Listings have begun to slow down. I would expect inventory to drop slightly or flat line this month before climbing again in September. Sales numbers will likely stay low, exhibiting market uncertainty. If the MOI stays high, prices will adjust downward.
Sellers:
Price sharply and don't get greedy.
Buyers:
The market is nervous. Negotiate a tough deal and hold long term!
Some numbers:
Sales are down 41% (same as June) compared with July 2007. This will bring more bearish news headlines this week.
We started 2008 with slightly less inventory than 2007. We are currently up 67% over last year, and 83% over July 31st 2006. North Vancouver inventory is up over 104% compared to July 07.
What are you seeing out there? Keep on posting!
Here are some visuals:
Sales
Listings
All sub area inventory charts here: INVENTORY
66 comments:
For Canadian FV for the last 3 days:
FV:11406
New Listings 472
Price Changes 428
Sold Listings 220
Lots of expiries today the REBGV. Finished the month at 20,066.
Thanks for all the information Paul. Have a super long weekend. Wonder if there will be any sales as the finer weather should be back Saturday morning...
Yay, finished at over 20K!
thanks paul. Appreciate that.
Thanks Paul, super stats, thanks for the continuity and the clarity. Your the anti VHB.
Thanks Paul. A happy long weekend to you and your family.
Good to see you WOW. Have a awesome weekend guys!
Wow, just wanted to let you know I always thought highly of your posts.
And Real estate bull/wow/etc., I always admire how you post under multiple names and pat yourself on the back. Very admirable.
nice to see WOW...
Wow, glad you are here. Always enjoyed reading your posts and your enthusiasm is refreshing.
Sales traditionally taper off in the fall but w/o the huge inventory hang we'll see this year. Next years "sales season" will begin with 15K+ listings and go from there. IT will get interesting....
Yay, finished at over 20K!
Enjoy it while it lasts.
Yeah, Dave's right. Soon inventory will be over 30K and who'll care about 20K?
Paul,
Just read your comments over at solipsist's blog. Be careful, even though your analysis of your colleague Ms. Gibson's commentary as "brutal" was spot on IMO, it's probably not a good idea to express such thoughts in a public forum. Remember article 19 of your code of ethics.
As always, thanks again for the stats and hard work that you put into your site. We all appreciate it.
Inventory charts are updated! Lots of areas flattening out. North Van is down from it's peak inventory levels. West Van continues to increase. I expect another flurry of listings come Sept-Nov then a seasonal decline will occur. I wonder if the decline will be as significant % wise as years prior or if it's different this time.
I expect another flurry of listings come Sept-Nov then a seasonal decline will occur. I wonder if the decline will be as significant % wise as years prior or if it's different this time.
I don't agree. The past data shows that once listings start to level off, they don't accelerate again, but rather flatten out or drop off. I think we are going to hit the peak within the next couple weeks and will likely have less than 20,000 listings come September 1st with a gradual drop through the Fall.
The market will probaby take back about 1% of median price per month until the end of year. I think prices will then level off for next year.
Dave,
I don't agree. The past data shows that once listings start to level off, they don't accelerate again, but rather flatten out or drop off. I think we are going to hit the peak within the next couple weeks and will likely have less than 20,000 listings come September 1st with a gradual drop through the Fall.
This is asinine. Start with this pattern:
accelerate -> pause
You're wondering what will happen next. If you look at past data, this pattern:
accelerate -> pause -> accelerate
doesn't stand out (and doesn't fit your definition of "once listings start to level off.") That leaves:
accelerate -> pause -> level off
and
accelerate -> pause -> decline
so it's a tautology. You're a genius!
Time will tell Dave :) Let's see what happens.
Dave
"will likely have less than 20,000 listings come September 1st"
So you're already acknowledging that you've probably lost your bet with Freako? That didn't take long.
If you were proven wrong so quickly on your previous predictions why should we put any stock in your current set of predictions? You're obviously an unreliable analyst.
"The past data shows that once listings start to level off, they don't accelerate again, but rather flatten out or drop off."
