Friday Numbers

The bear run is over! There were 270 new listings Friday and 211 sales, for a sell/list of 78.15%. Of the sales 29, or 13.74%, went over list. 11 of those were on the Westside. 3 were in East Van, 1 in Port Moody, 5 in North Van,  3 in Maple Ridge, 1 in Coquitlam, 4 in Burnaby and 1 in Surrey.

Average list price of the sales was $552,888, while the average sales price was $541,206, a difference of $11,681, meaning the average sale went for 1.69% under list price. 27 properties went for list price. One property went for 17%($218,000) under list while the highest over list was 55% ($258,000) over .  Average days on market to sale was 39.

There were 18 million dollar plus properties sold with four over $2 million.

There were 94 price changes, of which 6, or 6.38%, were increases. The average original list price of price changes was $701,165; the average new price was $666,057, a difference of $35,108, meaning the average price change was -2.79%. One property had its price reduced 25% (2,000,000), which increases the average price reduction (its a large piece of land in Maple Ridge).  Average days on market to price change was 42 days. 0.71% of all listings reduced their prices Friday.

Inventory in my target area rose to 12,380 while over 90s also rose, reaching 2,151, or 17.37%. The  14 day rolling sell/list was 70.79%.

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35 Comments

Filed under Daily Numbers

35 responses to “Friday Numbers

  1. PUPPO

    Price Changes – Increases are significantly lower past few days, of the 94 price changes 88 were decreased (94%).

    OMG Market is Correcting. Sell!

  2. paulb

    OMG! the bear run is over and inventory is still increasing!!! Now what ?? 😉

  3. PUPPO

    Got to love Rob, for palying snakes and ladder of the real estate.

  4. chip

    Went away for a holiday with West Van inventory at 416. Came back and it’s now 462.

    Coal Harbour was 149 and now 174.

    North Van was 508 and now over 530.

  5. fish

    Thanks for the numbers Rob

    Here is my take on the market. Very much IMVHO…but based on having a few grey hairs and seeing a few cycles here and elsewhere.

    1) The rise is real estate in Vancouver has been a wonder to behold. It could be argued that 7 years ago, when the real boom started, housing was under-priced in Vancouver on an international basis. Now it is in the top 10 world-wide ($/per sq foot).

    2) All cycles come to an end. This one will too. No one can say when this one will end, though if I had to guess I would say we are past the peak. This is the choppy market one sees at the top – see the stock market.

    Spain – which has been the hottest market in Europe just saw a 8% yoy decline. The US has experienced it’s first nationwide decline in median prices for over 30 years.

    3) We are over-priced on all metrics. Income base of residents, rental rates, population growth etc.

    4) Median and Average Prices may still rise due to the higher bids for expensive property…the wealthy are doing very well world-wide compared to middle-class and poor…that will continue to drive higher priced housing for some time.

    That is what has been happening in the US. Even as inventory grew and sales dropped prices rose for some time. Now they are dropping, the hottest markets like Miami have already hit with double digit losses in asking proces. (BTW for the guy who asked me about sales prices not supporting such a large drop…sales prices are looking into the rear mirror..they are what prices awhere three months ago…asking prices are what sellers think they can get today)

    5) Vancouver will always have a good bid under it…it is a beautiful place to live…the climate is pleasant for Canada and there are thousands of Eastern Canadians who want to retire here (which incidentally is one of the reasons BC’s health care bill is so high).

    There are a lot of immigrants rich and poor who look to Canada for a stable home and again find Vancouver’s winters the easiest to deal with.

    6) The fiscal shape of BC is good, maybe the best it has ever been. This has been driven by many things from the building boom, to resources, to the olympics. If we follow the US , the residential building boom will drop off, but the other two are still economic drivers.

    So I see a slow drop off much like California has experienced, rather than the catastrophe that is unfolding In Florida. We may not have as many ARM and I/O mortgages as the US, but we are certainly over-priced for the incomes here (70% after-tax expense the papers say) and mortgage interest is not tax deductible. So it would not take too much…perhaps a recession in the US causing job losses, or another 1% rise in long and short rates or a drop in resource prices to start pushing recent buyers into trouble.

