Because residential real estate prices have only dropped further since last summer and real-time information about recent transactions in March 2019
With recent home sales in the Lower Mainland showing some dramatic price declines, there has been an uptick in foreclosures as owners are unable to make mortgage payments.
In the past decade, there have been few foreclosures because rising real estate values and low interest rates allowed owners to easily refinance or sell to get out of a bind.But as prices have turned, there has been a modest increase in the number of court-ordered residential real estate sales in Metro Vancouver and the Fraser Valley, starting late last year, according to several agents.Yes, there’s definitely more, said Vancouver realtor Russ Macnab. For the last three or four years, on average, there have been about 20 to 30 (court-ordered sale) properties listed at any time across Metro Vancouver and the Fraser Valley.There were lots of people looking at them and interested in them, but fewer of them (available) because prices were rising.Now, it’s more like about 50 to 70 or 100, said Macnab.
There’s not a boom of them, not all of them at once, but there’s more of a flow.There was an increase in court-ordered sales in Burnaby and Vancouver starting last November, said Simon Clayton, who has sold over 20 foreclosed properties since 2012.Quite a number started popping up as people can no longer rely on gained equity to solve the problem (of not being able to make mortgage payments), said Clayton.Realtor Gary Voigt described the current ratio of court-ordered sales compared to total listings on the MLS as a sliver.
He said out of the 8,406 total listings for detached homes in Metro Vancouver and the Fraser Valley, 42 are court-ordered sales. For attached homes, the number is 26 out of 9,466.Put together, the total is 68.It can take months to half a year from the time an owner first misses payments to when a lender applies to court to recoup money, said North Vancouver realtor Aaron Rossetti.“It’s a trailing indicator.”For this reason, because prices have only been dropping since last summer and information about recent transactions shows sharper declines, especially in more expensive areas, the number of foreclosures could gather pace.
It’s very telling of the market, said Vancouver realtor Ian Watt, who started tracking the number of past court-ordered sales (not listings) to see how they correlate to price trends. In 2010, there were 752 court-ordered sales of both detached and attached homes, in Metro Vancouver.The number held steady until 2015 when there was a drop to 605. As real estate prices surged in 2016, they dropped further to 327, and then to 214 in 2017, and 195 in 2018.In the first months of this year (there’s not much activity in January, so really it’s February and March, said Watt), there have been 22 houses and four condos for a total of 26 court-ordered sales. Watt, who believes more owners are overextended in this market than in the prior downturn after 2009, predicts that next year, the number of these sales could be back up to 550.