Tax Freedom Day Numbers!

Another good one for the Bears! There were 380 new listings today and 214 sales, for a sell/list of 56.32%.

There were 119 price changes.

Inventory in my target area rose to 12,207 while over 90s also rose, reaching 2,116, or 17.33%. The  14 day rolling sell/list dropped to 72.58%.

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51 Comments

Filed under Daily Numbers

51 responses to “Tax Freedom Day Numbers!

  1. ObserverX

    Big listing day — I thought activity is supposed to slow down during the summer??

  2. M-

    ObserverX: from Mohican’s weekly inventory update post (http://langley-financial-planning.blogspot.com/2007/06/inventory-update_16.html) at Langley Financial Planning, you can see that last year inventory continued to build until early November. I’m not sure if this is due to high numbers of new listings, or low numbers of sales, but Rob’s numbers from last year should indicate that.

  3. Skeptic

    Observerx: Take a look outside, it doesn’t look much like summer

    M- : Inventory has flatlined over the last month

  4. Johnnyrent

    Rob

    Question. In the past three days there have been 371 more listings than sales but inventory is up only 198 during the same period. I didn’t think most expiries kicked in until the end of the month. Any thoughts?

  5. jojuchst

    Johnnyrent

    Maybe due to sellers terminating their contract early to go on vacation?

    Rob

    Correct me if you can but after a seller signs a contract to sell for say 90 days he can always give in writing an early termination notice and take the listing off the market or even re-list with another agent.

  6. awum

    Hmm, if these are the doldrums, they are hitting a little earlier than last year.

    If we end this month with substantially more listings (after the usual end-of-month listing expiries) than we started, that means MoI is going to pick up faster than I expected.

    I’m practically giddy with expectation…OK, not really. It’ll take a couple of weeks of this before I’m really interested!

  7. awum

    …but 24 expiries per day over the last three days is not a big deal in my view, Jonnyrent. That’s only about 0.2% expiring without being sold per day.

  8. deb

    so places can expire any day of the month right? I saw a place on MLS and now it is gone, but I don’t know if it sold or is expired. I checked the realtors site and it doesn’t have a great big SOLD plastered on it.

  9. General Zod

    One of the reasons the whole country doesn’t move to this city is happening outside our windows right now. Every once and a summer the rain doesn’t stop.

    What happens after two rainy days in Vancouver?

    Monday.

  10. Realist

    Or:
    Q: How do you tell if its summer in Vancouver?

    A: The rain gets warmer

  11. awum

    In case anyone’s interested, here are the YoY increases in the benchmark price for apartments in the REBGV area:

    Jan 2006 20.86%
    Feb 2006 22.59%
    Mar 2006 22.61%
    Apr 2006 21.79%
    May 2006 24.40%
    Jun 2006 24.18%
    Jul 2006 22.83%
    Aug 2006 22.06%
    Sep 2006 21.60%
    Oct 2006 18.67%
    Nov 2006 17.00%
    Dec 2006 16.96%
    Jan 2007 15.33%
    Feb 2007 15.31%
    Mar 2007 14.55%
    Apr 2007 14.74%
    May 2007 11.47%

    Single digits soon, maybe? Keep in mind, this is a lagging indicator — it can continue to show a YoY increase initially as the benchmark actually falls.

  12. Domus

    Awum,

    I think the correction is well under way in Vancouver. Thanks for the numbers.

    I really wonder how long it will last this time and how much of the real value of housing it will eat. If we were to use the past as an indication, this could be bigger than the early 1980s downturn. Real interest rates (nominal – inflation) were not that dissimilar.

    Unless the BoC decides to allow inflation through the door, those large mortgages will be a painful long-term burden for many people. Small rate increases will make them even harder to manage. This could last a while.

  13. lola

    I am a bear but I think this guy (link provided below) makes some good points. Fellow bears, let us try our best not to be sour grapes kind of people….nor revel in others potential misery. Here is something that may knock some sense into us. Mind you, I do accept that prices can’t go helter skelter forever!

    http://www.bobtruman.com/blogs/bob_truman/archive/2007/06/21/what-were-they-saying-last-year.aspx

  14. el_bubb

    Go listings Go.

    Can’t wait till Spectrum leaves it’s assignment stage.

