Did you know that, for 7 months now, westside Vancouver houses have been dropping value at the rate of over $1,000 per day?

Did you know that, for 7 months now, westside Vancouver houses have been dropping value at the rate of over $1,000 per day?

Monday, December 17, 2012
Faithful readers know that the charting of the housing bubble has changed over the course of 2012.

We have seen a dramatic reversal from houses that were selling for hundreds of thousands of dollars over asking price (asking prices which were, of themselves, way over assessed value)… to one where we charted by how much sellers were cutting asking prices (which when cut, were still over assessed value)… to one where properties are listed below assessed value… to where we are now: were we charted the biggest drops below assessed value.

 
That is a MASSIVE change in the market.
 
Does it mean the market has crashed? Nope – not yet.
 
And because it has not ‘crashed‘ yet, many express frustration at where were are. I

In many ways it is like watching a pot boil.  The over all process is not that long, but because we hang on results every day it seems to take forever.

 
When we hear profile properties 40% and 50% below assessed value, some express disappointment that that these are properties many would consider a POS.
 
How quick we are to discount what is happening in the broader market.

Many other properties, like this one at 6139 Dunsmuir Crescent in Richmond, are selling for almost 30% below assessed value.

 
6139 Dunsmuir Crescent is a 5 bedroom, 4 bath 2,,351 sq ft single family house in the prestigious Terra Nova neighbourhood in Richmond.

A newer home, it was assessed in 2011 at $1,470,000.

While on the market this year, the seller dropped the asking price as low as $1,188,888.
6139 Dunsmuir sold last week for $1,060,000… or 27% under assessed value (hat tip to one of the anonymous contributors to the comments section).

We have shown you real estate agents like James Wong who are very honest and upfront about market conditions. They will tell you bluntly – if you aren’t listing for at least 10-15% below assessed value right now, no one is looking at your home.

 
Brand new homes in Richmond are selling for about 30% below assessed value. This is a stunning sea-change from the start of 2012.
 
Let’s look at another set of statistics to put things into context.
 
The peak for the industry’s franken average HPI (Home Price Index) for single family homes on the westside of Vancouver occurred in April 2012.  At that time the HPI was $2,268,500.
 
Last month (at the end of November 2012) that number had fallen to $2,029,300.
 
You may glaze over at those numbers – or dismiss them as still wildly insane – but that’s a drop of $239,300 in 7 months.
 
Single family houses on the west side of Vancouver are losing value at the rate of $34,186 per month! 

Or phrased another way… $1,140 per day! 

 
(hat tip VMD @ VCI).
 
The unwinding of a bubble takes a long time to play out.  In the United States things started to drop in late 2005/early 2006, but the collapse of the housing market really didn’t enter our consciousness until 2008.
 
We are only in the early stages here… but the early stages have already produced some dramatic results.    If those dramatic results continue into the Spring, the next phase of the collapse will kick into gear.
==================================================================================
COMMENT:
Quote:
 We have shown you real estate agents like James Wong who are very honest and upfront about market conditions. They will tell you bluntly – if you aren’t listing for at least 10-15% below assessed value right now, no one is looking at your home.
Brand new homes in Richmond are selling for about 30% below assessed value. This is a stunning sea-change from the start of 2012.
aka ” Chasing the Market ”  down strategy. Mr.  Wong  is being generous….or maybe should be less diplomatic and more blunt. NO EVIDENCE WHATSOEVER of “offers over listing price”….and I have suspicions that the previous boom was  a lie created by dishonest parties, to suck people in. 
If one looks at historical patterns of market cycles…which often look like ” Sine Waves”…it can take 10+ years for the prices to rebound to the previous numerical values after the bubble bursts, excluding inflation.
EXAMPLE: ie the price may have been $400,000….dips to $250,000, then takes 10+ years to approach $ 400,000. Given that, and you must sell….and the market is tanking ……you are in “CUTTING YOUR  LOSS” Mode…..If you bought at $400,000 and the market is tanking, you don’t want to end up at selling at $250,000 (theoretical bottom)…so think and price strategically so that your loss is not $ 150,000.
Quote:
Single family houses on the west side of Vancouver are losing value at the rate of $34,186 per month! 

Or phrased another way… $1,140 per day! 

Deja Vu….I recall in the late 1970’s when there was a major boom…and the average houses were in the high $80,000 range…house price were rising approx. $1000 per week..(I still recall the news feature and bidding wars). Now we have a fiscal deceleration rate which, per day,  far exceeds what most people make in a week.
What is the proverbial bottom ? Anyone’s guess…but I think that the fiscal deceleration rate can reach such momentum  that it can overshoot the real market value. People literally freeze in making decisions…..how will things thaw ?  There are so many variables coming into play for not perhaps a Perfect Storm, but something very close.
Time will tell.
Advertisements
Gallery | This entry was posted in Uncategorized. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s