There were 241 new listings today and only 148 sales, for a sell/list of 61.41%
Inventory climbed somewhat, to 11,267, of which 2,504, or 22.22% were over 90 days.
Why do we have the low inventory? That has to surprise some people (in late June we had predictions for late July of 12,750, 12950, 13021, and 13331. Is it pre-approvals fearing rate hikes? (Personally, I don;t give that all that much credence).
The Best Real Estate Anywhere! 
Rob,
Is the percent of properties that sold over list still falling to a lower percentage level? It had headed down slightly and then you stopped posting the more detailed stats.
Thanks
Based on what’s happening to our closest neighbours, I would think it’s just a matter of time for the listings surge to kick in.
Inventory in Edmonton has exploded.
A CNN news cast on housing a couple of days ago mentioned that Seattle’s inventory had an alarming increase recently.
Have’nt checked out Calgary, but have heard several comments that the mood is starting to change there too.
Rob
Can you post the detail numbers please. Especially the over list.
coco:
Overlists are much lower than last year. That’s a fairly long term trend.
Overlists are an intersting stat. North Van, for example, always has a lot of overlists. You’d think that demand was higher there, and that prices should rise more than in other areas, right? In fact, its a North Van tactic to list certain prperties very sharply, and then generate multiple offers, often resulting in an over-list sale price. Everyone knows what’s up, and things unfold as expected; its simply something that is common in North Van.
Joe:
One quality of real estate is that it can’t move. Its completely local. It is subject to wider pressures, true, but it is local. So the question occurs to me: what is so special about Edmonton that declining values or exploding inventory or sub-zero temperatures there must, self-evidently, translate to the same occurrence here? Historical studies show that different markets move different ways, right? Are you saying that psychology will do the trick?
“Are you saying that psychology will do the trick?” – Rob
Why not? It is psychology which drove it up in the first place. NOT fundamentals.
Rob,
Just read the Andrew Coyne article you mentioned on the other thread. Did you see this one on RBC interest rate predictions?
http://tinyurl.com/2w78kh
Predicted to hold and go up next year.
Oh well, one can wish for lower rates or stock market chaos again.
Rob said…
Historical studies show that different markets move different ways, right?
So, we shouldn’t compare ourselves to other markets in the US. We shouldn’t compare ourselves to other markets in Canada. What should we do?
Rob, if you were talking with someone concerned about a significant drop in value of RE they had purchased in the last couple of years, what would you tell them to watch for? At what point would you tell them to get out?
Let’s assume they can afford the payments, but can’t afford to have the asset depreciate in excess of 20%.
What would you watch for? Or, should they just get out now?
robchipman wrote:
August 22nd, 2007 at 9:25 am
“In fact, its a North Van tactic to list certain prperties very sharply, and then generate multiple offers, often resulting in an over-list sale price.”
Rob,
100% of house sales in Vancouver could be sold “over-list sale price” if every seller listed their property at 25% below comparable properties and let things “unfold as expected.”
It makes great headlines that x% or x number of houses were sold at “over-list sale price.” However, at the end of the day, it’s the sold price that mattters, not the list price.
Rob
few points:
1) Mea Culpa- I for one thought inventory levels would be higher. talking it over with friends in the business, it seems like there were some sellers that were ‘testing’ the waters with rather outrageous prices (particularly in hot areas) and when there where no takers – they pulled the listings.
There are a few well known realtors who price stuff stupidly. One recently lowered a condo on Duchess in West Van from $1.7 to $1.3. Still over-priced (with it’s peek-a-boo view).
$1000/foot . no view. now it is $760/foot. Both those numbers are figments of the realtor’s imagination.
2) RE is definately local, but the wave is moving against it starting across the world in Spain and moving to the USA and now lapping on the shores on Canada and the UK.
We will see if it reaches Vancouver.
3) Finally you posted about 25% down not being adequate anymore for break-even on a rental property and 45% may be more reasonable.
This is exactly why I am out of this market. It makes no business sense to me what-so-ever. One has to hope for continued capital appreciation to make the investment work.
That may continue or it may not.
If it doesn’t, i would be very unhappy buying a property with 40% down and be cash-flow negative AND watch it depreciate.
One can only follow one’s own logic. I didn’t buy Nortel at $50 and missed out as it quadrupled, because it didn’t make sense. But then I didn’t hold on and watch it go to $4 either.
