Greater Vancouver Real Estate Market: November 2013

Home sales and prices have remained steady and balanced and consistent and, well … average. Just as they have been since July. You could almost go back to last month’s Greater Vancouver Real Estate Market report, cross out “October” wherever it appears and substitute “November.”

Okay, maybe not. It was November, after all, and sales and listings tend to undergo a seasonal slip. But basically, November was a month of no surprises.

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Sales and Listings

Once again, Greater Vancouver sales closely followed the 10-year average, dropping to 1.2 per cent under.

As you can see from the chart, even these middle-of-the-road sales numbers blow out the dismal 2012 results. That’s been happening all year, so don’t get too excited when you read Tweets and headlines about double-digit y/y sales increases; 2012 was a year of 10-year lows.

November’s MLS home sales in Greater Vancouver stood at 2,321. Of those, 969 were apartments, 926 were detached houses and 426 were attached homes.

At month’s end there were 13,986 Greater Vancouver homes for sale, down 12.8 per cent from October.

What’s Up, What’s Down – At a Glance
 Nov 2013 / Oct 2013 Nov 2013 / Nov 2012
Overall Sales -12.8% +37.7%
- Detached -13.1% +47.2%
- Townhome -14.1% +38.8%
- Apartment -11.7% +29.2%
New Listings -24.8% +17.7%
Current Listings -8.3% -10.9%

New listings dropped, as they generally do in November, but they were still 1.5 per cent above the 10-year average for the month. A total of 3,245 homes hit the market, which is 1,070 fewer than in October, a decline of 24.8 per cent. But sales dropped only 12.8 per cent. With low inventory and okay sales, listings were getting snapped up. In all urban areas within the REBGV region, the sales-to-new-listings ratio saw healthy increases for all housing types from the previous month.

As for the sales-to-active-listings ratio, it stayed above 15 per cent in November, just as it has done since March. At 16.6 per cent, it still indicates a market where supply and demand are in balance.

In December, the number of homes for sale will drop off steeply as the holiday season distracts sellers. New listings plummeted by 50 per cent from the previous month in December of both 2012 and 2011. Despite the entrenched belief that this is not a good time to sell, it has many advantages. With less competition, it’s easier to stand out in the market. Realtors are less busy this time of year as well, so they’ll concentrate on the listings they do have.

Benchmark Price (MLS® Home Price Index)

Benchmark prices held steady in November and now are about 1 per cent higher than a year ago.

Greater Vancouver MLS® Benchmark Prices % Change
 Nov 2013Oct  2013Nov 2012
Detached $924,800 +0.2% +1.1%
Townhome $458,000   0.0% +0.8%
Apartment $367,800 +0.6% +0.8%

Affordability is always a concern in the Greater Vancouver market, and with good reason. In its latest Housing Trends and Affordability report, RBC Economics identified what it calls “two-tiered affordability,” i.e., the difference in affordability between the single detached house and the condo:

Even though affordability of all housing categories remains within manageable levels overall in Canada, single-family homes represent more of a stretch for home buyers than they have historically, whereas condo apartment affordability is closer to its historical norm.

The emergence of two-tiered affordability conditions nationally mainly reflects the situation in Canada’s three-largest markets. Strong demand for, relative to the supply of, single-family homes in desirable locations in Toronto, Montreal, and Vancouver, in the past several years, generally applied consistently more upward pressure on prices for these categories than for condos, which represented the fastest-growing source of new housing units. In effect, single-family homes have become more of a luxury in these top markets that proportionally fewer households can afford. Because of their growing availability, condos remain much more within reach for typical households who are looking to own.

Here’s a look at how the divergence has grown.

MLS benchmark prices for single detached houses in the REBGV region range from $461,300 in Maple Ridge to $2,095,500 on 

Vancouver’s west side. If you eliminate the small outlying markets (Sea-to-Sky, Sunshine Coast, Gulf and Bowen Islands, Maple Ridge, Pitt Meadows), the lowest you’ll pay for a typical house is $550,400 in Port Coquitlam. In Burnaby North, Burnaby South, North Vancouver, West Vancouver, Richmond and Vancouver West—you’ll pay over $900,000.

Benchmark condo prices in those same six markets range from $346,700 in Richmond to $581,700 in Vancouver West. 

RBC Economics bases its affordability index on “the proportion of median pre-tax household income that would be required to service the cost of mortgage payments (principal and interest), property taxes, and utilities.” For Greater Vancouver homes it calculates that owning a bungalow would require 84.2 per cent of average household income, and a two storey house, 87.4 per cent. A condo takes a much smaller bite of household income: 41.9 per cent. These figures are “significantly above their long-term average” and the highest in Canada by far.

Condos account for 23.2 per cent of all housing in the Vancouver census metropolitan area (all of Metro Vancouver), according to the 2011 Household Survey. And of all new housing built here, 47 per cent is now condos. For many owners a condo is a lifestyle choice because of the urban location and access to amenities and transit. For many others, it’s the only affordable option, so there’s no choice involved. Either way, condos continue to change the face of  Greater Vancouver.