  15. Snick

    “I think the correction is well under way in Vancouver.” -Domus

    I agree

  16. The Guy Who Mocks Rob and Aaron

    Rob:
    Stick to RE, you sound like a longshoreman after his first Political Science night course.

  17. Mike

    I live in the Coquitlam area, which I thought might track similar to Rob’s Greater Vancouver numbers, but at a smaller scale.

    For the last 20 days I have been running the same saved mls.ca search for my area. I am not seeing any increases in the total number of listings. My search is for a single detached Coquitlam home in the 450k- 600k range.

    Everybody says inventory is increasing I just can’t seem to prove this to myself, any ideas?

  18. Joshua

    Mike: it has been my impression, from Rob’s numbers, that inventory over the last 3 weeks or so has been pretty flat – ie. hasn’t gone up or down too much (though still higher than last year). IIRC, we cleared 12,000 but then dropped slightly under 12,000 and are now up over 12,000 again. The last 2 or 3 days have seen a bit of a jump though, up to 12,207. Perhaps you are seeing the same trend in Coq?

  19. Puppo

    I live in Coquitlam as well and monitor the Mls market. The inventory is the highest since 2005. Median price is hovering between 649K to 669K. (trend is Up).Probably the reason why there is no or little movement in below 600K inventory.

  20. An

    “I think the correction is well under way in Vancouver.”

    May 2007 11.47%

    So an 11% INCREASE is a correction (while less than the ~20% of last years record year, it’s still going up)? Or perhaps your definition of ‘well under way’ is different from mine.

  21. Mike

    I am seeing a completely flat line in my target search for Coquitlam inventory. I have only been tracking for 20 days. Lots of junky listings, the nice stuff still seems to move quickly. Price also seems to be flat. Just feels like a summer time market with no real movement either up or down.

    I guess I was expecting a downward movement based on all the comments, or at least something that could be measured.

  22. awum

    ObserverX/M. – in Rob’s area 2006:

    The rate of sales peaked toward the end of May (averaging about 270 per day) and then gradually drifted down through the summer and into the Fall. It was more like 125 sales per day by October.

    The rate of listings peaked just a little earlier (at an average of about 310 per day) and drifted down but not as fast as the sales, through the summer, to about 210 listings per day by the end of August. Listing activity then actually picked up while sales didn’t.

    Did that affect prices? Yep. The REBGV benchmark price for apartments levelled off and then fell in October and November last year.

  23. Domus

    An:

    just a little example to reply to you question.

    Suppose that the price of the representative house was $500k on April 2006.

    Using the Year-on-Year appreciation of Awum, we can easily check that in April 2007 the price would be $573k.

    Now, suppose that the same house cost $510k in May 2006: I am allowing for a month-on-month appreciation of 2% (quite generous).
    Applying Awum’s YoY growth rate of 11.47% gives a price in May 2007 of $568k.

    This simple example shows that from April 2007 to May 2007 there has been a drop of roughly 1%.
    Surprising? Not really because the figures show Year-on-Year appreciation. A sudden slow-down of Y-o-Y appreciation (even if it stays positive) usually means that month-on-month appreciation has gone negative. It is Algebra 101.
    The intuition is the following: a slowdown in long-term (YoY) growth is usually due to negative short-term growth (MoM).

    Do the math again yourself if you don’t trust me.
    The big question is: will it last? And how negative will it turn?

  24. Domus

    I just noticed that Awum had already explained what i illustrated above in detail.

    See the sentence he added:
    “Single digits soon, maybe? Keep in mind, this is a lagging indicator — it can continue to show a YoY increase initially as the benchmark actually falls.”

    An, maybe we should all read posts more carefully, kudos to awum!
    Anyway, the above numerical example is still very valid.

  25. jesse

    “Now, suppose that the same house cost $510k in May 2006: I am allowing for a month-on-month appreciation of 2% (quite generous).
    Applying Awum’s YoY growth rate of 11.47% gives a price in May 2007 of $568k.”

    Appreciation of 3% puts May 07 at $574k. Most annual appreciation happens in the spring so 3% isn’t that unreasonable. M-o-M isn’t that useful unless compared to previous years’ M-o-Ms.

  26. It's not Zod it's God

    Whoa

  27. Domus

    Jesse,

    even if you put appreciation between April and May 2006 at 3% you will see that you get 0% monthly growth between April and May 2007. Just try.

