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UBS RE Bubble Index

2/28/2019

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While we wait for the February real estate data to come in, here is the latest UBS update to their real estate bubble index.

Not many surprises; we have been seeing these cities appear on the most expensive lists for sometime now.

My Demographia file has been tracking these cities since 2005.

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Vancouver, whose house prices accelerated to a double-digit rate relative to last year, has a ballooning index score. Higher stamp duties for foreign investors proved futile in braking its boom. By contrast, Toronto’s price dynamics have slowed considerably and its index score declined somewhat from last year’s. In both cities, valuations have trended upward since the late 1990s. Neither the financial crisis nor weakening commodity prices has dragged them down. But rising rates, stricter market regulations or an economic downturn could turn the lights out on the party given the high valuations and strained affordability.
2018 UBS Global Real Estate Bubble Index PDF

Vancouver is like NY Again

2/13/2019

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Remember when Vancouver real estate prices were defended by making comparisons to New York City housing prices?

It looks like we can make those comparisons again. For price drops see MyRealtyCheck.ca

The chart to the left is from Wolf Richter February 11, 2018, and he notes that:

The higher the price, the harder it gets:
Homes listed at less than $1 million: 45% failed to sell.
Homes listed at $1 million or more: 61% failed to sell.
Homes listed at $5 million or more (656 units): 79% failed to sell.

Sotheby’s, the luxury real estate brokerage, via BIV.com, January 9, 2019, reports that:

Resale transactions on Vancouver homes over $1 million fell by 26 per cent in 2018, with the slowdown more heavily weighted toward the second half of the year, said the brokerage. This was the third consecutive year of a decline in “top-tier” home sales over $1 million.

In the single-family home sector alone, the annual sales declines were even deeper, down 35 per cent among $1 million-plus homes and 51 per cent among $4 million-plus homes.

High-end condos in the City of Vancouver fared somewhat better but still “gave in to market stressors” in the latter half of the year, said Sotheby’s. Sales on condos over $1 million fell by 14 per cent year over year.

As I have reported from the latest January 2019 data, Vancouver's total residential sales are down 79% since the 2Q 2016 sales peak and months of inventory is pushing 10.

UBS RE Bubble Index

Vancouver is like NY Again

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