I’ve got a little different report on the numbers today. I had a flood in my office early this morning, and am posting this in the midst of about 15 restoration workers from On Side Restoration .
Friday was a big, big listing day in my area. 421 listings, and 219 sales. That’s a sell/list of 52.02%. Inventory is somewhere between 10,620 and 10,826 (I think it dropped overnight but is well on its way to catching up).
Saturday brought 210 new listings and 79 sales, for a sell/list of 37.61%. This is the first day in a long time that the Board has worked Saturday. Inventory has reached 10,829, and over 90s reached 1,811 (16.72%).
The Best Real Estate Anywhere! 
VHB,
its your day. We saw over 400 listings.
Wow, are we going to see 12K by the end of the month?
So this is it – nothing but disasterous real estate and credit news out of the US – listings (arguably) exploding here – the peak of the selling season upon us – either the bears finally get their big correction now – RIGHT NOW – or it just ain’t gonna happen.
Rob – sorry to hear about the flood. I hope everything is ok.
Listings > 400? Well, I was a month late and a few dollars short, but it happened. I have a feeling I will be able to say that again later this year about other predictions I have made . . .
Ever since Rob and VHB moved off their blogs, things changed. Maybe a sign or something.
Rob,
I hope the flood is not too bad, thanks for keeping the work up.
VHB: hat tip to you! 400 listings in a day, and just 3 weeks later than you predicted…..
So, I was timing 12000 by the end of May, it seems it might happen before that……I may be wrong but it looks like the market is finally unraveling.
Could it be rising interest rates spooked investors? No, it can’t be… It is different here…
I’ve noticed inventory climbing in the past week or so. Coal Harbour at 139 from about 120.
Surprisingly, North Vancouver now at 460 from about 420, even though this market has been on fire for sales.
Wow … has it begun? Listings are climbing very fast. Where are sales? Just not keeping a good clip.
Rob, sorry to hear about the flood. Hope you get it all resolved/restored quickly.
Sorry to hear about the flood Rob. I had to deal with a flood earlier this year myself and it is no fun at all. I feel for you. Get rid of that moisture before it turns into mold.
Its fairly unprecented that inventory would grow so rapidly in prime selling season. Exactly the same situation prevailed in Hot U.S. markets just about a year ago.
The flood is a disaster! Just about everything is boxed up. Poor Amanda, who runs the front of my office, and doesn’t follow any real estate blogs, is in for a shock when she opens up tomorrow morning!
I think that not only is inventory run up on Friday interesting, but also the fact that Saturday had a lot of listings entered as well. No listings were entered today, but there has been a lag between when listings are submitted and when they turn up on line. Now, a 400+ Friday and a busy Saturday. Has the backlog been handled? Will Monday be slow? Or did Board staff just make a dent in backlog, and will Monday be another high list day?
My jury is usually out on a lot of things, and the current run up is still one of them. I’m not sure it portends near future negative price movement, and I’m not sure how long it will continue. Just as high prices are the cure for high prices, increased listings are the cure for increased listings (yes, markets exist where Realtors don’t want listings, and do want buyers).
I am sure that we are in a very different market than we’ve had the past few years. If the time for spotting a peak has passed then we are entering the time to spot a trough. Buying what you can hold is a good idea much of the time. Buying what you can hold as we approach a trough is an improvement on that. If you own real estate now, and have room to finance it, arrange a re-advanceable/LOC style mortgage now, at current values, but don’t draw any funds down. You’ll incur set up costs, but no interest costs, since you won’t be borrowing money. If prices do drop you’ll be in position to take advantage.
Regarding the listings on a Saturday, keep in mind that last weekend was a long-weekend, and the board office may have had a large backlog to work through during the week.
Rob, do you know if the board office took both Good Friday and Easter Monday off?
They took both days off. However, the backlog as evidenced by lag time between submitting the listing and seeing it turn up has been around longer than that. A 4 day weekend wouldn’t have helped, but it wasn’t the cause either (I don’t think).
Yes. I agree about the lag time. Someone I know listed on April 3rd, but it finally appeared on the MLS on the 12th.
