Vancouver Home Sales Crash 23% In One Month As Prices Tumble

Tyler Durden's picture

Last week, following the recent dramatic decline to slam the Vancouver housing market after a 15% luxury real estate sales tax aimed at foreign purchasers, ground the local market to a halt, we reported that China's angry consul general to Vancouver lashed out at the local government for finally bursting a housing bubble which doubled Vancouver real estate prices in the past decade.

"Why a 15 percent tax? Why now? Why this rate? What’s the purpose? Will it work?" Liu Fei, China’s infuriated consul general in Vancouver, said in an interview with Bloomberg. "The issue is how to help young people afford housing," she added. "I’m not sure even a 50 percent tax would solve the problem."

 

Arguing that the tax would halt the influx of hot Chinese money into Vancouver - which many have claimed is the reason for Vancouver's stratospheric housing prices - Liu said that "this is a big country with a small population. It needs immigration to grow the economy." The implication was that absent a hospitable housing market where Chinese hot money launderers can park their cash, it is Canada that would suffer.

Whether or not the conflicted Chinese consul is correct, remains to be seen, but for now one thing is undisputed: the Vancouver market is being roiled as the latest numbers from the Real Estate Board of Greater Vancouver confirmed. In August, the board reported that Vancouver home sales fell 26% from a year earlier, while prices slid as the 15% tax crimped demand. Compared to July, sales tumbled by 23% to 2,489 transactions. Detached properties were hit hardest as sales dropped 45% from a year
earlier. Transactions of attached homes such as town-houses dipped 25%
and apartment sales were down 10 percent.

 

Meanwhile, the average price of detached Vancouver properties crashed, dropping 17% on the month, and 0.6% on the year, to C$1.47 million ($1.13 million) in August, the lowest price since September 2015.

Dan Morrison, president of the real estate board, said in the press release that Friday’s data show the tax “appears to have added” to a slowing trend that started several months ago by “reducing foreign buyer activity and causing some uncertainty amongst local home buyers and sellers."

“It’ll take some months before we can really understand the impact of the new tax. We'll be interested to see the government's next round of foreign buyer data", Morrison said adding that there’s an “imbalance between supply and demand in most communities", with the supply clearly overwhelming demand.

Needless to say, the realtor's group opposed the tax after it was announced as it also applied to pending transactions, leaving many buyers shouldering an unexpected tax and sellers with scuttled deals. He said in the statement the board is seeing fewer detached home sales, particularly in the highest price points.

As sales slow and prices cool, new listings of properties increased only slightly from last year, rising 0.3 percent. “What we’ve seen in August is mostly buyers going on the sidelines, either being forced onto the sidelines because they were cut by the sales tax and decided not to proceed with sales, or folks out there saying ‘let’s see how the dust settles,’” Robert Hogue, senior economist at Royal Bank of Canada, told Bloomberg. “So far we haven’t seen necessarily a flood of properties being listed on the market."

One look at the chart above, however, and what is so far only a trickle will become a flood shortly as local sellers "on the sidelines" realize just how big the drop now is.

Meanwhile, the bursting of the housing bubble is bad news for the local government: as the city cools, governments of all levels are deriving the biggest share of their revenue from housing and related activities, about 17%, in about two decades, according to a National Bank of Canada report this month.

Worse, the August swoon is just the beginning: the city is still the least affordable in the country. As reported previously, roughly 90% of a typical family’s income goes to service a mortgage and pay property taxes and utility bills in Vancouver, double the national average, according to a Royal Bank of Canada second-quarter report. The benchmark price of all housing types, a custom measure used by the real estate board which excludes some properties, showed the price of a home on that measure increased 31 percent from a year earlier in August to C$933,100.

If the Vancouver bubble has indeed burst, keep an eye on the blue line in the chart above whose rate of fall is only set to accelerate.

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Smegley Wanxalot's picture

This can't be true. Barack Obumblefuck tells us all the time that economies need more and higher taxes so that they can thrive.  And more regulation too .... markets love regulation and taxes.

roxyNL's picture

Please attach your belts !

what's next, soft or hard landing ?

Canada has a total fertility rate of 1.6 , at that rate it means that it's loosing 20% of its population every generation. Self-destruction : that's western civilization greatest achievment !

Backin2006's picture

So blatant. Basically China's purpose is to populate 'underpopulated' Canada with Chinese people. Anyone thought to consult the First Nations about this? Since Bible times having foreigners repopulate your land was always a punishment from God. All that's changed is that now we're expected to celebrate it as a good thing!

y3maxx's picture

Price avge has dropped because of the high end drop in volume sales.

Under 2.25 million price still strong.

Event Horizon's picture

ZH is and has been part of the "short & distort" crowd on Vanouver RE for many years, planted propaganda.. and trolls

Vol down compared to Aug 2015 which was extremely high vol.  2016 Aug vol close to long term average even with new tax shock, prices still up 30% over Aug 2015.

High end vol dropped first half Aug after new tax picked up to long term average in second half of month, Average sale price down because high end was pulled forward to beat tax, unit prices are not.