    Again I think we have passed the peak, and will see inventory rise and prices slowly come down…

    I could be wrong.

    The only way I can see this continue is if we go down the path to hyperinflation- which is certainly possible. If the central banks deicde to abandon all fiscal control, an stop raising rates, then prices could rise anew. But in that situation gold would be a better hedge than real estate.

  6. vintage

    Quote from Rob:
    …”the highest over list was 55% ($258,000) over”.

    Based on that number alone I’d say that regular would be buyers like myself stand absolutely no chance in this market anymore.

  7. Skeptic

    “One property had its price reduced 25% (2,000,000), which increases the average price reduction (its a large piece of land in Maple Ridge). ”

    Wow, that justifies a ‘new price’ sign 😉

  8. CheapMan

    The average price change is 35,108 / 701,165 = 5%.
    However, if we ignore that two mil, the average is going to be 2.24%.

  9. My wife and I were looking on the weekend for a place in an area bounded by King Ed-Main-30th-Cambie. Sigh. Even a crappy 2 bd condo with den was around 400-450. With an ordinary mortgage and 10% down, its still a whopping chunk of take home to lay out if you add on the strata and taxes (about 2800/mo). SFH fixer upper dumps are 600+. We need a reverse pied-a-terre; someplace to live in the city during much of the week but at those prices we’re going to rent further east and do a lot more driving than we hoped. Until the market corrects a bit (if ever) people like us are priced out. Not because we couldn’t theoretically afford it, but because there is lots to do in life that costs $, and 3 grand a month for a house would ask for too much of a trade off. I wonder how many other potential buyers sit on the sidelines, feeling the same way.
    Cheers.

  10. Mike

    The numbers are important, but I am finding that there is more to the story. When I go out looking and see mostly crap listings the inventory number really does not mean much to me.

    My target area is Coquitlam where the decent listings are still moving really quick while the junk just keeps piling up.

    Example: One house I saw which was an x-rental that had the usual quick paint and carpet job was listed for $600k. The house is actually worth an honest $530-$550k at best. Now, maybe this guy will take $560-$580k, but I bet if this house does not sell come Sept. he will just rent it out for another couple of years rather than drop the price.

  11. s.p.

    response to ceejay:
    my wife and i are too sitting on the sidelines waiting. we have about 100k saved for a down payment but have the ability to wait until things cool off. sure everyone keeps saying ‘you need to get in now!’ but to be honest – ‘we dont want to get in now’.

    people keep saying, ‘vancouver is different’ (insert any comment about climate/olympics/mountains/ocean here).

    to be honest – i have many other ways i would like to spend 30% of the 70% i would be spending on housing…so we will wait and see.

    cheers,

    s.p.

  12. awum

    Mike: There was a time not that many weeks ago when even the “junk” listings were selling. The whole market was hot.

    Q: What does a market look like that is in transition from “the whole market is hot” to “the market has tanked.”

    A: The decent listings are still moving really quick while the junk just keeps piling up.

  13. awum

    Say for the sake of argument I’m a prospective home buyer.

    Suppose I looked around my favourite segment of the RE market last year, and didn’t see what I liked. The inventory was too small; anything I liked was getting snapped up before I even saw it.

    Now, I look around my favourite segment of the RE market and hey, there is 33% more product out there, and it’s moving slower besides. I’m actually seeing things I like.

    As the market becomes less tight, expect the number and visibility of desirable properties to continue to draw some buyers in. Expect these properties to sell, and draw a good price, keeping up the number of sales and to a lesser degree, keeping the average sale price rising. For a while, at least.

    As the expectation of near-instant value appreciation evaporates from among the less desirable properties, you can expect to see them becoming even more difficult to sell. The number to watch into the Summer is the inventory — I’m especially curious to see what happens in FVREB’s inventory in the next couple of months.