ADweaver,
“Let’s assume they can afford the payments, but can’t afford to have the asset depreciate in excess of 20%.”
This doesn’t make sense. If they can afford the payments, why wouldn’t they be able to “afford” a temporary house price drop of 20%?
They’d keep making the payments if it dropped & could wait for the temporary storm (20% drop) to pass.
Your so-called temporary may last ten years or more as Japanese housing market.
It is hard to say how long this housing correction takes.
TI
“Your so-called temporary may last ten years or more as Japanese housing market.”
Classic response. Thanks for the originality.
You’re welcome, Rob.
Adweaver:
I think we have to comapre ourselves to a lot of places, and consider a lot of stuff. But, sometimes I think we evaluate and analyse somethign like Miami quite well, but tack on an assumption to make the whole argument work. I’d like to see the assumptions tested before we reach the conclusion, because otherwise, what’s the worth of the conclusion?
If I was talking to someone who was concerend about a potential drop in RE values I wouldn’t tell them that there was a specific point where they should pull the rip cord. I’d be fooling myself that I knew.
I would tell them that they can’t lose money selling at a profit, but if they decided to hold they should envision taking their money and burying it in a tin box in the back yard. The money will always be there for them. The kicker is taht they don’t control the date when they’re allowed to dig it up. If they can live with that, hold. If they can’t, sell.
Sounds simplistic, but I think its more realistic than saying “I can predict the future”; remember, even CREA, which some will call a hype machine, has consistently under estimated the strength of this market. How can I tell someone when its time to exit, and do it with a straight face?
With your specific scenario, why would someone be able to afford payments but not be able to afford an equity loss of 20%? They’ve either had as much growth as they need (older investor who may not see the next boom), in which case they should sell, or they’re not in a position to hold, in which case they should sell. The point is, their situation determines the course of action, not my apprasial of the market. You’ve either got the legs to play or you’re playing an extremely dangerous game. If you don’t have the legs I say get out. If you stay, good luck, but either way, you’re on your own. This is, after all, real money.
A:
MOTO award for you. I think I said that everyone in North Van knows what’s going on. There is no secret. I don’t think it makes any headlines, let alone great ones. Have you seen it in the paper?
Fish:
My main point is that 25% down is a great deal anytime here in the Lower Mainland, and not a common scenario in any of the markets we experience. Also, I have many succesful investors who buy with 50% down or more. Its quite common. Maybe they’re stupid, but they are the ones who buy and sell the stuff. The asumption that 25% should be the single hard and fast metric simply doesn’t stand up around here. Yet real estate investing works, and not only in this market. It may not make sense to you, but the data is still correct.
Good move. “He who ecuses himself accuses himself.”
I agree it has worked, and may continue to do so, however I am not willing to risk it.
I had a friend in the late 90’s who borrowed against his house (as mortgages are tax-deductable in the US) and invested in aggressive mutual funds.
for three years he made a killing. Borrowing at 6-7% and was raking in 20%+.
After the crash of 2000, he nearly went bankrupt. What has always worked may not all ways work :).
Today I spoke with an appraiser friend. Getting burnt-out by people arguing when she does appraisals that don’t show a huge jump for refinancing or a price near or above asking for sales.
Says she is calling it as it is- the market has settled down- but owners, brokers, Realtors are at her, arguing when she doesn’t show a big leap in price.
The psychology has become…if you own a house…it has to go up several % a month…if not something is wrong. The same thinking that occured with other over-valued assets…dotcoms, gold in the 70’s and RE in the US.
Could it become even more over-valued…you betcha! I am very bad at calling the tops…but on the other hand I have never lost big on any investment and hope to keep that record up.
BTW – nice to have this well-mannered, even tempered discussion. We both know that whatever we write is transcribed hot air, the market has the final word.
-mortgage brokers under the gun to produce
-appraisers under pressure to “hit the numbers”
-RE agents pushing the buyer “well I have another offer” better grab it now.
“due diligence” that is “so yesterday”
I’m calling BS on the whole thing
..if it smells like BS or it looks like BS
than guess what…?
Well, Blueskies, I haven’t seen anything suggesting a downturn as you predicted. Am i wrong on this?
Fish, IMHO, many RE agents are like used car salesmen. I don’t know how many times I heard the ‘I have a buyer ready to pounce if you don’t’ approach. It makes me sick. Buying RE is a significant move for many people but these dirt bags just want to make the quick buck and could care less if you over extend yourself. Society can really be sick…
US foreclosures leap 93% in a year
http://tinyurl.com/3ypepz
and that is only the beginning.