Seasonally, the fall usually has a slight pickup but March-May are the big RE season..  << That will be the tell for the direction of Vancouver RE market..  IMO, If the FED starts easing next year then Vancouver RE continues higher.. if tighten goes down..

Takeaway,, too early to tell, watch the FED

 

 

 

 

 

Lost My Shorts's picture

Blah, whatever.  Another "crash" from incredibly ridiculously high to just ridiculously high.  Crashes ain't what they used to be.

Event Horizon's picture

it hasn't crashed, unit prices are not down, not yet,,  these ZH pieces are just like FED propaganda...  PRINT AND DISTORT 

Laowei Gweilo's picture

wow Zero Hedge.... i can't believe you fall with real estate propaganda 

housing prices in VAN are NOT crashing... in fact they INCREASED.

what did crash was luxury homes... which happens when volume crashes and a few > $20million  houses sell for a few million less -- luxury average price swings a lot more because a handful of ultra mansions skew the average 

but that's isolated to luxury housing

the AVERAGE price of ALL housing in Vancouver is actually INCREASED 4.9%

and even average of ALL detached housing increased 4.2% over the last 3 months

i suggest you read these two articles:

http://www.cbc.ca/news/canada/british-columbia/vancouver-real-estate-1.3...

http://www.cbc.ca/news/canada/british-columbia/26-slump-in-vancouver-rea...

and stop peddling the fear mongering of Vancouver real estate agents

 

beemasters's picture

This price crash is way too soon!! I wish we could blame the Chinese longer. Hmm...can we blame them for the crash? Can we? Can we?

Not My Real Name's picture

If the Vancouver bubble has indeed burst, keep an eye on the blue line in the chart above whose rate of fall is only set to accelerate.

Wait ... The line is already dead vertical. Does that mean if the rate of fall accelerates any faster we'll start traveling backwards through time?

golden kafir's picture

you mean like the ahousaht 1st "nation" who speak a form of ancient Korean ?

pitz's picture

First nations are consulted 'ad nauseum'.  Entire armies of primarily white lawyers in Vancouver sue all levels of government seeking 'justice' (and big fees).

U4 eee aaa's picture

according to old testament law being borrowers and not lenders as a nation is said to be a cursed land, not a blessed one (at least for Israel but I'm pretty sure the principle applies to every nation). We have been in the pit for a long time

Son of Loki's picture

The only local people who can afford a house there are the old timers who bought long ago and are moving sideways or slightly up. Of course, the other people buying are Chinese and Indians who are moving their Loot out of their home countries as far away as poss from their own gubmints.

 

None of the young Canadian people can afford these $$Million$$ houses on their salaries.

847328_3527's picture

There's a TV show that shows what you'r esaying perfectly, something like "List it or leave it.'

 

I was shocked to see the high prices on those old shacks! Plus, all the people involved are in their late 50's or older who bought the present house 20-30 years ago and now their house has been pushed up to $1-2$ million so they consider moving to another house (also about $1-$2 million) or renovating.

 

There are No Young Canadians who can afford this price.

SeattleBruce's picture

And think about the property taxes.  Crazy! 

pitz's picture

Actually its been mostly dumb speculators (heavily from South Asia, not China) and the odd stupid local with some money from the folks buying.  "Chinese" participation is quite minimal.

The Real Tony's picture

The only thing driving the price of real estate in ALL of Canada is Chinese money. There's a spillover effect throughout the entire country from the cities the Chinks buy into. That being Vancouver, Markham, Unionville, Richmond Hill and Stouffville. To a lesser extent Sutton. That's the reason for the insane housing prices in Canada.

Abitdodgie's picture

"20% of its population" simple answer to that refugees and lots of them.

cognitive dissident's picture

too many pillow-biting fags in Toronto alone account for this, whatever, too many mouth-breathing/phone-staring bags of water on the planet as it is, but that won't be a problem much longer.

Dubaibanker's picture

 

Most of North America along with the entire world's top cities are in a classic free fall in real estate!

Vancouver was the longest rising market and is one of the last ones to fall!

The fall in Canada will be epic this year and next!


Vancouver home sales hit four-year low in wake of foreign-buyers tax
CorporateCongress's picture

That's how it should be... Nature rebalances. It's unnatural / impossible to grow forever. We could do with a lot less people... And no we don't need to solve it with refugees. We only need to stick it to the elites holding debt papers...

Bwana's picture

It is the federal or central governments that are causing the economic hardship that is collapsing economies and causing families to limit their children. It doesn't matter whether the money is fiat or gold and silver. If the government takes too much of what the people earn, the people cannot afford "new things" or additional children or any at all.

What Canada, Japan, Italy, the US and all the other governments that have declining populations and economies cannot seem to understand is they have taken and are taking too much of their citizens money. People can't spend what they don't have to keep the economy running and they won't have children they can't afford to properly house, feed, clothe and educate. 

Surveys show 60% of the households in America are $15,000 in debt, living from paycheck to paycheck and can't cover a surprise debt of $400. Our stupid government that observes this wants them to go buy stuff to keep the economy moving. With what! Where do they get the money? The stupid government wants them to have another child, that child will cost them about $200,000 by the time the child is on their own. That's about $800 dollars a month for the next 21 years. Re-read the first sentence in this paragraph.

