There were 311 new listings Friday and 176 sales, for a sell/list of 56.59%.
Inventory hit 11,056, and over 90s hit 2,377, or 21.50%.
Filed under Daily Numbers
very bearish week to start Sept.
To paraphase our host’s rental scetion:
SELL SELL SELL.
Surge in listings after the summer “break”.
Listings always ramp up in September. You cannot draw many valid conclusions from this. Remember that last year Autumn inventory was high and prices decreased from their peaks in July ’06 only to rebound in Spring ’07. I think the Spring of ’08 will tell you if the market has turned into a US-style housing recession.
Just curious. You sound bullish to me. How would you explain the inventory surge beginning around now in 2004, and the slowdown in sales along with declining prices then?
I agree with Jesse that this spring will tell the tale. I though, wrongly, that the top was in last year when the BoC paused. Spring came the prices rose and so did the BoC bank rate. Now that they are on hold there is no pre-approval rush and if they start to drop, the rate the people who locked in and bought thinking that rates are going up will not be very happy. Dropping rates might even cause people to wait even more as, why buy if the rate will be lower in the future. I know that there are ARMs but these products are in the news lately and they are losing their appeal. The turmoil is has crossed the border but has yet to scale the mountians but I am sure it is buying the necessary gear as I write this. We shall see soon enough.
year over year it’s the same thing as last year. People don’t buy RE when their kids go back to school. That’d be crazy
I think we will find out where this market is going well before Spring 08. While comparing fall to spring/summer stats may not offer a lot of insight, I’ll be very interesting to see how these stats compare to the same months in 2006.
I’m not so sure that it matters that more buyers always come out in the spring. Its not just the number of potential buyers vs. sellers that has inflated the housing bubble but the price expectations of buyers. I believe many people are buying now with the belief that if “I don’t buy now, I will never afford a house.” When those same people believe that house prices are going down, they will hold off purchases or will expect sellers to sell well below list. This is a classic deflationary scenario.
If house prices begin to slide during the next few months and the US slips into recession and the local media picks up on the “house prices are falling” story (as the media in Alberta seems to be doing), then I think expectations of falling r/e prices will intrench themselves in the minds of potential buyers. I believe that whatever happens this winter with the economy and r/e will definitely carry into the spring.
It seems there might be a slide. This time it might actually happen because of the downturn in Alberta and the issues with the U.S. It doesn’t seem like many people have seen or heard of the Alberta downturn. Something so close to home may make people think twice.
I feel sorry for the new buyers who bought at a peak…very unlucky. There is no definite evidence of a downturn but my Spidey senses are tingling!
Feed the Bears!
I went to look at some properties today, overheard my realtor talking to several other realtors that they have no buyers, just homes for sale. Only the realtor I’m using has buyers.
I wonder what happened to all the buyers as every realtor in the past always had a few.
Smart buyers entering in droves…at current price minus at least 18%.
coco, were you just curious or seriously looking? I won’t even start shopping until the prices fall 25%…and then I’d lowball.
“Only the realtor I’m using has buyers. ” – Coco
Who sez? Him?
Those who can afford to keep their houses won’t lower the selling price. So we need to see job losses first. With so many corporates at their top performing year and slower growth expectation in the next few quarters, expect to see profit declines and layoff intensifies.
It’s not lie, cell phone calls about arranging showings for other buyers. Today we were delayed and the realtor had to call the other buyer and realtor stating that they were going to be late for the next showings.
You can wait for an overall correction on every property of 25% or you can find places that have been reduced several times and get that amount off today. The places I looked at today have had 30k – 80k price reductions because they have ugly interior decor, ugly wallpaper and ugly interior paint colours. Similiar properties in the same area have sold for a lot more. The majority of people just want to move into a place where they don’t have to paint anything, so if you don’t mind putting in some elbow grease on some interior cosmetic changes then there is some deals to be found.