    Let me also that, given the YoY figures presented by Awum, that monthly appreciation of 3% from April 2006 to may 2006 is very high (it would imply a yearly growth of more than 36%!!!! Even trimming it to 30%, that sounds too high even for the earlier hot period).

    Conclusion: even if your assumption was right, you would have that a YoT 11% gain in May 2007 translates in 0% growth between April and May 2007. (I personally I think that there was small negative change, but I am happy to accept your assumption).

    Now, since we are at it, let’s play a little game: take an investor who bought in the past 12 months. Given transaction costs and low rents, the only option to make money is capital appreciation. But even in your optimistic scenario, monthly growth has stalled to 0%. What do you think the investor will do if this situation lasts a few months or even a year? keep the house and subsidize tenants? After all Rob says that you should be in for the long ride: it is starting now…..

  28. Mike

    Lots of facts a figures flying around. I wonder when somebody is going to tell sellers that the market is not looking too good anymore, so they can start to lower prices.

    If you are serious buyer and are out in the field looking you soon realize that this is still a sellers market.

  29. Domus

    “I wonder when somebody is going to tell sellers that the market is not looking too good anymore”

    Mike this will NEVER happen. Buyers have to think with their own heads: for realtors is always a good time to buy AND sell.

    Also, even if prices do not go up much any more, do not expect a huge drop in 6 months. RE markets don’t work that way. In the US the crisis has been going on for 12 months now and prices are only marginally lower in many place (in nominal terms, the drop is bigger if you account for inflation). However, as the slowdown is going to last for a while (as in the past) nominal prices will become more common. it will take a few years to unwind completely, just like it has taken a few years to hit the top.

  30. blueskies

    Most annual appreciation happens in the spring ……………….

    can I assume this bold assumption will no longer be true a year from now?

  31. Snick

    Puppo,

    The Coquitlam area is showing price declines and stagnation of what is actually listed on a daily basis.

    “The median is not the message”.

  32. bearette

    Excellent example, Domus. Geared to us non-financial services folk. Now I have a comeback for snotty coworkers.

  33. jesse

    “even if you put appreciation between April and May 2006 at 3% you will see that you get 0% monthly growth between April and May 2007. Just try.”

    As I said, most appreciation is usually in a few months, not spread over the year as you imply. So, for example, it could be that 4 months exhibit 3% growth and the other 8 months exhibit 0%, for a total of 12% for the year. May-June may be flat but June still has all the gains seen in April-May.

  34. jesse

    “What do you think the investor will do if this situation lasts a few months or even a year? keep the house and subsidize tenants? After all Rob says that you should be in for the long ride: it is starting now…..”

    Agreed. Slow moving train wreck. Negative cash flow investor with not much equity (or just greedy) would probably wait until next spring and hopefully the next substantial capital gain, if he can hold out. The fall looks to have a lot of listings so that normally puts pressure on prices. Next spring who knows.

  35. News Flash

    Domus said: “I think the correction is well under way in Vancouver.”

    The Bulls hope the “correction well under way” continues for many years to come. I guess prices are correcting up cause that is still the trend.

  36. jesse

    “even if you put appreciation between April and May 2006 at 3% you will see that you get 0% monthly growth between April and May 2007. Just try.”

    I understand what you’re saying. I think we’re making slightly different points. I agree that YOY looked at in a vacuum can be deceptive unless you crunch the numbers. But a 1% drop MOM after several months of 2% MOM gains still isn’t that bad compared to 2006.

  37. Domus

    “But a 1% drop MOM after several months of 2% MOM gains still isn’t that bad compared to 2006.”

    We have not had many down months in the past 4 years. It could be a fluke. It could be the real thing. We can just wait and see.
    Fact: price increases have slowed down YoY and gone back to negative month on month.
    I don’t know the future: it could be just a pause. I guess not.

  38. awum

    The thing that surprised me was just how quick the benchmark price reacted to an increase in “months of inventory” last fall. The link may be tighter than you might think. Fits with the Edmonton news as well, maybe.

  39. Domus

    awum:

    from observation of the RE crisis in the US, I have noticed that:

    1- transaction volumes are very sensitive to inventory build-ups (at least at the beginning). In many US cities (especially California) as inventory built up, sellers were reluctant to drop prices which led to a drastic decrease in sales. Only now it seems that prices are coming down more substantially, after almost 12 months of crisis.
    This does not bode well for people who make a living out of RE transactions, as it means there is less loot for them.

