Thursday Numbers and US Real Estate

There were 244 new listings yesterday and 121 sales, for a sell/list of 49.59%. When did breaking a 50% sell/list become a goal? It probably pays to keep in mind that in  many, if not most markets, 50% sell/list is outstanding. 

Inventory hit 8,964, of which 2,450, or 27.36% were over 90s.

I received two interesting contacts this week from California Realtors.  Both of them found me on the blog.  Both of them are looking for buyers. 

One,  Todd Bernstein of Coldwell Banker in Encino telephoned me to chat about Vancouver, and to survey my opinion of Canadians buying in LA, given the strong dollar and the attractive pricing. Linking those two things together may not be rocket science, but picking up the telephone and pursuing the idea is nuts and bolts business savvy. If you don’t even ask for the order you’ll never get it. I shared with Todd that his idea did have traction here, and was appearing in print (Diane Francis/National Post) and on talk radio (Bill Good/CKNW), but that the prevailing attitude seems to be that Canadians should wait a little longer for US bargains. Be that as it may, the idea of LA / California / US property purchase is one to keep in mind. If, as some argue, prices here don’t ever drop enough to offer a good chance of subsequent growth, we’ll need to consider purchases elsewhere.

A second Realtor, Melanie Narducci, of Keller Williams San Francisco Properties, contacted me through email on a similar, but slightly different mission. Melanie wants to sell property in several areas, from Ireland to Italy, but thought that San Francisco might be a natural match for Vancouverites. If you’ve been to San Francisco you might agree.

I initially hesitated putting either of these guys on the blog, because I’m sure they’ll attract a lot of undeserved fire, but after 15 seconds decided that they were both grown ups and could take it 🙂 The coincidental nature of their contct with me, the US opportunity angle, the idea of buying outside Vancouver to find growth, and the simple fact that they can offer insights into markets that we often comment on makes their presence very valuable.

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36 Comments

Filed under Daily Numbers, Investment Approach, Other Blogs

36 responses to “Thursday Numbers and US Real Estate

  1. WoW

    I dunno, listings/sales seems bearish to me, if it continues to build like this, I can’t see a 20% upside this spring…but thats just me.

    Robert – as always, thank u for the numbers.

  2. AmPa

    On the topic of buying in California right now, the maxim is a simple contrarian one: “Buy when everyone is crying, sell when everyone is yelling”. i.e. its a no brainer, if you can buy and hold, now is the time to buy in San Fran, San Diego, etc. These fair cities will continue to be international havens.

    However, buying out of country, or even out of the province adds a exponential increase in the complexity of the investment. I would argue that only those who are already quite sophisticated and experienced in making money in BC real estate (and hence already made barrels of dough) can venture to out to expanding their portfolio with Cali RE. For the rest of us still struggling to either acquire or maintain a primary residence here, the avenues are not so open.

  3. e

    colleagues of mine have purchased houses in OC (i.e. in the safest cities (which have had ZERO murders last year — kind of astounding). anyhow, they purchased houses which with 25% down and 30 year mortgage (at 5.3%) are cashflow POSITIVE (well, $50/mo if that counts) INCLUDING management fee. these are nice houses. i have seen some of them. 20 years old or so.

    rents are typically $2600+ for a 4 bedroom. ($2600-3000 is the bottom 30% of listings in these areas for a 4 br SFH).

    they also think prices will just get worse (some of these have been down 30% since the last sale price in 2007 — or were purchased for 30% below assessed), but having made money in BC, they are shifting it to cali, and will just buy more as it gets cheaper. the PROFIT they made on flipping a single condo is enough for a DOWN PAYMENT on one of these SFH in california. add in the original equity, and they can basically buy 3 cali houses for every 2 vancouver condos that they sold!

  4. Digan

    I love the fact that Vancouverites are buying south. It means less demand here. Keep it up!!!

  5. Dyugle

    Last year inventory was 9158 and this year is 8964. We have been gaining on last year at about 200 a week so in one week this years inventory should pass last years. I feel we will hit 10,000 by the end of Feburary. Any other guesses?

  6. domus

    Dyugle,

    I think end of February 10k is more than feasible. Might be even one week before.

    Things are shaping up as last January: maybe this year is just a touch more bearish, but yet by much.

    The past week has been very bearish in sell/list. Too early to say if it means anything, it might be just a blip.

    I expect inventory by the end of next summer to be larger than in 07 and stay large also during the winter slowdown. A lagged repeat of the California, with a two years interval.

  7. mike@gmail.com

    Well, so far the inventory YOY is down, and so is over 90’s ratio.

