Tuesday Numbers

There were 277 new listings today and 190 sales, for a sell/list of 68.59%.  Of the sales 21,  or 11.05%, went over list.  7 of those were on the Westside. 5 were in East Van,  1 in Richmond, 1 in Port Coquitlam, 2 in Maple Ridge, 3 in Burnaby and 2 in Surrey. 

Average list price of the sales was $539,676; average sales price was $527,812, a difference of $11,864, meaning the average sale went for 1.69% under list price. 28 properties went for list price. One property went for 16%($26,000) under list while the highest over list was 15% ($109,000) over.

There were 11 million dollar plus properties sold, with  three over $2 million. Average days on market to sale was 37.

8 apartments, 1 duplex, 11 houses and  1 townhouses sold over list.

There were 123 price changes, of which 11, or 8.94%, were increases. The average original list price of price changes was $622,610; the average new price was $605,720, a difference of $16,890, meaning the average price change was -2.48%.  Average days on market to price change was 50 days.

Inventory in my target area dropped  to 11,293, while over 90s dropped substantially to 1,649, a percentage drop to of 14.6%.

0.99% of all active listings in my target area had their prices reduced today.  The 14 day rolling sell/list was 60.26%.

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33 Comments

Filed under Daily Numbers

33 responses to “Tuesday Numbers

  1. Hi Rob, there is an ongoing typo that is starting to bug me… in the “Inventory” paragraph, you have “a percentage drop to (!!!!) of (!!!!) 14.6%”

    Other than that – keep up the good work. Hopefully those prices drop soon, I’m looking to buy… 🙂

  2. Domus

    Expiries as usual……wait for the new listing wave, May sounds promising for the bears (the poor, repetitive, sad, homeless renters who still generate most of the traffic….)

  3. accountant88

    Monday Inv 11579
    New Lists 277
    Sales -190
    Expires -373
    Tuesday Inv 11293

    373 expires (or cancellations) at the beginning of the month.

    Wonder how many of these will be relisted in the near future?

  4. Jim

    acountant88;
    Thanks, nice post. I expect most of them to relist . May is typically a big listing month. Will the buyers show up?

  5. Skeptic

    Domus: “bears (the poor, repetitive, sad….”

    You got that right ! 🙂

    Is it my imagination, or has sell/list picked up in the last week or so ?

  6. moldcity

    When properties are relisted do they generally go on market for the same asking price they couldnt get before or do they list higher or lower?

  7. jojuchst

    Skeptic: “has sell/list picked up in the last week or so ?”

    sell/list has been around 60%-70% for April. For the entire Apr 5889 list 3510 sale for a ratio of 59%

    moldcity: “When properties are re-listed do they generally go on market for the same asking price they couldn’t get before or do they list higher or lower?”

    >90% judging from what I’ve seen list at or below their last list. But you occasionally get the odd balls that after 3 months of no sale would list at a higher price.

    Rob: Are you aware of any easy way to quote prev. postings? (other than cut and paste) BTW I miss the preview feature of your old blog.

  8. robchipman

    Ed:

    Thanks for the catch. That’s the danger of cut and paste editting 😉

    If all the expired listings get re-listed then we’ll hit 12,000 by May 15 easy. After all, that’s only a net gain of 421 after expiries/relists are factored in. (You can gather that I don’t buy the old “all the expired listings just re-list anyway, so…”) In my experience a lot of sellers change their minds after a few months on the market, especially since many sales are predicated on a specific price. If the seller can’t achieve the price there is no point in selling.

    Yes, the sell/list has picked up slightly. Not enough, however, to be significant yet.

    Unscientifically speaking, I’d say re-lists are split 50/50 on reducing price/staying the same.

    jojuchst:

    Aside from cut and paste I don’t know an easy way to quote earlier posts. Maybe someone else can advise.

  9. Domus

    “If the seller can’t achieve the price there is no point in selling.”

    Yes, there is….it is called reducing the price and is the way the world has worked for the past thousands of years….demand and supply are equalised at a given price which should adjust. If it does not, there is a welfare loss on the part of both buyers and sellers.

    Of course, for limited periods a welfare loss can be tolerated. However, over longer spells we should see sellers lowering prices. I think we will, even if it might take years…..

  10. Jim

    jojuchst:

    “sell/list has been around 60%-70% for April. For the entire Apr 5889 list 3510 sale for a ratio of 59%”
    Thanks-but which is it for April?

  11. robchipman

    Domus:

    You’re missing my point. Often, sellers have a specific goal, and have to work within certain boundaries to achieve that goal. Price of what they’re trying to buy and price of what they’re selling comes into play. Reducing price of what they’re trying to sell isn’t always an option.

