sales have picked up slightly this month but there still so bad so there's no rush to buy yet. However, sales are still happening at a decent pace, we say slowdown but the market is still decently strong.

The FBT summary trial has ended and thats a wild card depending on what the judge says in a few months.

So I'd say late 2019 we should see price gains. But so much depends on policy rather than the market so who knows.

The numbers are there, the demand is there, I feel we've put a dam in thats holding it back and its just building up now. We have huge government cash injections in BC with LNG, the pipeline, and the coast guard plan. There is a crazy amount of money entering our economy and eventually ending up in peoples hands and there going to want to spend that money on something. People only talk about foreign demand but local demand is huge and we're one of the wealthiest nations in the world so people have money.

The below is a great read.

https://chambermaster.blob.core.wind...esentation.pdf

I made a mistake and didn't answer the questions.

The questions:

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.
-In 12 months I expect the average price to have gone up around 5-10%. Possibly more depending on what happens, there's a lot of factors. Likely stress test will have been modified or removed, China trade war will hopefully be settled and Meng released, and a few other things look good. However, there's a decent change something bad may happen in the world.

2. Where are we in the cycle? Predict a bottom!
-I'd say we're close to the bottom with maybe 3% more to go down in prices.

3. The long shot - when will YVR RE mark a new high?
Highest prices will happen when the FBT is removed and/or the Liberals regain power for a year. Both are likely to happen but it'll be a while. After either happens there will be a steady rise above inflation.

[GMD]

1. 12 months from today, -9% per GVREB monthly benchmark (e.g. next year same as last year)
2. Bottom: Feb 2022
3. New high - nominal May 2026, real (inflation adjusted) May 2030

But hard to predict since a lot depends on policy. If the central bank drops rates to 0, that will revive the market, most likely. Rate increases could really crush Vancouver. The above is based on no change in the overnight rate from BofC

[misher]

Honestly the market is bigger than the residential market. You’d think you’d see a fall in the commercial market with residential going down and sales have slowed but prices still seem to be stable. That kind of speaks to how strong our economy is.

There’s also large 6.7% gains in the American commercial market over the last 12 months which implies ours should be going up as well https://www.creherald.com/u-s-commer...medium=ios_app

[WarrenC12]

Originally Posted by misher

I made a mistake and didn't answer the questions.

The questions:

1. Where do you see the market 12 months from today? Lets focus on price, that's all that anyone cares. Benchmark, average, whatever.
-In 12 months I expect the average price to have gone up around 5-10%. Possibly more depending on what happens, there's a lot of factors. Likely stress test will have been modified or removed, China trade war will hopefully be settled and Meng released, and a few other things look good. However, there's a decent change something bad may happen in the world.

2. Where are we in the cycle? Predict a bottom!
-I'd say we're close to the bottom with maybe 3% more to go down in prices.

Oh god these are GOLDEN!

[rofina]

Originally Posted by whatnext

I don't even think there will be a marked recovery anytime soon, barring some turn of events that allows a flood of foreign money to return to the market. Instead we will be like Toronto post 1989, where there is a stagnation lasting over a decade, until incomes rise to a point where prices can be justified.

Even if China relaxed rules on capital outflows, there is too much political pressure here now for any sane politician to welcome that money back with open arms.

The city should deal with Boomers whining about their property equity by leveraging it to push for density. IE "You can still get a good price for your SFH if you sell for multifamily development".

1, 2, 3, stake your predictions please.

[misher]

The May 2019 Report is out next week. Anyone want to make any predictions? I’ve seen some people mention that sales picked up in May.

[Changing City]

So we're three months on, and the prices of houses are still falling steadily, and the price of condos hasn't changed much over those three months. In the meantime I found this prediction from a Vancouver analyst, Dane Eitel, published in Garth Ellis's blog. Here are some highlights:

"On Detached house sales and prices:
“The Detached market is still plummeting especially when you take a 1 or 2 year outlook. Eitel Insights sees a tumultuous time still upcoming for sellers, and we anticipate the market to continue lower with a test of $1.400 million in our future. If that price point does not hold we expect the market to sink lower until we see prices of $1.225 million across Greater Vancouver on an average sale price.”

On the condo market:
“With the average sale price of Greater Vancouver coming in at $656,000 the market is down 13% from the peak. We anticipate this price point decreasing over the upcoming years leading to a test of $525,000 a total drop of 30% from the peak. The market will be inundated with active listings, even now the realtors are continually getting emails about assignments sales because developers do not allow their buyers to publicly advertise the listing on the open market. Once the property is completed the market will sharply rise in active listings and with each new month see higher and higher inventory. Eventually leading to the cannibalization of the condo market with new properties selling with warranties and kickbacks the resale market will be forced to lower their prices to see any offers. Thus forcing newer properties to lower their prices and the vicious cycle will repeat until the market bottom likely in 2022.”

[whatnext]

Certainly a bleak prediction for some but it seems reasonable.

[WarrenC12]

It will be interesting to see where condos land. The rental market is still incredibly tight, and if interest rates drop as many expect, there will be a cashflow level that will work for people able to invest.

[rofina]

Originally Posted by WarrenC12

It will be interesting to see where condos land. The rental market is still incredibly tight, and if interest rates drop as many expect, there will be a cashflow level that will work for people able to invest.

There are definitely opportunities starting to pop up.

Rents are strong, rates are trending down, so are prices.

Quite a sweet spot for a long term investor banking on cash flow and not immediate capital appreciation.

I seen a couple units, at 20% down with cash flow after mortgage/maint/taxes.