    2- the slow adjustment is prices means that housing cycles are prolonged and painful for all actors: sellers, buyers and realtors. The first category to lose are investors: no appreciation and oversupply of rentable properties. Realtors can hold for a while, but many of them had to change job in the US.

    The most strinking feature of the US experience (in my opinion) is the fact that you don’t need drops in prices to trigger a large crash in the market. A simple stop to nominal appreciation is enough to stop the market in its tracks. This can happen also in the middle of a strong economy, like the US was 12 months ago (when the Fed was still raising interest rates).

    This does not bode well for our Vancouver……

  40. awum

    Those apartment numbers, for Domus:

    April 2007 Benchmark: 355,108
    May 2007 Benchmark: 358,428

    It’s still up, actually Domus, sorry! That’s a 0.9% increase. Why is YoY down so much then? Well:

    April 2006 Benchmark: 309,484
    May 2006 Benchmark: 321,559

    That’s a 3.9% increase over the same period last year (much more than your assumed 2%). Hence the lost ground on YoY.

    By the way, June 2006 saw about a 1% increase. June 2007 would have to increase by less than that (or decrease) in order to bring the YoY number down further.

  41. Domus

    Very good, can’t argue with numbers! Cheers awum!
    I am happy we were not too far off in any case.

    Nonetheless I have to recognize that a 0.9% increase would still give a 11% YoY over 12 months. No crash yet…….

    Let’s wait and see what happens to the benchmark in June 07. You can probably compute this quite easily: what is the monthly growth rate which would bring the YoY rate in single digits? I guess something around -.4% (four tents of a percentage point). A very small monthly drop in the benchmark and we’d be in single digits YoY.

    The bears might be wrong again……or maybe not this time!

  42. Domus

    Hey, based on the past few listing days maybe the benchmark might really have a small downtick…….nah, this is Vancouver, best place on earth…….

  43. robchipman

    “Fact: price increases have slowed down YoY and gone back to negative month on month.”
    “Let’s wait and see what happens to the benchmark in June 07”.
    First, remember what benchmark prices are. They’re an educated guess at what a benchmark property would sell for. They balance the weaknesses of average and median numbers, but they have weaknesses of their own.
    Second, we’ve seen negative MoM price changes throughout the past few years from time to time. That’s the nature of a market. However, in May house prices rose in 12 geographic areas and fell in 2. Attached rose in 2 and fell in 6. Apartments rose in 9 and fell in 2.

  44. Domus

    Rob,

    how often have we seen benchmark properties’ down months in the Spring during the past 4 years?

    I’d be curious to know. Halving of yearly growth rate is not small change…..

  45. Skeptic

    The forecast for this year was only 8%, we’ve probably done that already.

    We could see 10-12% by the fall and then give up 2-4% (wouldn’t the bears get excited) and still hit the 8% for the year (followed by another strong Spring 2008).

  46. jesse

    “First, remember what benchmark prices are. They’re an educated guess at what a benchmark property would sell for. They balance the weaknesses of average and median numbers, but they have weaknesses of their own.”

    This is a fair point. I will credit the local REBs for taking a stab at benchmark prices, the closest thing we have to Case-Schiller (which isn’t perfect either). In any case there are markets in the US without access to benchmark prices so all their bloggers can talk about is how medians and averages suck.

  47. robchipman

    Domus:

    I don’t track benchmarks, so I can’t answer your question. I like them , but they are hypotheticals.

    Halving of yearly growth is not small change. We’re not there yet, but we’ll get there someday. Meanwhile, although YOY is a lagging indicator and we can still have positive YOYs while having negative MOM, this market is still going up.

    Skeptic:

    Dec 31- May 31 we’re up 8.6% on apartment benchmarks and 6.6% on averages. Attached are 7.1% and 6.7%, while houses are 10.5% and 9.9%, respectively. The last few years the maintstream predictions have been on the conservative side.

  48. Skeptic

    Thanks for the numbers Rob. Its nice to see that buffer building just in case there is a correction down the track.

  49. awum

    The last few years the mainstream predictions have been on the conservative side.

    “Conservative?” “Wrong” might be a better word…

  50. robchipman

    Conservative equalled wrong. They consistently undershot. I think they undershot for 2007 as well, but time will tell.

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