“I feel sorry for the new buyers who bought at a peak…very unlucky. ”
I heard that in 2004 and 2003. Now who is feeling sorry for who? The ones who held out in 2004 need a 40%+ correction just to break even. Those in 2003 need 50%.
“Those who can afford to keep their houses won’t lower the selling price. So we need to see job losses first”
Yes, job losses and interest rates increasing. Every correction Vancouver has ever experienced came AFTER significant interest rate increases and unemployment.
I don’t know why people bother discussing correction until after we see unemployment much higher and interest rate increases by at least 200 basis points.
I am not saying it wont happen. It just isn’t happening yet and doesn’t appear to be on the horizon over the next year.
BTW, the exterior of these homes were in great condition with nice paint colours, but inside yuck.
How bad… you ask? Devil masks with tongues hanging out, rhino heads on pea soup green walls and pea soup green ceilings. Another had bold brown stripe wallpaper on alternating walls mixed with pink floral wallpaper. Another had a beat up country look with rough beat up barn doors for closet doors and the worn distressed look on the interior doors. Another had navy blue, dark green, and deep yellow, ceilings were painted to match the wall colour so it looked dungeon like.
Yawn… is it the end of the world yet? Wake up this bear when it is.
Newsflash..”Yes, job losses and interest rates increasing. Every correction Vancouver has ever experienced came AFTER significant interest rate increases and unemployment.”
The same was true in the US. This time housing is dropping even while the economy was white hot and will lead the economy into recession (IMO).
Met today with a developer…forever optimist. Says we are NOW in the beginning of the housing recession here in Vancouver. however expects no more than 10% drop in most except the most over-priced condos/homes.
MLS # V642774 just dropped it’s price $388K (15.6%) and is still over priced
News Flash, I’m just glad I bought in 2001 😉 I’d like more properties and the ability to relocate my main residence. That can’t happen in this market. The RE I did buy in 2001 will still have equity despite the correction we’re going to face in the near future.
anybody like to see bubble elimination-by satv then log on to http://www.vancouvercondo.info.
I love reading the bull on this blog. I went to an open yesterday and it was so busy the realtor had run out of his sheets in one hour. He was taking offers that night and already he knew of 6 being presented. It sure sounds like a slow market to me. The open I went to last week has already sold and it was listed for 869,000. I hope you bears aren’t holding your breath because it could be a long long wait. Why don’t you all move to Edmonton or Calgary and snap up the falling prices there?
you are describing frothy top action, the final capitulation as such…..
from that single data point you should be able to make practically any trend you want…
the end is nigh.
Why don’t you realise that those offers probably we’re under list as well as pre approved mortgages.
You know people frantically trying to get in before the next rate hike.
Here’s what’s being said in the Toronto Sun.
“He was taking offers that night and already he knew of 6 being presented.”
Were you one of the 6 who placed an offer?
If so, did the place represent good value for the asking price?
If no, why not? There’s 6 other offers…..they must know it’s a good deal, right?
Geezer’s link to the column by Linda Leatherdale in the Toronto Sun:
Crash? What Crash? U.S. sub-prime woes shouldn’t cool hot property market here.
Noticed the last few lines in the article:
“Now, a word of caution: Though I’m a believer that real estate will help you grow wealth, don’t get greedy. There’s no better comfort than a mortgage-free home, and an emergency fund, just in case.
And remember this:
It’s time in the market, not market timing that pays off.”
Mortgage-free home? Wonder how many folks in the Vancouver area are in this situation? With some guys taking out 30 or 40 year amortization mortgages, some may be still be paying mortgage payments near or during retirement age.
vanreal, ever heard the expression “don’t confuse brains with a bull market”?
Just so that all discussion doesn’t revolve around bulls vs bears, here is another topic covered in today’s New York Times.
Apparently, half of all sales in San Diego are advertised by giving a price range rather than a single price. Here is the article:
Does anyone in Vancouver use this range pricing? One argument for using this is that it gives more information, which is an indication of how eager a seller is to consider even a low offer. Those who are willing to wait to meet their target would give a narrow range, while those who are eager to make a fast sale would give a wider range.