Hey,
there were long weekends last year as well….
I think this is the beginning of a large buildup: price will hold for another 12 months, then will start dropping slowly like the US.
Sell your properties soon, investors out there…..
Domus:
If we’re reaching a peak speculators should sell.
Investors should hold.
Domus,
I disagree. These things can unravel faster than most people think.
“General notions are generally wrong.”
There is a LOT of money tied up in “investment” properties. The current slow pace here and the gloomy news from the US may well see a greater surge in inventory and panic selling so people don’t have to “dip in” to other monies.
FREAKO,
You mentioned the other day that the stock market is “foward looking”.
Again, I disagree.
I agree with Galbraith that the stock market is a lagging indicator.
“I am sure that we are in a very different market than we’ve had the past few years.”
Rob, what you care to elaborate on this earlier statement of yours?
Rob,
as an investor you hold at your peril. This will be prolonged (based on historical patterns) and the opportunity cost of tying your money will be high….you must love the sector to stay in.
Usual disclaimer: this is my opinion…
Whoa, slow down folks, add up the week’s total listings and divide by 5 days (assume Saturday covers for Monday holiday), average is 312 listings per day.
Now look back at March and April 2006, there’s a bunch of weeks with average daily listings around 250, some above, some below.
Sure we’re a little bit higher but the sky isn’t falling just yet.
SOME UNPLEASANT ARITHMETICS:
312-250=62
62/250= 0.25
CONCLUSION: EVEN TAKING 250 AS AN AVERAGE LISTING FIGURE FOR LAST YEAR (WHICH IS A GROSS OVERSTATEMENT) WE STILL WOULD HAVE A 25% INCREASE IN LISTINGS.
ARE YOU SURE THIS IS NOT A BIG CHANGE?
Further to Skeptic’s caveat about listings: How do this year’s sell/lists compare to 2006 or 2005?
25% higher lists is a big change, possibly coupled with lower sales will makes it even bigger. Isn’t denial one of Kubler-Ross’s stages of grieving……
Domus:
As an investor you probably don’t hold at your peril. Generally speaking the real estate investor is able to withstand economic downturns (I’ve sold way more investment properties because the investor wanted to sell rather than had to sell).
None of us know how soon a correction is coming, or how severe it will be. If you’re cash flow positive (or negative by choice), the opportunity cost argument is, I think, significantly weakened.
If you argue that we’re going to have an ’81/’82 style correction, and the investor is unlikely to see the next peak, and needs/wants to liquidate rather than pass property on through the estate, then its time to sell (although I’m sure you’ll agree that decisions like that depend less on the market and more on the individual). If you argue that we’re going to see the continuation of an historical cycle, then why not extract equity through mortgaging, take advantage of the other opportunities, and enjoy both worlds? I mean, if you know that historical cycles repeat, and you know that your alternate investment is a winner, act on your knowledge, right? (I believe more in the unknown, as you know, and govern my actions accordingly)
Snick:
If you look at daily numbers, as I do, you see the market change all the time. If you don’t buy into the whole bear/bull/bubble/nobubble thing you can entertain the possibility of different outcomes. If you would like me to say “The bubble is apparent, watch out for the pop”, its not going to happen. Sell/lists are down, inventory is up, MOI is closer to a “balanced” market. Its less of a seller’s market than it was. Its not a buyers market, however. BTW, last July, August and September felt this way: not easy to sell everything, but tough to find good buys.
Rob,
what you say makes sense only in part to me.
Leveraging stock market investment by taking mortgage out of RE property is a dangerous game.
I know you probably believe that Vancouver RE is not in a bubble and the market is in working order.
I just don’t share your view on this, sorry.
“None of us know how soon a correction is coming, or how severe it will be.” -Rob
Why would there be a “correction”?
Snick:
either you are blind or you don’t want to see….
Have a look at CNN.com and then ask me again…..
Domus,
I DO know what you are talking about. Believe it. I’m just curious as to why Rob would declare that he does not believe we are in a bubble, yet he thinks there is some sort of “correction” on the horizon.
It does not “compute”.