Do you believe the same to hold true with prices?
and yeah, I think it's time to acknowledge the loss to freako.
So you're already acknowledging that you've probably lost your bet with Freako? That didn't take long.
My bet with Freako is for the end of September, so we still have two months to go.
It looks to me like my original prediction will come true in that listings will peak around this time and drop off from there.
Do you believe the same to hold true with prices?
It depends on your timeframe.
With respect to listings we are discussing month to month values.
In the short-term (month to month), yes prices can drop and then recover. It happens all the time (just look at the past data).
In the medium term (year to year), prices generally won't drop and then immediately recover into an uptrend. That said, it has happened before (e.g. 1989).
If you were proven wrong so quickly on your previous predictions why should we put any stock in your current set of predictions?
Well if that isn't the Bear Pot calling the kettle black. There hasn't been a poster on the local real estate blogs more wrong than you for *years* now, Drachen, and yet here you are, pontificating away.
Seriously, man...
"will likely have less than 20,000 listings come September 1st"
Given July ended with barely 20k listings and August is a historically low listing month, that is still a reasonable bet to make.
I think it's time to acknowledge the loss to freako.
Are you so unsure that you can't "bear" to wait until the clock runs out?
Funny how when the market was hot, nobody disputed it. Those bearish just questioned how it could have gone so far and how much longer it would last. They speculated about a peak followed by a downturn and what the extent of that downturn would be. Few if any bears called the timing right, myself included, but here we are.
In the past 12 months or so the market has gone from white hot, to red hot, to strong. It then made a short stop at "balanced" and in recent months it has turned decidely cold. The numbers speak for themselves. They have been consistent and they aren't subtle. Despite this, we have some persons disputing the profound about face in this market, as if it were but a bump on the appreciation highway.
Its interesting to see how intrenched the denial phase can be.
The total inventory number is completely useless without the number of sales factored in. If inventory and sales fall for the rest of the year and MOI stays around 9, then who cares what the total number is.
I agree with Dave that total inventory should fall for the rest of the year. We will continue to see inventory slowly build through each month, but the month end expires will grow bringing the total inventory down. This pattern happens every year and I doubt it will be any different this year. The only way that I can see inventory continue to climb into and past September is if there is a sharp drop in prices for July and August. But again, I agree with Dave that a 1% drop each month sounds about right unless MOI goes 10+.
I think its a bit early to say that things will turn around next year. No one can say what impact falling prices will have on buyers/sellers psychology and that greatly depends how the media deals with the falling prices.
Dmello
Your points are in the main reasoned however I'm curious as to why you and Dave expect a usual pattern in the Fall when there has been such an unusual (from the past five years or so) pattern in the Spring through mid-Summer?
I think we all agree that listings will tail off over the next few weeks. This, I suspect, is largely due to holidays, back to school etc. It seems to me that the pattern established so far this year argues more for a spike in inventory in the late Summer and Fall than it does for it to fall for the rest of the year, however.
FV:11126
New Listings 130
Price Changes 86
Sold Listings 41
REBGV looks finished, so we will get the numbers up asap! First I have to rub my wifes back...dam ;)
Your points are in the main reasoned however I'm curious as to why you and Dave expect a usual pattern in the Fall when there has been such an unusual (from the past five years or so) pattern in the Spring through mid-Summer?
I think you give the general public too much credit...
We have really only had 1 month so far with price declines, probably 2 with July. The majority of sellers and buyers out there do not read the blogs nor put any thought into the latest re stats. They get all their info from family/friends and the media. All they know is that sales are down and inventory is up. I believe this is evident with very few new listing in July being priced sharply. These people have no idea that prices have already started falling.
I think it will take a few consecutive months of falling prices before the media catches on and most people figure it out. By that time we will be into October and most will hold off until after the holidays.
..continuing from my post above.
The one thing that Vancouver has over other US cities and the rest of Canada is the Olympics... or should I say, The Olympic Hype. This alone throws one hell of a wild card into the picture and makes Vancouver very difficult to compare to other US/Canadian cities. If we did not have the Olympics coming in 2010, this bust would be much easier to forecast.