The article claims that range pricing is often considered useful in rapidly rising as well as falling markets.
Maybe someone who understands this better can explain whether this would actually provide useful information or whether those willing to wait would still pretend to be eager to sell by increasing their range (by raising the top price).
“With some guys taking out 30 or 40 year amortization mortgages, some may be still be paying mortgage payments near or during retirement age.”
With refinancing, many will NEVER pay their mortgages. They will be in debt up to their eyeballs ’til the day they die. Even if I never own a house, at least my rent is maybe half of their housing costs, and I’m actually saving for my retirement.
As a bonus, the landlord has to take care my home (you don’t have to own a place for it to be YOUR home). The toilet seal was leaking, so all I did was call the landlord. He was over in a hurry for fear of water damage. I have to give him credit for taking care of his rentals unlike some landlords. Still, he just had a long day at work, and then had to fix a renters toilet. No stinky toilet hands for me. Ahhhh, the life of a renter.
Bottleblonde Leatherdale looks an awful lot like a realtor. Anyhow, the fact that a rag like the Toronto Sun feels the need to publish something to the contrary, just makes me believe in a crash all the more. I recall seeing articles like this in American papers a couple of years ago.
“Maybe someone who understands this better can explain whether this would actually provide useful information” – Considering
Hi! I’d offer well below the low end. Useful information? There is none.
Ugh! Looks like Japan is s-l-i-p-p-p-i-n-g economically…at least tonight. After all, “analysts” predicted a .5% rise in Q3 GDP.
Uh oh. Looks like -1.2% Oh well.
Maybe they don’t live in the best place on earth. (SSSSsshh!)
Er…that should be for Japan’s Q2, not their Q3.
Just because sales are frothy in one area, does not mean they are as frothy all over the lower mainland.
On the opposite spectrum, if your area has a lot of price reductions and sales are slow, that doesn’t mean all of the market is suffering either.
Hey Vanreal, why stop at Calgary and Edmonton? LA sales just dropped 25% MoM and 50% YoY. link.
But don’t worry – it just can’t happen here.
Geezer. Glad to know where you’re getting your advice from. The TorSun is a fine publication. I used to read the Economist, Barrons, and the FT.
But Linda Leatherdale has got all a guy needs to know. And the page 3 girl in the Sun is great, to boot!
Second attempt at the LA link.
Ok, let’s just do it this way. Sorry for the spamming.
Food for thought for bulls and bears:
From a 2003 IMF study of asset bubbles, paragraph below based on 20 housing price busts between 1970 and 2002, with a price contraction of at least 14% to qualify as a “bust”):
“Housing price crashes differ from equity price
busts also in three other important dimensions.
First, the price corrections during housing price
busts averaged 30 percent, reflecting the lower
volatility of housing prices and the lower liquidity
in housing markets. Second, housing price crashes lasted about four years, about 1 1/2 years longer than equity price busts. Third, the association
between booms and busts was stronger for
housing than for equity prices. The implied
probability of a housing price boom being followed
by a bust in the sample is about 40 percent.
Housing and equity price busts have,
however, one important feature in common.
During the 1970s to the 1990s, they generally
coincided or overlapped with recessions.”
Thanks for the link. I cherry picked a few quotes, which I think are food for thought:
“Yet, as has been the case throughout the housing downturn so far, median home prices managed to hold their own. August’s median dropped slightly from its record July level to $579,000, though it was still 5 percent higher than year-earlier levels. Condo prices actually hit a new peak of $460,000, up from July’s $450,000 and from $415,000 a year ago”
“This relative scarcity of buyers has put the squeeze on sellers. Leibovitch said about two-thirds of his firm’s clients with listings have pulled them and chosen to wait out the market instead of accepting a lower price”
” the average length of time homes have stayed on the market has declined from a high of 68 days in the first quarter to 50 days in the second quarter. Normally, a lengthening of the figure would be more consistent with a collapse in sales”
“…the unsold homes inventory, which measures how long it would normally take to sell all homes on the market. Last month, the inventory stood at about 12 months, nearly 50 percent higher than the historical average of 8.3 months. However, the all-time high was 28 months back in early 1991”.