    The easiest example of this is someone who doesn’t want to own anymore, period. They’s re-mortgaged to fund current consumption, and are now deeply in debt with high monthly payments that they don’t enjoy (the ATV and 42″falt screen don’t seem worth it anymore). They’d like to sell, clear off the debt and rent. To do that they require a certain price (current total OSB + transaction costs). If they can’t achieve that price they simply can’t sell. They pretty much have to resign themselves to the monthly payments.

    A second example is someone who wants to trade up from the 2 bedroom, 50 year old house with a suite in a marginal area on a busy street to a larger house in a better area on a quieter street. Kid #1 is growing and kid#2 is on the way sort of thing. The problem is that the upgrade house is hard to find, and when it is found it sells quickly (maybe the people are trying to move from East Burnaby where they bought the starter home, to North Van, where they grew up). The price they need to sell the existing home at is the North Van price – the mortgage they qualify for. If the market will pay that price for the E. Bby house, great. If not the sellers really have only one option: not sell and not buy. Reducing price isn’t an option.

    There are more examples, obviously, but I think this points to something that you’re ignoring, and to something that contributes to real estate prices being sticky on the way down: despite thousands of years of supply and demand working together to raise and lower prices, in real estate there are many players who do not need to sell. They can simply leave the market. Their role can’t be ignored.

  12. Jim

    Rob:
    Completely agree, many many listings are: “lets see if we can sell at our price”, and “if so we’ll trade up,cash out etc”.
    However market prices are set by the marginal transactions, those that have to sell or are desperate to buy, and that’s why despite risng inventory, and faltering sales,prices can keep rising. Its like an elastic band, the gap between supply/demand fundamentals and price, can stretch, and stretch, and stretch……….

  13. Mightymouse

    Not all the sellers who have to sell will have purchased within the last five years though. Some of the group who must sell will have purchased prior to 2002, and will be able to afford to drop their price much lower than current market value.

  14. robchipman

    Jim:

    Right you are.

    Mightymouse:

    Not so right you are. The key ingredients are how much has equity on house #1 increased, what have mortgages done meanwhile, what has happened with the sellers income, and what the desired place costs. Those ingredients are variables, of course.

    You are right that someone with latitude can reduce price. My point is that many sellers have restricted latitude and so leave the market. This contributes to price stickiness.

  15. Anonymous

    Rob, you’ve nailed it.

    The bear argument is that people are selling so they can go and rent. i.e. leaving the market altogether

    The reality is that many/most sellers are going to buy something else/upgrade/downgrade.

    Apart from those on this board, I don’t know anyone selling to get out of the market and rent.

  16. Noname

    “The bear argument is that people are selling so they can go and rent. i.e. leaving the market altogether”

    I am a bear and that is NOT my argument.

    My argument is that in some time, supply will outstrip demand.

    In the past couple of years, demand has exceeded supply because people bought/are buying MULTIPLE properties for the purpose of speculation.

    The supply is not going to matched by the future demand.

    On the top of that, when the economy turns less favorable, people who are already stretched to the limits regarding affordability are going to be squashed leading to even more supply.

    The bear argument is simple, supply will far outrun demand as a result of rampant speculation.

    Have you seen the latest unoccupied housing numbers from the US? They have simply overbuilt, just we are doing now…

    Noname

  17. Domus

    RE market is a chain…..it feeds from the bottom (FTBs) all the way up to million-dollar properties.

    Most people are in fact upgrader, who find themeselves in a chain: selling their existing RE and using proceeds to buy larger RE.

    It works all well as long as the FTBs are willing (and able…) to pay ever larger prices at the bottom: if that stops, the whole construction crumbles at its own foundation, as it has happened innumerable times in many places before (including Vancouver).

    If you want to upgrade and do not find a buyer, you have 2 options: either do not upgrade or sell at a lower p

  18. M-

    Anonymous: one of the other questions that’s been brought up and that has never been resolved is the question of how many houses/condos are being held “empty” while prices rise rapidly– basically, how much pure speculative activity is out there.

    Based on the rate of construction over the past 5 years, and the rate of population growth, it would seem that there’s probably 3-5% of excess “empty” (or under-used) housing out there on the market right now. What will the owners of that property do if prices stop rising, or start dropping? Some may sell.

    As an aside, yesterday I came across a house assessed at $1.2M, with an advertised $1625 monthly rent! Price/rent ratio of 766! With rent being so cheap compared to owning, at some point, first-time buyers may start questioning the value of buying. Several of my friends have opted to rent rather than buy, because they recognize that buying carries with it high costs and little value.

  19. realitycheck

    This site has become the new bear home now that VHB has gone. Don’t you people ever tire of being wrong?

  20. Domus

    “Don’t you people ever tire of being wrong?”

    Funny, this is what many people were saying in 2000 to those who warned against a bubble in tech stocks. Between 1997 and 2000 they made lots of money. Then it all ended bad……

  21. Jim

    Noname:
    Well presented. The simple answer is often the right answer. Tough call as to when though.

