Evaluate and assess

The story from our last post was the change in market hype. Now, the question in everybody’s mind is of course, how that translates to price changes. To really assess what’s happening to prices, beyond the flawed lagging HPI benchmark, Johnny Oshika and I wanted to compare with assessed prices. By comparing against one fixed point of reference, we hope to be able to answer the following question: Are units, on average, selling above or below their assessment price?

Johnny Oshika and I expanded our search since last post to get records for more cities within REBGV area and even beyond. We have now records for cities we were missing within the REBGV, such as Whistler/Squamish, and also cities outside of the REBGV such as Surrey, Hope and other cities from the Fraser Valley. Our total number of records is now more than 45,000. We will mostly focus our discussions to REBGV data though, as that is our main interest.

For your reference, areas covered by Real Estate Board of Greater Vancouver include: Whistler, Sunshine Coast, Squamish, West Vancouver, North Vancouver, Vancouver, Burnaby, New Westminster, Richmond, Port Moody, Port Coquitlam, Coquitlam, Pitt Meadows, Maple Ridge, and South Delta.

Disclaimer: We did not curate all the data and assume no responsibility for missing points or errors. We just wanted to get a read of the trend in prices. Take any specific information carefully and do your own analysis if you are in the process of making a big decision.

Sold prices vs Assessment Prices

Our question is Are units, on average, selling above or below their assessment price? We compared the sold price to Assessment price from the year it was sold (2018 if sold in 2018, or 2019 if sold in 2019):

Only REBGV cities included

This has the answer to our question. On average, in 2018 units sold above assessment prices, and in 2019 they are selling below assessment prices.

However, this chart shows that the sold price with respect to the assessed price dropped during 2018, and then as most assessed prices went up in 2019, the sold price went into negative territory in 2019. This makes the chart a bit hard to read, as the point of reference changed from one year to the other. A better way to look at it is to compare only to assessed 2018 prices, that way the point of reference is fixed:

Only REBGV cities included. The number below the average reflects the standard deviation

From this last chart we can see the following (comparing with HPI index for the region)

This data suggests that Detached and Apartments have had price drops larger than what the HPI indicates, which agrees with our analysis of the HPI being a rolling average and hence a lagging indicator. Interestingly, the drop for attached is less when compared with the HPI benchmark. This could mean that the HPI for attached units might go up in the upcoming months.

Also noteworthy is the large standard deviations. This means that there is a large spread in the difference, there are many outliers outside the average and median values.

Assessment 2019

Let’s look at the data using Assessment as fixed point of reference:

Only REBGV cities included, the number on top is the Avg Sold – Ass2019, the number at the bottom is the standard deviation

Summary

We have seen that units sold, on average, above assessment prices in 2018, although a trend to lower sold prices was evident. However, as most assessment prices went up in 2019, and the trend to lower prices continues, now most units are selling below assessed prices.

Tomorrow we will get the official April numbers. As we track the daily sales from Realtor Paul Boenisch (http://vancouvercondo.info/), these are the April final numbers

Dotted line on the left reflects final inventory on March 31.

The sales for April will be the lowest since the year 2000:

High numbers in red, low numbers in blue

Prices will most likely continue to drop. How much and how long? We can learn from the past and other cities to have an idea, but nobody knows for sure.

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One comment

  1. […] The plot below shows the sold price vs assessed price for March 2018 to March 2019. The assessed price of the year in which the unit was sold was used as reference. Note that overall assessed prices went up in 2019, so that’s why a big jump in units selling below assessed price took place in January 2019. For more details using one year only as reference see our last post. […]

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