experts: real estate column Monday, June 13, 2011

Of Graphs, Giants and Sustainability

We may be forced to question the concept of sustainability based on local incomes and a, possibly outdated, definition of something we used to call affordability.

By Alan  Skinner

A press release of April 28th this year declared the Chinese population to be 1,339,724,852, as of November 1, 2010. An interesting trivia sidebar lauded "the painstaking efforts of about 10 million census workers".

The Real Estate Board of Greater Vancouver has, since 1977, been publishing a graph of the average selling prices of residential property and this is updated monthly. It is this object that I have been gazing at intently for a while trying to come to grips with what has been happening to our home prices in the past 34 years.

The easy part couple inflation (the 'everything costs more' phenomenon) with the laws of supply and demand ('everyone wants a piece of the desirable Vancouver pie and that pie isn't terribly big') and what do you get? Yes, prices go up and, depending on the intensity of that demand, prices go up even more. But, will this "more" continue ad infinitum? Clearly not enter the existence of cycles. Cycles however are not synonymous with the action of teeter-totters or see-saws where amplitude down follows (and equals) amplitude up. The simple fact here is that a cycle, for example, in San Francisco is not in sync with a cycle in Beijing. Likewise, say, Paris and Vancouver. Consider the "detached home" price rise since 2008 to date and the US led worldwide economic crisis. Truly, no sane analyst would espouse a theory claiming that the 73 deg climb in the Vancouver detached graph since '08 could be extrapolated for the coming 10 or 20 years. Clearly not ... or ... maybe, why not?

I'll pose a modern 'fairy tale'. A highly populated "superpower" sloughs off its ultra socialist beliefs and adopts some free enterprise beliefs which over say, 10 or 20 years, leads to the creation of a relatively small, emerging wealthy class of citizens. Let's say this class is a mere one half of 1% of the country's citizenry, but, if that citizenry were a billion strong, or more, that % would be in excess of 5 million individuals with significant buying power. Now, bear with me on this part of the fable ... say that a number of these folk, wishing to distinguish themselves from the other citizenry, wanted to own property in (or emigrate to) another country. Then consider that a prevalent idea among that group was that Canada (and specifically Vancouver) represented an accepting and desirable destination. For as long as that idea prevailed, that demand could have a significant impact on that target city ... just a thought.

Yes, we may be forced to question the concept of sustainability based on local incomes and a, possibly outdated, definition of something we used to call affordability.

Now back to reality (?) and to the 2011 year to date, 5 month results for our North Shore. North Van detached homes sold are up by 33% from the previous year, attached (t/hses) down 3% and apartments down 7% from 2010. Detached average price is 6% higher than this time '10 and inventory May 31st '11, down by 27%. Average prices no change (t/hses) and down 5% (apts). Inventory (t/hse) 21% lower than May 31st '10 and (apt) up 1% from 2010. N/Van overall inventory at May 31st '11is now markedly lower than 2010 and N/Van, 12% higher in total number of sales '10 to '11(1005 vs. 1125).

In West Van, detached number of sales for 2011 is up by 91% from last year. Average price up by 17% and inventory May 31st '11down by 24% from last year. On the condo side sales of attached (t/hses) are lower at 30 vs. 36 units; average price down 13%. Active listings down from May 31st '10 (33 vs. 55). Apartments sold are up 50% over 2010; with average price 10% higher than '10 and active listings down 33% from May 31st '10. Overall markedly lower inventory and strong demand, especially at the upper end price-wise.

Yes, dramatic sales growth in W/Van with shrinking inventory and N/Van, higher sales with inventory starting to shrink.

Again, visit my website to see and "hear" the new developments. I continue my commitment to keep you... www.OnTopOfTheMarket.ca - the "go to" site for North Shore Real Estate analysis and jumping off point for FULL market listing information.

To join those wishing to get the e-mail version of this "update" - send a request now to alanskinner@shaw.ca and you'll be assured receipt; phone me at (604) 988-7368 or visit www.OnTopOfTheMarket.ca




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Recent Articles by this columnist:

Keeping Realtors Honest
Tuesday, August 12, 2014


How well do we stack up?
Tuesday, July 29, 2014


Resistance to change and compliance delay
Wednesday, June 04, 2014


Of urban planning and municipal wisdom
Thursday, April 17, 2014


Yes, it's official - demand is rising
Tuesday, March 11, 2014


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