Dmello
I agree with your sense of what most folks know, which is next to nothing. I also agree that the media won't really pick up on the reality of the situation until long after the proverbial train has left the station.
My question, however, related more to market reality rather than mass market awareness. To expand, even though we agree that most people are unaware of what is happening around them statistically (on any subject, not just RE), the fact is the RE statistics which have prevailed over the past few months paint a very different picture than what has come before them, YOY. Regardless of the level of awareness of the masses, my question was, given that the statistics posted thus far are a significant departure from recent history, why do you and Dave rely upon recent historical trends to project what will happen in the short to mid term?
I think Paul must give very good back rubs ...
That reminds me of a small child's t-shirt I saw advertised on the 'net.
"Mommy just wanted a back rub"
Okay, okay... that was a bit risque. But it's kinda cute. ;)
Drat, NVan sales are picking up.
Paul, what's the story on V708426? A beautiful heritage house in Upper Lonsdale but has an incredibly strange transaction history, sold 4 times in the last 6 years.
I have heard rumors that the house is haunted... J/K ;)
It sold in 02,03, and 05. Not sure why but it does not strike me as unusual.
from last thread...
Solipsist said:
Does cheering a price correction make you a pessimist?
I think that it is in the eye of the beholder.
The old saw; 'The Chinese word for crisis is the same as that for opportunity', Wikipedia says that it is an etymological fallacy - This presumed oriental wisdom is used to communicate the inspirational notion that a crisis should be a time of optimism by erroneously deconstructing weiji (crisis) as wei (danger) and ji (opportunity)., but it is still inspirational.
Don't time the market. Price the market.
Another astute distillation by patriotz.
anonymous
"Well if that isn't the Bear Pot calling the kettle black. There hasn't been a poster on the local real estate blogs more wrong than you for *years* now, Drachen, and yet here you are, pontificating away."
Wow, if you'd paid that much attention to me you should have seen me say before;
The man who predicts that the sun will rise again is not wrong at 2:00, 3:00, 4:00 and 5:00am and right at 6:00 when the sun does rise, he was right all along.
The only way for me to be wrong is for there to be no crash of over 50%. I didn't say that would happen last year or the year before. I think the crash is starting this year but it will take 3-5 years before we know where the market will rest.
Paul
"Does cheering a price correction make you a pessimist?"
Please use a different phrasing. Cheering anything makes you an optimist. Cheering your own execution makes you an optimist. Optimism is cheering for what is happening because you believe it's a good thing.
The man who predicts that the sun will rise again is not wrong at 2:00, 3:00, 4:00 and 5:00am and right at 6:00 when the sun does rise, he was right all along.
I have hammered on that point umpteen times. Every now and then we get a new troll with the usual "broken watch" wisdom. It is not how many times you have been "wrong" or how long you have been "wrong" but the end result that matters.
My analogy is a man climbing a rock face. I predict that he is going to splatter himself on the ground when he falls. But he climbs higher and higher and my detractors scream "you have been wrong so many times, he has climbed 10 metres, 20 metrest 30 metres, still you are wrong". Those comments are of course meaningless IF the man falls and splatters himself.
If I say that prices will go back to 2003, I will have been right no matter how long it takes, or how high it goes in the meantime. Unless one is a market timer, that is all the information needed to make a decision.
"But he climbs higher and higher and my detractors scream "you have been wrong so many times, he has climbed 10 metres, 20 metrest 30 metres, still you are wrong"."
I'm put in mind of the old Jewish joke about the rabbi who falls out of the 20th storey window and reflects on his prospects on the way down:
"19th floor...so far, so good...18th floor...so far, so good."
And of course the example of the turkeys whose experiential evidence suggests to them that they will be well-treated and fed every day in perpetuity, and how this theory seems to be good all the way up to the day before Thanksgiving.
"Does cheering a price correction make you a pessimist?"