If it quacks like a duck…
“If you would like me to say “The bubble is apparent, watch out for the pop”, its not going to happen.” -Rob
See what I mean?
Domus: “CONCLUSION: EVEN TAKING 250 AS AN AVERAGE LISTING FIGURE FOR LAST YEAR (WHICH IS A GROSS OVERSTATEMENT)”
Hi Domus, please check this link:http://rireb.blogspot.com/2006_04_09_archive.html
You’ll note that the average for Feb 17 2006 – April 15 2006 is 243 listings per day. If you dig a little deeper into the detail of Rob’s old posts, you’ll see that 250 is a reasonable figure, why do you think its a “gross overstatement” ?
Also, your caps lock is on, not sure if you are aware.
We are well above the numbers for this time frame in any of the past several years. There is no disputing that. Talk of “averages” is moot, IMO. It is what it is. And MUCH higher, I might add.
Hey folks, whatever is or is not happening, this blog is the only source for daily statistics on the market. We should all be thankful for the effort that goes into it and hopeful that Rob keeps it up.
At the same time Rob’s business is real estate investment. He can hardly be expected to state that the source of his livelihood is a bad investment, regardless of the time horizon.
I’m betting seven figures on a correction, I believe there is a bubble and that it will burst, sooner rather than later. I also suspect that Rob will do just fine in any market condition so stop backing him into a corner or he may justifiably pack up his marbles and go home.
Jonnyrent:
Could not agree more. If Rob stops posting the stats I will likely offer to pay for them.
I too am betting 7 figures on there being better selection by summer’s end. I am a quasi bear but am still putting offers out right now-just not bullish offers.
Johnnyrent,
I’m sure most people would agree that the daily numbers are interesting/important to a degree. However, I think it is equally important to have candour and frank discussion about what is unfolding in local/international real estate markets.
I f someone like Rob chooses to “put it out there”, he should be equally eager to discuss any “inconsistencies” that arise from any statements he puts forward.
Guys,
I am grateful to Rob, and never have I been rude to him. I kind of like the guy and what he does. I just think he is wrong on this one (I know, I know, he just cannot say bad things about the good he sells and I never condemned it for that).
That has nothing to do with speaking my mind clearly. I am sure Rob understands and does not take offense. I think frankexchanges make this blog one of the most interesting around, it is a good thing to disagree.
By the way, have you noticed that the market is going down really fast???
“By the way, have you noticed that the market is going down really fast???”
Evidence?
Domus, it is all about “evidence”.
Snick,
that was a joke….chill out!
Agree with all responses. I just brindle at personal attacks, conspiracy theories or dogmatic positions which do not take into account alternative points of view. I’ve made my choice, perhaps a little early. Time will tell whether I’m a bum or a hero but in the meantime, let’s let the numbers do the talking and keep the comments objective and reasoned, in the spirit of VHB. Cheers, JR
Snick:
My position isn’t inconsistent. If you think it is you’re either ignoring some of what I say or you’re just not understanding it.
Domus:
I’m a long term holder, non-market timer (both as a response to my admitted inability to predict the future). I assume long term appreciation.
If we’re talking about the opportunity cost of tying up your money (which is why you’re saying sell now, right?) we pretty much have to assume an alternate investment. If it has return it has risk. The risk is no less because whether we use the proceeds of a sale or the proceeds of a mortgage.
I invest in property on a long term basis, and I accept that there will be times when values go down. If the expected downturn comes I don’t panic. The world is unfolding in a manner that I knew was possible, and that I prepared for. After the next downward correction I assume that there will be another uptick. (The “assumption” part is obviously important. I’m not claiming any special knowledge that others don’t have. Being unable to predict the future I make an assumption about it, and I’m honest about calling it an assumption).
I don’t depend on the historical cycle approach, but since you brought it up, our up/down cycles generally result in a higher up and a higher low. Staying in long term results in capital appreciation and as a result leverage is only positive (you don’t sell when its negative), so returns can be quite good.