    I wonder at what point things will change, YOY

  8. coco

    Goldman Sachs Group Inc. and 25 other underwriters of Countrywide Financial Corp., the biggest U.S. mortgage lender, were named as defendants in a suit by New York state and city officials for allegedly making misleading statements about the company’s prospects.

    (RBC, Scotiabank and TD Canada Trust are named in the suit…will it bite them back like the Enron/CIBC debacle)

  9. Annon

    Thanks coco.

    That’s actually great news. It’s pay back time. Hopefully this will teach those loser CEOs and the stupid board members a lesson.

  10. BOBBYBEAR

    you think 50% is rough, wait till same time next year…..35% might be tougher.

  11. BOBBYBEAR

    Was not Ireland an incredible boom?

  12. anon

    Calculated Risk notes this is “one of the greatest fears for lenders … that it will become socially acceptable for upside down middle class Americans to walk away from their homes.”

    A commenter on L.A. Land this morning writes, “I am one of these people. My condo has dropped in value from $520K in 5/06 when I bought it to $350K now. My ARM payment will probably go up $900 per month in June.”

    Will we see this kind of pricing freefall in YVR? Two years from now?

    See:
    http://latimesblogs.latimes.com/laland/

  13. BOBBYBEAR

    The system pushed lending out onto a limb. The end of a limb is very thin. Hang on if you can.

    The system wanted everyone to spend and borrow their brains out. Many have.

    Now it is payback time. Very Simple.

  14. coco

    I heard real estate was dismal in California, but realtors contacting Rob for possible clients describes a sad U.S. housing situation.

  15. coco

    Here is why…..

    Startling jump in California foreclosures

    http://tinyurl.com/3xcdl2

  16. Anonymous

    It would not surprise me if some recent highly levered buyers in Vancouver are thinking about walking away from their high monthly payments.

    Those with 40 year amortization mortgages soon realize that after 1 year of high payments, they have virtually ZERO towards their principal.

  17. Geezer

    Bobby Bear wrote:

    “Was not Ireland an incredible boom?”

    It sure was. I guess if BC were to get the same tax innovations here along with the same massive Eastern European immigration we could see the same thing happen here over the next few years.

    Better buy now and start practicing your Polish! 🙂

  18. WoW

    Hmmmmmmmmmmm….interesting times…wonder if listings surge will start now that the weather has turned…guess this will bring out buyers too…but let’s see who’s in more of a rush, sellers or buyers…

  19. jesse

    If you do decide to invest in places like Cali, be sure you talk to someone who understands the laws and hire property managers you can absolutely trust. Not being there can significantly increase the risk (and costs if you’re not careful). You are not compensated for this risk since you are competing with local players.

  20. beach

    Rob, thanks for including this topic – its one of my favourites! I am definitely looking to buy a property situated in a warmer climate over the course of the next year and Southern California is at the top of my list for potential locations.

    For you realtors out there, there are plenty of people like me in Vancouver. Young professionals in their early 30s who could easily afford to buy but don’t see any value in buying a property at the current prices in Vancouver. Just look at the demographics for Kistsilano: significantly higher incomes than Vancouver average (when you factor in household size) and yet 64% of people in the area rent (http://www.bizmapbc.com/pages/neighbourhood-profile/kitsilano-4th-avenue.php).

    I, like many other residents in the area, would love to buy a property but am only interested in one that is in close proximity to a beach. Unfortunately, Vancouver has a limited number of beaches and an even more limited number of properties available. Those properties that do become available are listed at incredibly high prices ($900-1,400/sq.ft) due to the huge demand and lack of supply. I can’t see supply changing much in the beach areas due to zoning issues and the fact that many of the people who own the prime property near the beach have lived there for a long time and have no interest in moving or allowing major developments to occur. So given the huge demand for these types of properties and limited supply I can’t see prices falling in the beach area any time soon.

    That’s why I’m looking south of the border – where there is plenty of supply! I know I can currently find property within a block of the beach in areas like San Diego for $500-600/sq.ft and that’s going to fall even further over the course of the year. So if you’re a realtor with property located in beach areas perhaps you should start marketing it to Canadians. We are beach starved and with the availability of frequent cheap flights, travelling to Southern California is almost easier than traveling to Victoria. Plus your beaches are much nicer than ours (especially in the winter)!

  21. $fromA$iatoyourpocket

    GEEZER, I hardly have my Chinese down. Now I have to take up Polish?

    I should take up stupid as well.