The fallacy in many people's reasoning is in thinking that house prices have objective value. They don't. They have relative value, where the other variable is a currency. And currencies are a particularly illustrative example: imagine you hold both Canadian dollars and Japanese Yen. Overnight, the value of the CAD falls precipitously against the Yen. Is that good news or bad news? Well, that depends whether you had most of your wealth in CAD or JPY, and also in which country you were intending to make more purchases. If you own property but have very little cash, rising property prices are great news for you, as is rising inflation, ceteris paribus, if you hold substantial mortgage debt. It's bad news for people who own little or no property but hold cash, and who hope to buy property at some point. When X falls against Y it's bad for holders of Y and good for holders of X. Newspapers tend to write as though assuming that most people are homeowners rather than cash savers. Of course, they may have one eye on the fact that falls in house prices normally presage a recession. But this is slightly cockeyed reasoning; in effect, they're lamenting the fact that debt has to be repaid. The alternative would be rampant inflation, which is presumably something they wouldn't condone, but they are inconsistent on the matter through (one assumes) sheer ignorance.
"When X falls against Y it's bad for holders of Y and good for holders of X."
Sorry, that should of course be:
When X falls against Y it's bad for holders of X and good for holders of Y.
Would someone please give me their theory on why the sales volume decided to drop so drastically in 2008?
We all know about the un affordability (73% debt service), the soaring energy prices, tightening of credit, North American recession, negative growth in BC, collapse of industries (fisheries, forestry), etc, but what was the major catalyst that caused a 40% drop in sales? A combination? All these factors existed in 2007, minus the recession.
"why the sales volume decided to drop so drastically in 2008? "
because smart speculators have sold off and left.
Here's an interesting comment from a realtor on another blog.
I have found there to be no shortage of active buyers...what I have foud is a shortage of buyers able to secure financing with lenders shiftin towards the new guidlines in advance of October 15th. Along with this lenders are reporting an abundance of applications of which many are unstaisfactory once viewed by the underwriters. This is slowing the process down to the point where even preapproved clients are waiting up to seven days for their financing.
07/31/2008 03:15 PM by Kye Grace (Sutton Group - Killarney Realty)
That doesn't explain the collapse of sales in the first half of this year, but obviously it's not going to help matters.
As hard as it is to believe, I guess there are still a few slow learners out there who have't got the message yet that the party is over.
slats: "but what was the major catalyst that caused a 40% drop in sales? A combination? All these factors existed in 2007, minus the recession."
The actual sales number is comprised of investors and owner-occupiers. The owner-occupier "property ladder" means that sales are leveraged off new market entrants (first time buyers and new investors) such that roughly 2-3 purchases hinge on finding one new market entrant. I expect it is likely a combination of fewer investors and fewer FTBs that has lead to fewer sales.
If you check vancouvercondo.info there was a link to an article written by Ozzie Jurock indicating that only 34% of sales completed compared to 70%+ last year, an indication of "leveraged" sales. The actual number of accepted offers dropped by about 20% or so since last year (I think) so the drop is not as significant as 40% in terms of less demand.
Personally I think there are enough investors not buying to tip the scales. Adding in a few marginal FTBs can no longer qualify and a few more that advanced their purchases in years past and it could easily add up to 20% less. This is how it starts. It could get way worse if lending tightens markedly. (I haven't seen any indication of this other than a few lenders leaving the market but credit scores are going to be scrutinized more come October)
Slats
"but what was the major catalyst that caused a 40% drop in sales?"
The way the market was running it required an exponentially increasing supply of money and buyers. It appears that the supply has simply been exhausted. There is really no need for further explanation although some of the other factors you mention could have contributed to the end of the money/buyer supply.
The biggest three factors in my mind were;
Banks getting nervous about the risks (this will likely be an ongoing trend, as the market does start to fall credit will tighten further).
Dwindling supply of people who had both the money and the desire to enter the market.