Hey, but no sweat, we’re so damned different, it’s downwright hilarious.
Jay
infinite patience is required
at some point you’ll be able to tell hungry RE agents to go get stuffed
you will be able to wear a button that says:
Buyers Strike in Progress
I’m still calling for a downturn…..
maybe Thursday after lunch..
Blueskies, I’ll meet you at the store to purchase said buttons!
FISH
GREAT POINT. I missed out on the Nortel deal when it shot up to $12o bucks per share. But I missed out when it became penny stocks as well.
I missed out on the boom. But I’m also going to miss out on the bust.
It’s pretty sad to miss the boat. BUT IT’S WORST TO JUMP ONTO A SINKING BOAT!!!
RE market on the way down!!!!!
Rob,
I really appreciate your selling skill.You never seem to get tired of convincing people that real estate investment at this point can be a real bad investment.
I don’t know why would you do that.
People sold stocks in vancouver as well during last weeks panic selling and they will sell house as well if the panic sell starts which might already be happening ,we (member at this blog) don’t know yet.
Everywhere in canada,They’ve been saying ,we are different.Even at the Federal Level,Misnisters are claiming the same..we are different..can’t understand when will they stop lying to poor people.
Calgary/Edmonton were different as well but now they are seeing significant price drop.Same in vancouver..we are different ..but prices are falling.
Why don’t u give information regarding price corrections?
Why don’t u give information regarding price corrections?
umm.. Rob is a bear, this is a bear blog.
Rob has said several times “There will be a correction”
granted there may be a few bulls hanging about but all in all we bears stick together…. mutual support and all that
after all crapping in the woods is a team effort.
pass the Charmin please…..
Helen:
I’m not sure I know where you’re going with that. I’ll try to answer.
I don’t know when a correction is coming, or how big it will be. The system is too complex for me to decipher. As far as I can see we might have some continued appreciation for a considerable time before we have a correction. Again, I’ll point out that CREA has consistently under-estimated the strength of this market. I think that’s proof that we don’t know what’s going to happen.
The best I can do for anyone who wants to own real estate is advise that since we don’t know what the future will bring, prepare as much as possible for the worst. That doesn’t mean assume that the worst will happen. But it does mean prepare for it in case it does. And that’s what I do. It isn’t a stretch from there to the position that you can buy anythign, anytime, if it has merit. The fact is that its tougher to find good deals these days. They exist, but its harder to find them.
I’m not sure what info you want regarding price corrections. If you want the daily price change numbers, I’ll try to provide them as I did in the past, but I’ve been really busy. My administrator has left, I’m re-organizing my business, sales are brisk, and I’m building a house.
If you’re looking for price correction information from Calgary or Edmonton or Miami, look somewhere else. I don’t believe that price activity in those cities is a predictor for Vancouver. I don’t believe there is a causal relationship. Calgary is a boomtown, pure and simple. Edmonton is the City of Champions, but when you leave the rink after a win its still -40 outside. Miami is the sub-tropical capital of Latin America. They’re all great cities, and I’ve spent my share of time in each of them, but they’re very different from Vancouver. On top of that, studies have shown that the markets in the 4 cities don’t move the same way.
Some people assume that I can influence the market or my sales or income level by what I say, and that I would…polish the truth, so to speak, to do so. That’s not true. I don’t control the market, and I call them like I see them. A lot of people (Snick, for example) can’t accept that, and that’s just the way it goes.
I don’t understand the parallel between traders making money in equities in times of volatility and what I say about the real estate market. The people I broker transactions for know if they want to buy or sell. I don’t tell them what to decide. At best I help them make a decision one way or the other. Frankly, a no is as good as a yes in this business.
Without question Rob is one of the most informed realtors I know (I know him virtually, and will consider using him in real life).
That said, I’m a bear, until the fact pattern changes.
“Why don’t u give information regarding price corrections?” – Helen
You must be new to this site, Helen. If you want that kind of info, you’ll have to ask me.
For example, in BOTH Port Moody and Coquitlam,. I have seen…
Blueskies, you can crap all you want in the woods.
People are oblivious to reality and whats to come.
The bulls can sniff yer Rose Bud! 😛
Vancouver is rated the most livable city in the world
http://www.economist.com/markets/rankings/displaystory.cfm?story_id=8908454
…but I can always find something to complain about…