  22. coco

    B.C. Economic Index
    Consecutive Quarters Point To Weaker Economic Growth

    http://tinyurl.com/2qv58b

  23. Whybuywhenucanrent

    FYI, I just went into escrow on my Van West house [building lot]. Bought it a while back, kept it after I moved away in case I wanted to move back someday. For various reasons (personal and market) now was the time to sell. Priced it at 3% under comparables, closed at 2% under comparables (1% over asking). 1 offer, 5 days on market. Very favorable terms. My agent says the market is in a lull — she didn’t get a single call on it today.

    And the resumption of Rob’s daily postings suggest that he has more time in his hands.

    I’m calling it the top. Or slightly post-top, since I didn’t get a bidding war. I predict that a year from now we’ll look back and see that The Top happened for Van West houses on Jan 1, 2008.

    Again,
    Whybuywhenucanrent

  24. coco

    Drivers in some parts of the Lower Mainland will pay a little more for their car insurance, following a rebalancing of regional rates by the provincially owned Insurance Corporation of British Columbia.

    http://tinyurl.com/2hb678

  25. -A-

    Rob, you better pray there is no such thing as bad karma. If there is such a thing, there is a reservation for you in hell for sure.

    My God! Are you pitching/testing the waters for American RE. If I were an editorial cartoonist I would illustrate you as a cheap shabby hooker on Victoria and Hastings, wobbling along with one broken heel and an unsightly run on you garter suspended nylons.

  26. coco

    If Gordon Campbell turns around and whacks British Columbians with a huge carbon tax next month — at a time when the whole world seems to be heading toward a recession — even the most hardened cynics might keel over in shock.

    The idea is to reduce the emissions by taxing the heck out of oil, gas and coal consumption — and not just by piddly amounts, either.

    Proponents of the carbon tax argue the whallop has to be big enough to hurt, otherwise it will have no effect and the business of burning fossil fuels will carry on as usual.

    On Dec. 7, Finance Minister Carole Taylor said British Columbia’s expected economic-growth rate for this year was being ratcheted down to 2.9 per cent. Six weeks later and that number is starting to look insanely optimistic.

    On Friday, the Business Council of B.C. reported growth in the final quarter of 2007 was an anemic 0.3-per-cent — the second below-average quarter in a row and weakest six-month period for the economy in seven years.

    http://tinyurl.com/2y3ya2

  27. robchipman

    -A-

    I’m slowly coming to love you, man. My karma is fine, but thanks for worrying. You might want to address the way you dismiss the poor, the working class and the uneducated (I suspect you throw roughly 95% of the population into that category) before you start offering karma advice. BTW, did you contribute to the blanket drive or push the Kiva button yet? Or are you a poor student or something? 🙂

    beach:

    In case you picked up what -A- picked up on, I’d sooner sell you Costa Rican beach property than San Diego beach property.

    WBWYCR:

    You can never lose selling at a profit. 1 offer, 5 days doesn’t sound like you were really priced too much under. At the same time, a quick sale often indicates great pricing on the part of your agent – congrats to them and you both.

  28. coco

    B.C. Tourism sector braces for U.S. recession

    http://tinyurl.com/yq3wba

  29. coco

    Effective January 1, 2009, real estate licensees will be able to form personal real estate corporations, a change the British Columbia Real Estate Association that Realtors have asked for since 2003.

  30. coco

    B.C. boosts film tax credit rates

    http://tinyurl.com/382myf

    (no need to worry….the new carbon tax will offset the increase)

  31. coco

    Translink will increase taxes to pay for those
    141 hybrid buses heading to B.C. in 2009

    http://tinyurl.com/2ubt47

  32. A Looser

    It sounds like the BC tourism people are thinking of marketing to other Western Canadians. Albertans know BC and have long ago decided if this where they want to visit. They know our idea of a royal treatment as the Gov Gen just discovered. Welcome to Bumcouver!!!

  33. tqn

    Micheal Levy on CKNW said that it’s too early for Canadians shopping in Phoenix – wait until the 2nd quarter of this year.

  34. robchipman

    tqn:

    Diane Francis struck a similar chord in her FP article as well. RE moves slowly, and judging by the readership here, good markets make us forget what bad markets really look like. (Although I thought both Michael Levy and Michael Campbell tagged Q3 as the time to start looking, not Q2).

  35. Nozferatu

    I think you guys in Vancouver are crazy to buy RE in the US. I’m from Los Angeles. I wouldn’t even touch this place. Your exchange rate simply isn’t good enough to justify all the costs, risks, and so on to take into account.

    It’s your money, it’s your time. I have a friend in BC who wants to buy in Palm Springs. He asked me of my opinion…not that he values it too much. I told him go ahead but it’s at your own risk. If you’re wealthy and have money to burn, then go for it…you’ll only lose a little bit of your horde.

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