    Jim

  22. robchipman

    Noname:

    You’re obvously right. At some time supply will outstrip demand. We’re not there yet, but we clearly see less demand this year (relative to supply) than last year.

    I can’t buy that the recent run ups are all due to speculation, however. My sales experience doesn’t reflect that. I’m sure its a contributing factor, but I’m not even convinced its the dominant one.

    If we get a bad economy we’re in for some problems, as most of us have already agreed. The economy, on its own, won’t have a huge effect on demand for housing, even if it does have an effect on demand to own, until unemployment causes people to start leaving Vancouver (we’ve seen it before, I agree).

    I guess we have to ask: do RE prices drop precipitously along with demand, or do we need more of a perfect storm (over-supply, higher mortgage renewal rates, bad economy)? Will over-supply on its own have as big a ripple effect as some think?

    Domus:

    “If you want to upgrade and do not find a buyer, you have 2 options: either do not upgrade or sell at a lower p[rice]”

    That was my point. Many sellers will choose the former. That leads to lower volumes of sales, and eventually of inventory, but not necessarily a price collapse. It also contributes to a lower rate of re-listing.

    BTW, the question “Don’t you people ever tire of being wrong” really deserves a better answer than you’ve given. Review the tech bubble. If I bought Cisco at the end, I’m crying. If I bought it a little earlier, went through several splits, and rode it up, I’m quite happy. In other words, it didn’t end in tears for everyone.

    M:

    Interesting rent multiples. I’ve found some really bad ones (not as bad as yours, mind you) west of Denman. $500k+ unit renting for $1400. The draw for the buyer was location rather than income. Some people will pay a premium for location, which is why I still collect rent from Westside properties (they’ve had bad metrics for years).

  23. Domus

    Rob,

    why would there be a premium for buying and not for renting? Shouldn’t the 2 be proportional.

    If I buy an investment property to rent out, why would I care about anything other than the rent i get? I certainly won’t live there…….

    As for the Cisco investment: we go back to whatever it means to ride things out. It is almost certain that buying an asset and holding it over a long time (8+ years) will give you some positive return. Fair enough.

    Question: how good is that return? Well it depends on what alternative investments would have given you over the same spell of time. That is the only metric that counts when evaluating asset returns. In that sense Cisco was not such a great buy even for those brave hearths who chose to ride it out….I think even GM and Ford might have been better buys, which is quite something……

  24. Noname

    Hey Rob!

    I agree that over-supply in itself will not lead to huge instant price drops.

    For example, look at Phoenix, despite the enormous inventory, the sky has not fallen.

    But I also beleive that the slow down in housing will have a significant effect on the economy. Once people start losing jobs, housing prices will be going down with them.

    I think this is the big question. How much of an effect will the slow-down in construction and housing sales have on the overall economy?

    I do beleive that the current fast pace of the global economy is driven by the global housing boom. I also believe that when the housing boom stops, so will the global economy which will go through some major adjustments that will lead to the collapse of many housing markets.

    On the other hand, if the economy is not affected by a housing slow-down, then I can imagine prices not being affected significantly…

    Noname

  25. robchipman

    Domus:

    In theory you’re right, but in practice you’re not, and if you just reflect on what you see yourself you’ll see that what I’m saying is true.

    There are people who own fully paid off Westside property and rent it at rates that don’t seem to make sense. There are other people who will buy Westside property and rent it at a loss, and take the tax write offs. You know those guys exist, because you know what Westside property is worth and what it rents for. I’m not making them up. I can’t think of any other way of describing the extra they pay other than as a premium.

    Are they nuts? Hmmm. Let’s see: they own high quality property and don’t seem to have huge cash flow concerns, either because they have more money than God or enough a tax issue that they need the write offs, or a combination of the two. I think its safe to conclude that they’re not nuts. I know the owners of my Westside accounts generally strike me as rational.

    You might not do that, and I know that a lot of my other clients wouldn’t either, which is why I also collect rent in Maple Ridge. But, as I was once told, income means different things to different people. The fact remains: people will pay a premium for certain properties, which is why Northshore/Westside places often don’t have great metrics.

    Think of that when you say that there is only one way of evaluating returns on assets. You must realize that is false. You can’t simply say a 10% return is better than a 5% return. “Better” is subjective. 90% leveraged gives higher returns than 50% leveraged. Which is “better”? What risks are involved? What is the time frame?

    The Cisco good news story didn’t involve riding anything out, so your question becomes moot. It goes up in value, splits, goes up in value, splits, etc. Later it falls in value, but not to anywhere near what you orignally paid. The money was made before the crash, in other words, not by holding on like grim death until after.