Is this market going to fall a significant amount? Maybe. Do we know how soon? Clearly we do not. Is it wiser to sell now, and put all your eggs into one basket, whether that be stocks, bonds, or future real estate purchases? That’s not a “wisdom” question. Its a risk tolerance question. I’m not willing to risk being priced out of the market. If the market drops it probably won’t drop lower than my purchase prices, and it almost certainly won’t drop lower than my costs. Yes, my return on my downpayment may not be 600% over 5 years, but I’ll probably be ok, long term.
So, is it a bubble? When I hear bubble I think ’82 style correction of 40%+. I don’t think we’re there. I might be wrong. You might be right. If you’re right and we lose 40% now we’re back to what 2003 values? If you follow my advice of locking in financing today you’ll look like a genius. If you’re wrong, and you follow my advice, you’ll still own property that increases in value. If you sell everything now you’re going to have to bet that you’re right. As I said before, that’s not a wisdom question. That’s a risk tolerance question.
(Where does 600% come from? Purchase an East Van apartment for $60,000 with 25% down. That’s 15,000. It covers itself (actually slightly cash flow positive). Now its worth $150,000. Pretend that there was no mortgage paydown (there has been) and no rent increases (there have been). Subtract the OSB of $45,000 from the value today of $150,000, and you’ve got $105,000. You used to have $15,000. The dif is $90,000 capital gains. That’s a 600% gain on the $15,000 invested. Can you see why you’d be ok with a correction that allowed you to buy more property? Assuming, of course, long term appreciation and the occassional “bubble”:-).
Johnnyrent:
Real estate isn’t a bad investment. Pay too much for it, or buy the wrong stuff, and well, a fool and his money were lucky to get together in the first place. I recommend buying anything, anytime, anywhere, if it makes sense. That’s a classic case of simple, not easy. I’m having a hard time finding those buys now.
Does that mean prices have to drop until they’re back in line with past fundamentals? Obviously not. We will see change, but we won’t go back in time.
I know a lot of people imagine I survive because of the recent run up in prices. Imagine the following scenario: Rents increase, as they have. Sell/lists fall. Prices also fall, but not back to pre-2004 levels. We enter a buyer’s market. I start being able to find cash flow positive properties at 25%-45% down. Would I make more sales, or fewer, than I do today? Could I sell you something on tose terms? Clearly, this market helps my future, but hurts my present.
Why am I telling you this? I don’t want you to assume that I say real estate is a good investment because my livelihood depends on it. If I had to do that I’d go sell something else that was more fun. I say its a good investment because it is. I’ve been very fortunate, I know, but it seems pretty obvious that if real estate wasn’t a good investment, I wouldn’t invest in it.
Thanks to everyone for the kind words and expression of gratitude for the numbers.
Bubble’s=Catastrophic/50+% drop
Corrections=Neighborhood of 20% drop
So watch the inventory and rates!
Further to Rob’s comments. As one who is less invested in real estate than I would like to be-I am awaiting and expecting a buyers market. But I would caution those that have limited experience in RE and are using analysis of fundamentals, U.S. experience, historic Boom Bust cycles to time their move. It will vary dramatically by dwelling type, by neighbourhood, and by timing with those categories. Most importantly, buyers markets typically are much shorter than sellers markets-so you must be “on your game”. Thirdly, just as most bears sod too soon-don’t wait too long to buy.
Hi Rob,
If prices do drop don’t banks begin to raise their lending standards leaving less people to sell to. Add to that anyone who can’t sell for what he owes and ends up in foreclosure. And then add to that all the people who are now either afraid or simply not interested in purchasing real estate (It is a trend after all. I’m sorry but I just don’t believe it will be AS EASY for you or anyone to make the big bucks.
Rob
I didn’t mean to imply that I think real estate is a bad investment. My point was that a person in your position isn’t going to imply it either, regardless of current or projected market conditions or how relentlessly you are baited into implying it.
Much of my net worth has been built on the value of my past real estate holdings increasing so in the main I think its a great investment. Further, I don’t think there is any real downside at this time for astute, long term RE investors nor for FTBs over the long haul, provided they buy right and are not overextended.
That said I think that in the not too distant future short term speculators are going to get clobbered, recent, very highly leveraged purchasers are going to be in for a shock and more than a few spec builders will be left twisting in the wind.
