How much have Detached House Prices Moved?
Always a heated debate, just what the heck are detached prices doing these days? The truth is, it’s up for interpretation. Some people think the sky is falling, others can’t see the forest past the trees. So let’s get factual.
Detached prices are down, that is a fact. By how much exactly is up for debate. Depending on the metric you use, whether it’s average, median or the MLS Benchmark. I’ve highlighted my concerns with the MLS Benchmark here. Data shows it tends to lag by as much as 6 months behind the average sales price. Which is why most real estate investors and analysts will use the average sale price when studying a market, such as Ozzie Jurock.
As of February 2017, the average sales price for REBGV (Greater Vancouver) is down 3.1% year over year.
Again this is a year over year price drop. So although the average sales price fluctuates signficantly month over month, we have a rolling one year data set which should eliminate any flaws.
The median sales price paints a similar picture. The median sales price shows a 2.4% price drop year over year.
So essentially, as per the average and median sales price, if you bought a detached home in Greater Vancouver in 2016 there’s a good chance you’re selling at a loss today.
And lastly, you have your MLS Benchmark which shows a 12% year over year increase still exists.
So what’s with the big discrepancy? The MLS benchmark is a formula created and published by the Canadian Real Estate Association. From what I understand it takes a 3 year rolling average of comparable properties. The formula takes an economist with a PHD to understand. Here’s the recipe for the secret sauce.
So how does this shakeout?
While a 3% drop from February 2016 to February 2017 for the average and median is hardly something to blink at, for context, from February 2015 to February 2016 the average sales price went up 29%, median went up 35%, and the benchmark was up 27% and that was just for REBGV as a whole.
If we break it down further by area, here’s how it looks:
- Vancouver East Detached Prices off 12% from the peak
- Vancouver West Detached Prices off 13% from the peak
- Richmond detached prices off 7% from the peak
- Burnaby detached prices off 12% from the peak
Call it a crash, call it a hiccup, call it whatever you want, the numbers don’t lie. And so while prices could go up or down this is where we stand today.