    My point is that the dot.bomb argument has its limits. To reduce it to the almost absurd, someone is saying your clock is still wrong, and you’re replying “They said that about the other stopped clock, and after 12 hours it was right”. I’m saying you need a better answer to the charge. The imminent crash prediction has been made for a few years now. In the interim people have booked substantial profits. (Witness Jim saying its better to sell a year early than a day late. The clear implication is that while there may be danger, there are profits to be made).

    What if you’re wrong for this year, and I put 10% down on something in January, sell it December 31, only get 7%, but as a result of leverage I book a 70% return. January 1, 2008, you turn out to be right, and the market drops, but I’m out already. What is so different about 2007 compared to 2006? What was so different about 2006 compared to 2005? Is it just the dizzying heights of price we’ve reached?

  26. Domus

    Rob:

    thanks for the details about rent premia.

    As for the rest I lost you somewhere between Cisco and leverage. I guess I am trying to say something simple but, my fault, I am not explaining myself well: if you have 100 to invest and, after 5 years, you get back 150 you might think yourself really good. Excellent.

    Was that the best way to invest your 100? Well, it depends on what other people got on other investments.

    Leverage: the secret weapon of hedge funds…..it works beautifully when you get it right (which happens oftentimes). When you don’t, it becomes more painful than you’d ever imagine…..

    I am just saying that housing is not a very safe bet right now from my point of view. I accept you may disagree.

  27. Geezer

    For what it’s worth I am aware of an older condo building in downtown Vancouver which has had almost 10% of the suites vacant since new (early eighties). At least one of these suites has been renovated twice but never occupied.

    They belong to different owners who obviously do not care about metrics. I do not understand why they do this but I would speculate that they are all very wealthy and these condos are just “more possessions”. They probably worry about the lost income as much as they worry about the depreciation on their Ferraris, their rarely used 100ft. motor yacht or their valuable ring and watch collection – not much!

    Vancouver seems to have plenty of people who could afford to fit into this category and if one older building has close to 10% of it’s units owned by these folks how common are they in other developments and how much impact do they have on the broader market?

    Rob, perhaps you have an idea about these long term “condo collectors” who show no interest in renting.

  28. Skeptic

    Domus, Rob has done a good job of disassembling some of your arguments, its disappointing that you are just going to claim you don’t understand what he’s saying, rather than accepting or rejecting his arguments and giving reasons why.

  29. Domus

    Skeptic:

    you have a vivid imagination. I do not claim not to understand Rob. it is just that what he wrote had little to do with my original point, so I spelled it out further…..

    You are a piece of work, man…..

  30. Skeptic

    Ok, maybe I misunderstood you. I thought :”As for the rest I lost you somewhere between Cisco and leverage” meant you didn’t understand Rob.

    Anyhow, on another note, have you seen the REBGV graphs on prices at vancouvercondo.info ?

    It looks like we’ve already got about 8% gain for the year to date. Prices could go flat for the rest of the year and we’d still meet the 8% forecast that several have bandied around.

  31. Domus

    Skeptic,

    right now prices are not the variable I am seeing. I am looking at the listings and stocks: prices will come down in due time, as they always have.

  32. robchipman

    Domus wrote:

    “I am just saying that housing is not a very safe bet right now from my point of view. I accept you may disagree”.

    Its not that I disagree so much. I look at it differently. If I could find something with good metrics that I could afford (i.e. my cash isn’t getting sucked into a huge reno ;-), I’d buy it, pretty much regardless of where the market is. Its tough to find those properties now. Not impossible, but tough.

    Your original point seemed to be that if sellers can’t acheive their target price they’ll reduce, helping to fuel the downward spiral, and more to the point, it seems as if you think all sellers will reduce to obey the law of supply and demand.

    My experience tells me otherwise, and explains part of why prices are sticky on the way down. As prices rise its easy to get higher sales volumes as a result, but as prices fall you need other things to spur sales. People don’t lose money willingly, especially when they don’t even possess the money that is going to be lost. That point gets ignored an awful lot in the semi-apocalytpic descriptions of what’s to come.

    Now, if I wandered off topic…hey, tht’s what the internet’s for!

  33. awum

    In the hottest sales month (May) of last year, in the first seven sales days there were 1323 sales in Rob’s area. In May of this year, it is 1473 sales. We’re averaging a good 10% more sales per day this year than last. At this rate, it’s close to May 2005, which was a historical high. You can’t take a “bear” read on those numbers without losing your credibility. Keep perspective!

    Over the same period, last year there were 1841 new listings, and this year 2164. We’re averaging a good 18% more listings per day this year than last. OK, now that’s a bear playground.

    My question (aside from my usual question, who the hell has this money and where did they get in from?): Why so many listings? The inventory rise has little to do with softer sales, so what is pushing so many sellers out in to the open? Profit taking? New construction? Inability to flip pre-sales?

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