  14. robchipman

    awum:

    I think that you’re theory sounds like it has merit, except that I’ve noticed, and been saying for quite some time, that inferior listings take long time to sell while listings with value generate lots of action.

    Now, either something has changed and I haven’t noticed it (I don’t think so – look at over 90s, etc), or the observation that inferior listings are only now begining to pile up is incorrect (and I obviously go with the latter).

    I also think that you’re underestimating that effect of discretionary sellers such as the one Mike describes. If he can’t get a big price he can simply re-rent – since he’s bought rents have risen, and there is a good chance his costs have dropped. What is the net effect of him leaving on the strong demand/supply interaction between a motivated buyer and seller? The buyer doesn’t see as many inferior listings, true, but effective inventory drops (again, we’ve been remarking for a long time that despite increased inventory its tough to find good listings for buyers).

    Ceejay:

    I’m probably reading you wrong, but are you really describing a buyer who wants a large Westside apartment as a second home for part time use?

    Mike:

    I sell a lot of tired rental properties. I will say that in past years (’05/’06) I could demand absolute top dollar for them despite receiving criticism on condition. I haven’t done that lately (although there is one that might be in the works – I’ll update later).

    Two thoughts occur to me: first, cosmetics aren’t important when buying a property, but they are important when selling. In a strong market curb appeal can become less important. Time and again I’ve set a new price record with a beat up property, with the previous sale being a doll house. (In a down market you’ve got a different siutuation entirely). Second, you’ve heard before that most renos don’t pay off, dollar for dollar. That should indicate that the difference between a house that needs work and one that doesn’t shouldn’t be huge. That’s not always the case, of course, (and I’ll admit that clean, well-decorated, well priced vacant houses are what Realtors are always looking for) but, all things being equal, from a buyers point of view concentrate on location and the bones of the property more than its condition.

  15. Hi Rob. Yes, you’ve got it exactly.

    s.p..good luck. I think you’ve got your priorities right 🙂

  16. tqn

    http://www.news1130.com/news/local/article.jsp?content=20070625_073257_4904

    Group of presale buyers have been told their contracts are void
    Monday, June 25 – 05:57:00 AM

    John Streit
    NEW WESTMINSTER (NEWS1130) – Presale buyers have had troubles with the Riverbend project in Coquitlam and now people in New Westminster are finding themselves in a similar frustrating situation.

    Forty one people who put down money in 2004 have been told their contracts are void. CTV is reporting that it’s legal because of a clause in the contract.

    It states that if the completion date did not occur by May 2005, then the contract would end unless the parties agreed to extend it.

    Anyone heard this?

  17. jojuchst

    Rob

    I thought vacant houses are harder to sell than furnished ones?

    But realtors would prefer vacant ones?

  18. Domus

    Rob said:
    “Now, either something has changed and I haven’t noticed it (I don’t think so – look at over 90s, etc), or the observation that inferior listings are only now begining to pile up is incorrect (and I obviously go with the latter).”

    Rob, maybe inferior listings are not piling up. However something is definitely piling up. Inventory in your area in 35% larger than a year ago. Whatever it is, something is piling up.

    “I also think that you’re underestimating that effect of discretionary sellers”

    Fair enough. I am sure many people will postpone sales for a while. It has been happening in the US.
    However, as the market is not picking up south of the border it seems that sellers are starting to accept substantial cuts. Simply put, you cannot postpone a sale forever to keep your paper gains intact. It’s a time game.

    I think Awum is spot on, good analysis. Am really curious to see how things unfold in beautiful Vancouver.

  19. e

    i think a lot of people assume that it takes more sellers to make prices go down. however, consider the other side of the equation. if the bulls tire out, then there could be a decreased demand, which will draw down prices (i.e. people just simply not wanting to pay $1M for a certain type of house).

    there is no real reason for them to tire out right now, as economy is strong, etc. however, as the markets are unpredictable, that is not to say it won’t happen. sometimes markets tire out even when the going is good. tech stocks are an example. they were so heavily demanded and prices went up for years. then people just got tired of investing in bleeding companies, and demand just dropped.

    remember, it is the buyer who sets the price. if the depth of bids is very shallow, then the price will be very volatile. (i.e. 1 person who wants to buy benchmark home at 600k, next person wants to buy 570k,next 550k).

    right now we are in a bull market where there are like 5 people who want to buy at 600k, 5 who want to buy at 595k, 5 at 590k, and so forth, so it is harder for prices to correct.