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Catullus's picture

Canadians: no problem that can't be taxed.

Nice to see the Vancouver housing market is as volatile as junior mining stocks. But at least junior mining stocks are liquid enough to sell!

jcaz's picture

Yep, Mr Wang is gonna love it when he finds out that 23% of the money he's laundered is now gone-  "But... But... It's real estate, how can I lose money????"

Laowei Gweilo's picture

to be fair, if you look at listing to sales, scarcity is high and demand is higher than supply...

it's actually rather liquid and you could sell (at a price higher than 3 months ago too based on the data that ZH chose not to highlight) pretty easily.

Kohiba's picture

"this is a big country with a small population. It needs immigration to grow the economy."

Fuck off and die.

golden kafir's picture

And we need growth to feed the pension ponzi, meanwhile in nearby victoria http://www.timescolonist.com/business/victoria-real-estate-sets-record-i...

TradingTroll's picture

Yeah, they should be buying in the Yukon then. Yukon has lots of land, no 15% tax and they need immigrants.

The Real Tony's picture

The problem is the immigrants. Just like the Pakis destroyed all of England the Pakis and Chinese destroyed Canada.

2banana's picture

23% decline x 40:1 leverage = ????

Either misery and bankruptcy or bailouts for the chosen few with connections.

Son of Loki's picture

What about the Eskimos?

Rock On Roger's picture

They play the Stampeders on Monday.

Winston Churchill's picture

Lets just see another months data first.

The price decline is 17%, the new tax on foreign buyers is 15%.Not a co-incidence, or just one ?

Time will tell.!5% isn't really enough to discourage foreign buyers, try the 700% thay charge in the

Channel islands.It took them a long time to find a tax rate before setting that one, that keeps the locals still

able to afford their own real estate..

DeeZ_nutZ's picture

chinks should pull the putin on the stupid canadian ass and declare people's republic of british columbia.  citing some bullshit reason like - you are fucking with our real estate, protection of chinese speaking population, this lands always was chin?se a thousand years ago, etc.  canada has no military, no airforce (30 old ass f-18 don't count) and no navy.  however, canada has a beautiful prime minister and A LOT of homosexuals, so they all can display a glorious "let's suck each other off and bumfuck your buddy" show and try to disgust the commies to the point that they will just run in shock....  however this might not work.  i guess let's just suck eachother off then, since there is nothing better left to do.

PavlovPup's picture

Listen Deez, we have all the gay guys we need, maybe just try grinder.

 

Rock On Roger's picture

You go ahead and get started.

Show us how it is done, sounds like you're an expert sucker.

RamzaBehoulve's picture

I don't want to sound arrogant or anything. But unless you are plaining to move or you are a speculator. Why would you care about the value of your house crashing? You are living in it, it's your home, unless you majorly fuck up and end up with massive debts, nobody will take it away from you, you'll always have something above your head.

Funn3r's picture

If you paid 100 but now it is only worth 50 then the difficulty is that you probably borrowed 85.

No problem if you're sure you will never move and sure you will always have a job. Oh and if you are sure that interest rates won't rise and double your monthly payments. But those are a serious collection of "if"s. 

MASTER OF UNIVERSE's picture

High end NYC Real Estate has crashed along with high end in Miami, SF, Houston TX, et cetera. Vancouver & Toronto have to melt down given disposable income across the board. Money laundering is not going to prop these markets up forever, eh. Clearly, Cocaine built Miami & New York shitty, but few can afford Cocaine given disposable income losses on average throughout the population. What is telling is that witout money laundering from drugs, and Corporate Crime, only Investment Bankers can afford to buy all the high end Real Estate. This means that John Paulson & Henry Paulson must buy at least 1000 high end Single Family Homes/Mansions for the status quo to be maintained at break even levels. And we all know that they will need to purchase fleets of cars & trucks to park in their investment properties. This will keep Ford & GM maintained for sales given the drop of late.

SeattleBruce's picture

Wow, sounds like the ghost towns in China.  Can't drive an economy for long like that.  Anyhow, the house of cards/jenga tower is starting to fall.  Can only put so many cards on top, or remove so many jenga beams before collapse.

Abitdodgie's picture

Ive been keeping an eye on the LA market and my old house in Venice peaked at 2.1 million in Feb 2016 it s now at 1.85 million down $ 64,000 n the last month , I see part two of the housing crisis starting in a couple of months.

Consuelo's picture

 

 

+100

 

It happens 'quietly', as the people who can smell it coming get the for-sale signs up and cash out early.   i think you're right - a few more months and this contagion gets to ragin'...

xerxiesx's picture

Well taxes don't affect demand so there must be some other reason.

SeattleBruce's picture

Well, if you expected a year 1 return of 15-20%, and had to pay 15% to BC, it sure would hurt your year 1 ROI.

steelrules's picture

Canada's housing bubble is bursting, at what point will our banks be demanding our government bail them out of bad mortgages?

I also theorize the fire in Fort McMurray was a banker bail out of sorts, as the oil collapse also collapsed house prices by 20%.