I think its important to re-visit the relation between volume and price. We can have dramatic volume drops while maintaining price, simply because on the way up sellers get what they want, so they sell. The fact that the market changes and buyers aren’t offering increasingly high prices doesn’t force sellers to sell. Many can, and will, leave the market. Sales volume can fall, but so can inventory (right now we see less inventory but still strong sales).
Again, I apologize for the truncated numbers recently, but we have some hard number comparisons. Our DOMs are usually what, under 40? And often clser to 30? Our MOI has recently been under 4, no?
Someone talked about picking a single data point and extrapolating anything they want from it. We’ve got a lot more than single points of data. I’ll try to get you some more, but lets do more with it. Saying that multiple offers proves that we’re at the frothy top is a little weak (not that VHB said that).
Make sure you don’t confuse 15% off a ridiculous price with good value. A long in the tooth listing could indicate a a lot of things, including an unrealistic seller, and a very unrealistic price. Make sure you get a very good idea of value, regardless of the particular property’s asking price or number of price reductions (which can well ahve nothing to do with value).
Thanks for that link.
Do I see more than 20% of Van area listings going more than 90 days after a smoking busy summer? That points to a lot of inventory coming on stream – more than past few summers, anyway.
Seems that could have soaked up some future demand.
Our housing bubble maybe next to pop (Canada)
Thanks for the info. On top of the value already. Prices for this area are priced at the same level as last spring/summer or lower.
it ain’t over, from across the pond
quote from same:
But the reluctance to come clean about subprime exposure may be feeding nervousness in markets about who holds what risks – one of the underlying reasons for liquidity seizing up in the first place.
“The next turning point will be the publication of quarterly results,” he said. “We will see in the quarterly results. It’s clear that there will be some impact.”
“some impact” famous last words
Canada gains in wages, employment
We’ve seen over 90s as low as 15%, but it’sgenerally been in the 20% area for quite a while. I think that it is interesting that as inventory drops we’ve seen over 90s rise slightly. My experience is that in many markets most listings don’t sell, meaning over 90s is normally much higher. It is an important number.
Rob – comparing median prices assumes that the distributions are similar. Is that true for LA? (My understanding is that it’s not – that the lower end has collapsed due to the absence of people able to get a loan.)
Snick:”How would you explain the inventory surge beginning around now in 2004, and the slowdown in sales along with declining prices then?”
Using 2004 as an example, prices dropped a few % with the runup in inventory but a similar inventory runup in, say, Spring ’07 lead to higher prices. So I agree an explanation other than inventory is warranted.
I think the move-up market and higher-quality listings sell in the Spring more so than in the Fall. I don’t have more of a possible explanation than that.
Rob, data from LA and other US markets has shown roughly flat median prices but drilling into the numbers shows price erosion and significantly fewer sales at the bottom of the market whereas the upper end of the market has not seen as dramatic a downturn. This keeps the median price higher.
Luckily, the REBs in BC report benchmark pricing so we have a much better sense of the direction of the BC market. I think some credit is due to the local REBs (pardon the pun) when you compare benchmarks to the statistical mess of averages and medians down south.
The article picked median prices, not me, so I’m not sure what we can do in terms of judging their assumptions. Median prices can indicate different things, in that it a stable median price could mean fewer low priced sales, and fewer high priced sales, so long as the higher price sales are large enough to overcome what’s lost on the low end.
That may be happening in LA, and then again, maybe not. Notice that some lower priced categories increased in price. That makes it a little harder to make the argument (although Jesse indicates that drilling down shows that is what is happening).