  20. robchipman

    domus:

    The idea that a seller postpones a sale in order to maintain paper gains assumes that the seller is motivated to sell in the first place. Few people are motivated to sell at a loss. Death/divorce/transfer/ and family size increase are must sells. Investors who can hold (and everyday that rents go up there are more who can hold) don’t need to sell. If they decide to sell for purchase price plus 100% instead of purchase price plus 150% you could argue that they sold after deciding not to maintain a paper profit of 150%, but its not a meltdown. I stand by the statement that a discretionary seller may well ask for the moon and stars, but won’t ever sell at a loss.

    That brings us to the old question: if buyers become less willing to pay high prices (e’s very important point), volumes will drop. Only the have to sells will sell. To motivate more sellers (increase the number of “have to sells”) there has to be another change (huge increase in vacancy rates, drop in rents, increase in carrying costs).

    Bottom line: Mike says he sees junk listings piling up. They’ve been piling up for a while. Either he’s just noticing them piling up, or he’s seen it happen as long as I’ve been seeing it happen. Regardless of his experience, awum’s conclusion is that this is a sign of a tanking market. If awum’s correct then I have to wonder: how long does it take for the market to change from hot to tanking, because, again, I began pointing a pile up of listings last summer. Over 90s have dropped as a percentage figure, as well.

  21. robchipman

    jojuchst:

    Clean, well priced and vacant. That’s the best. No question.

  22. Domus

    “If awum’s correct then I have to wonder: how long does it take for the market to change from hot to tanking, because, again, I began pointing a pile up of listings last summer. Over 90s have dropped as a percentage figure, as well.”

    Short of big external shocks it can take a full couple of years to see large price drops like in Florida, Ohio, Michigan, Boston, Southern Cal. Of course, another reason to sell for an investor would be zero (or negative) real returns over 2 or 3 years. Nobody wants to see their hard earned money losing its purchasing value over time.

    When do seller start considering dropping prices? Assuming they still make a nominal profit of some kind my best guess is within 12 to 18 months.

    At the beginning they will sit out and wait: it might be a temporary market blip they tell to themselves.
    As time goes by and the market stays flat (or goes worse like in the US) the investors will start thinking about alternative ways to use money.

    I can be wrong, but I think that Vancouver’s RE market might enter a serious price decline phase starting in the summer 2008. I would be surprised if it happened earlier, but it would be possible if the US crash keeps on worsening.

    For the time being, it is a waiting game: sellers can stay put, prices are not going to jump in any one direction, inventory keeps building up.

    Seems like a stationary scenario but powerful forces are stirring beneath the surface.

  23. robchipman

    awum:

    “Now, I look around my favourite segment of the RE market and hey, there is 33% more product out there, and it’s moving slower besides. I’m actually seeing things I like.”

    That’s a good theory. There’s 2 problems. First, I keep asking Realtors how they find the market, what with the increased inventory. They still say its tough to find good product for their buyers. That doesn’t make sense, given higher inventory and relatively stable over 90s, but its what I hear and experience. Second, prices have gone up by as much as 15% since last year – what was getting snapped up at $400,000 now costs you $460,000. And its not really moving too much slower than last year – remember that we started slowing down last summer (I caught all kinds of flak speculating on whether we were in summer doldrums and how long they’d last), and that we just had a Monster May.