On the other hand patient market timers who have recently left the market but plan to buy back in have an opportunity for substantial gains. There is of course no guarantee in any investment approach, including my own market timing so we’ll just have to see where the cards fall.
think there is an opportunity for market timers to gain in the short to mid term but it is not for the faint of heart.
Oops, should check my posts more carefully. Last line should have been deleted.
A little historical perspective using FVREB numbers (unscientifically eye-balled from the graph in their statistics package):
March 2000……8800 active listings……1000 sales
March 2001……8000 active listings……1100 sales
March 2002……6400 active listings……1500 sales
March 2003……6100 active listings……1600 sales
March 2004……5500 active listings……2000 sales
March 2005……6000 active listings……2000 sales
March 2006……5100 active listings……2100 sales
March 2007……7400 active listings……1700 sales
March also saw the highest number of new listings of any month in the last seven years. It looks like a trend reversing, but dramatically so? That’s hard to say, because the sales figure was still pretty high (higher than 2002 and 2003). There’s a similar YOY trend using February stats as well.
Can’t wait for them April numbers!
Thats quite the list sell change in 1 year.
41% in 06
23% in 07 I can’t believe FVREB has not had prices correcting
Paulb,
the adjustment will come. Even in the US it is taking time for prices to adjust. In real terms they are way down, and in some places also in nominal terms.
Vancouver, if anything, is even more inflated according to most metrics but I don’t expect to see nominal price drops before Spring 2008. It’s the nature of the beast.
However, for the next 12 months buyers will have much better choice for their money and, if they are patient enough, they might save a bunch of money.
Damon:
You’re missing a few critical points.
My buyers are investors, generally, and they usually have more than one property. That means lots of equity and good credit. If they arrange financing now they will be able to draw down the funs later. Financing isn’t usually a problem. Often the purchases are made without a mortgage, and the mortgages are placed later, after title has been transferred.
If there are fewer people to sell to, that’s better for my clients. They will be able to buy, and people who are ready, willing and able to buy are in short supply in buyer’s markets (which is one of the reasons that they are buyer’s markets).
If someone can’t sell for what they owe then they’re probably not my client. I advise buying and being able to hold. I do sell foreclosures for lenders, and I do buy them for investors. If foreclosures increase across the board, I’ll have more business, not less (foreclosures have been in short supply in recent years due to increasing values).
People who are afraid of real estate now fall into two categories: those who are always afraid of the big step into expensive real estate, and those who are afraid now, because of their view of the market, but who will enter the market under different circumstances. I never sell to the first category, because they never buy anyway. People in the second category will buy sometime.
I have a hard time selling investment property today. Most of the time the only upside is the belief that the market will continue to rise. Long term it will, but that’s not enough. When I find properties with good numbers they sell quickly with multiple offers (which degrades the numbers in most cases). Believe me: I can sell a property virtually sight unseen to an investor overseas (often a local Canadian working offshore) quite easily if the numbers are good and if I agree to be the rent collecter, especially if I’m already collecting rent on their behalf.
As for all Realtors and whether this market benefits them more or less than a tougher market, you are right: its been easy for a lot of people to make sales the past few years. That won’t continue. A market downturn will see many Realtors leave the business. Many high producers welcome that scenario, because they feel that they can compete very effectively once selling becomes demanding.
Jim/Johnnyrent:
Good comments. Market timing is tough, and late entrants to this market had better be prepared for some potentially very tough sledding.
todays sales are in the toilet
awum: Thanks for the numbers. Nice post.
I have been a bear for the last two years and I still think we are much closer to th peak of the real estate cycle than before . But I just bought a house, finally. The number and location made sense for me. I plan to stay in the same house or same area for ove ten years. I am prepared to take a hit when the downturn comes but the cashflow is manageable.
Also, Rob, please don’t shut down this blog as other BC RE blogs have gone down.
Ah….the capitulation of the least bears, unmistakable sign of the impending crash (drum-roll……)
I don’t deny that making such a purchase at this time is not the best timing move. I do play stocks such that I am well aware the up and down swings. However, it is the time in market that counts, especially the finance numbers make sense for me.