Median price will climb with lower volumes if falling demand falls more slowly than inventory, as I’m sure you know. In other words, the median price drawback is that the same price (in other words, an unchanging median price) could occur in a changing market, regardless of what the change is.
That said, you and Jesse have highlighted the value of looking at median, average and benchmark at the same time.
An interesting comment from a North Shore-based realtor who I spoke with on the weekend: He said his buyers are generally convinced that they shouldn’t be paying more than what the market would have demanded a few months ago. He said that’s new to him, at least since 2001. He’s convinced this means some kind of a plateau or a pause.
Vanreal, I love your great empirical evidence. You went to an open house and saw a bunch of interested buyers. Listing sheets gone in an hour. Great. That MUST mean the market is still hot. RE is still smoking despite common sense. I guess you didn’t need to note the location or asking price of the open house you attended to enhance your post. That would be silly cuz all we do is post a bunch of “bull”. Also, that one example MUST be indicitive of the RE market. Bravo. Who’s posting the bull on here? This kind if mentality and willful blindness towards the RE market is why we’re at these prices.
Beware of Bears!
I would like to look at what caused housing downturn in US.
1. Is it the fundamentals that changed? Ie. economy is fading away?
2. Is it that the reality finally catches up and some can no longer play the game?
3. Is it really psychology that has changed?
I find it irony because I don’t think the fundamentals have changed much but the US government is always cheerleading. Paulson even said “it’s the strongest global market I have seen in my 50 years in the market” What an idiot! I really think it’s number 2 that leads to number 3. But then one can also argue that it’s no. 2 that has gotten so bad that it actually dragged no. 1.
So for Vancouver, since it’s too different to ever worry about housing decline. I guess no. 1, 2, and 3 will never apply.
Rob, do you happen to have some stat for how many of your buyers needed mortgage (avg amount and % and years of mortgage) …. this definitely will give much insight to who these buyers are and what their financial capacities are. And we can then, perhaps, use those as some kind of reference points for further discussions? Much appreciated for your input.
My buyers are different (I almost feel exposed using that term! 🙂 ), in that many of them can buy without mortgages, but we put mortgages on the properties to enhance return. Therefore, the % of my clients who “need” mortgages would be misleading.
I think in general, most buyers need mortgages. Most buyers don’t have the purchase price just lying around. Some do, but not many.
Most mortgages are 25 years. Accelerated paydowns have become popular, however, and so many mortgages are amortized over 25 years but paid down over less. Strategies vary, however.
Financial capacity varies as well, even within my clientbase. I think the numbers your looking for are regular TDS and GDS ratios; I don’t think we’ll get better than that. I will say that if the argument is being made that average working slobs can’t buy now, I’ve experienced otherwise.
Interesting comment. I’ve been saying for a long time that the cure for high prices is high prices. That seems simplistic, but it could well be what you’re describing. I recently sold a NV property with multiple offers. We got list price. I priced it sharply, and had hoped for over list, and definitely didn’t want to undershoot. My experience was that buyers would go so far and no further. Both your guy and and I only offer anecdotal experience, but it is similar.
Here is a link on median prices:
The last few years of a frothy Vancouver housing market is not truly an indication of future profits. Buying a house today has no guarantee of wealth creation in the future, as housing prices can fall as well rise.
I’m not sure I’d charactize the last few years of appreciation in Vancouver probably as frothy. Frothy implies unsupportable. How big of a haircut do you see coming? If we see east Van 1 bachelors at $64,000 again, then yes, we were frothy (mind you, they’ll cash flow with a cashback at that price and anything close to current rents).
Consider the real estate market like ordering a cappuccino. You never really know the level of froth until you start drinking it. Could be a little, could be a lot. Time will tell.
Hair cut predictions? If I knew I wouldn’t be considering properties for sale right now. That said, I would not overextend myself financially if I bought a place. That way if prices tumble, I’m set to buy another property.
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