    You’re right: if it slows down in the future it will slow down. But 33% more listings across the board doesn’t mean 33% more desirable properties. Desirable properties are in short supply, sell fast, and sell over list. There is much more demand for them. Increase supply by 33% and you may not notice a slowdown in absorption simply because demand is high (witness the North Van over list constant). If all that’s happening is that there are slightly more desirable properties available for the continuing strong demand coming from motivated buyers, do you really see a decline as a result? (That’s why I think we have guys saying its hard to find good product despite the increase in total inventory).

  24. Domus

    Rob,

    changes do not happen overnight. Sub-standard stock is the first to become uninviting. Maybe 18 months ago the same would have been snapped up fast, not now.

    The market could revert back to grwoth? Sure, strangest things have happened in Vancouver RE.
    Is there a possibility this inventory build-up is a sign of a more serious slowdown? You bet there is. One third increases in inventory give a strong signal to many actors in the market: people do take notice even if it takes them a while to do so.

  25. Annon

    Hi Rob, is that photo taken at The Chief? Wondering if it is the sun or smog, the picture seems a little not clear. But I am sure if you were up there, it must have been fun.

  26. chip

    I think it’s the lookout above Deep Cove.

  27. robchipman

    Domus:

    We know that among investors this kind of thinking:
    “Of course, another reason to sell for an investor would be zero (or negative) real returns over 2 or 3 years. Nobody wants to see their hard earned money losing its purchasing value over time”

    is not typical. Most real estate investors hold long term (I’m not referring to pre-sale flippers, but to buy and rent out investors). History shows this time and time again. They hold on through cycles. A few years of negative returns doesn’t make them sell.

    When did we hit 12,000+ inventory? It wasn’t yesterday. The day’s not over but we’re running an alright sell/list right now (168/198). My take (completely unscientific) is that we’ve still got some legs. Chip:

    You win the prize! For those who don’t know where it is, go to Deep Cove, turn left on Panorama, the trail is on the left, just past the park. Nice walk to the bluffs. Take your dog.

    Deep Cove is on the right, with Metrotown behind it, the bicycle dome on Barnet is the little white thing in the middle, and the tower on the top on the left is SFU.

  28. Domus

    Fair enough. RE investors may be a different breed and you are the expert on that. It is still not pretty to see 3 years go by with negative or no appreciation.

    I don;t think we have had 12k for that long. Was it April when we broke through that level? I think inventory is definitely giving some signals. What they mean is up to us to guess.

  29. $froma$ia

    Oooooo! Rob, Is it your Aaron Best that has a house on Patterson St. Burnaby for sale?

    I love inventory, so much to choose from. 😛

  30. jay

    The shot is from “Correy Rock” above Deep Cove and its not really a good spot to take the dogs unless they are well behaved. I knew one that was playing with out looking and took a long spill…. You can almost see where the young people of the area had to move if you look East as far as the eye can see.

  31. robchipman

    Domus:

    We broke 12,000 in October ’06. Over the winter we dropped off, reaching 8,900 in February, and have climbed back.

    $-

    Yes, that is our listing. I’m glad you like the choice. Buy it now, while you can!

  32. Mike

    I read several times where people site the U.S. housing market as an example of what we might soon experience. However, is it not true that the U.S. has been in an economic downturn for several years now, thus their low interest rates? While here in Canada and BC our economy has been and is still on fire.

    People are still pouring into the province. My employer for the first time is hosting a job fair this summer.

    To get some serious cooling in our housing market would we not need to see a cooling in the BC economy as well?

  33. Domus

    Mike,

    the US is not in a downturn. Until last summer the economy was growing at over 3% annual rate. The growth has now halved due to housing woes.

    The housing downturn happened in the middle of a healthy economy, with almost full employment and historically low interest rates.

    The main problem, according to most commentators, was low affordability due to price increases: this led many poorer people to overextend their borrowing (with complacent banks and low interest rates) which hit them hard when rates were pushed back up in 2006.

  34. $fromA$ia

    How much is it asking? I have a fat down payment.

  35. $fromA$ia

    OK i saw it. 😦 The kitchen’s picture really lacks for a home asking $600K+! Oh well.

    Btw, were there any permits pulled for the updates? We are talking $600k you know.

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