A small number of owners who recognized the peak in prices when they saw it (this group ought to grow larger as time goes on, exacerbating the situation).
http://vancouver.en.craigslist.ca/rfs/781876865.html
Someone is selling a piece of shit, oh wait, they mean positive, cash flow home. And offering a second mortgage such that you pay nothing out of your pocket... wow.
Funny link vancouverguy. I like how it says that all you need to do is fog up a mirror and you're in! Sounds pretty much the same as what went on down south where everyone and their grandmother could get a $500K mortgage. That guy who put up the posting is also pretty unliterate :-) uuuh I mean not literate...uuuh....buy my house!
DT list prices I have been tracking went down 63bps over two weeks, or ~16.3% on an annualized basis. 25% of people reduced prices, and no one increased prices.
Does anyone here have anecdotal evidence of price drops based strictly on repeat sales e.g. a property with repeat sales during the last two years say?
This would give some independent evidence of falling market prices in the spirit of Case-Shiller, rather than waiting for the HPI (which in my opinion is not transparent nor verifiable) to reflect market conditions.
Slat asked
"but what was the major catalyst that caused a 40% drop in sales?"
I was following the market carefully in January. I was in the process of listing my property, and was worried about the market topping and tanking simultanously.
I think that when the big drop in financial stocks occured in the 2nd week in January, precipitated partly by that rogue trader at aq French bank, that the wind left the sails in the Van housing market. I went under contract the next week, got only one offer instead of the several I was hoping for, and several RE agents passed on anecdotal evidence to me that their phones stopped ringing that week.
So, I think the market was ready to cool off. And prior to that week, the subprime issues and financial stock issues had been largely confined to the US, but in that week it became apparent it was a global problem.
And before that week RE agents were saying "sign me on, I'll put your house on the market and **won't accept any offers until the following Tuesday**, that way I'll get you the right price, to "have your lawyer look at the contract and make sure there's no way the buyer can back out of it."
It was a world of difference for westside RE agents, maybe it was random chance that it happened that week, but more likely, it seems, that it was the hit taken by global financial stocks.
It's my theory, it fits the evidence, take it or leave it.
Whybuywhenucanrent'til'13?
Forecasting a 50% drop in Van area RE by 2012!!
Come to the After Party, 2150 E Hastings, 7 PM, April 15 2012!
Piece of shit? Vancouverguy, I think you missed the part where they said they have granite countertops and laminate floors!! HELLOOO!!
Laminate = move over hardwood
Granite = the new marble
Buy now or die.
Seriously though, they give you the second mortgage for your down payment? Desperate? If you can fog a mirror you're in. LOL! Yikes.
While we are talking about over-priced:
http://tinyurl.com/6ylbjx
Love that first picture! What is it?
No kidding. what the the hell is that? A hide-a-bed? Nice...
Frank
Somehow I don't believe he is actually getting $5166.666... a month for that wreck. I don't think you could get that for a nice 2100 square foot house in Kits or the West End.
Interesting little dip in median prices this week - both SFH and condos in Paul's weekly stats.
Is it a blip or is this the major start? I mean, we all know its coming any month now, but it would be fun if the price drops started in earnest this week.
Paul
When do the RE boards numbers come out, so we can see how much the benchmark etc has dropped?
Thanks for the input.
It will be interesting to see how getting rid of the 40 yr amortization will affect future sales, considering the point Jesse made regarding the leveraged sales relating to FTB's. This could snowball, hopefully sooner rather then later.
Hi Paul,
WTF???? I saw where you dropped this jem on condohype, care to elaborate???
paulb Says:
August 2, 2008 at 2:26 pm
There is a lot of truth to this article. Sad but true.
I’m on the very brink of leaving Vancouver myself.
Frank, the report from the board should be out today or tomorrow. We never know for sure how long it will take.
Streel,heh you will just have to sit tight. I'm exploring some options but that's all I can say for now. No immediate threat ;)
"but what was the major catalyst that caused a 40% drop in sales?"
No catalyst required. They just ran out of fools.
If price/rent and price/income are far above historical norms, supply will inevitably outrun demand. This has to happen at some time - without any external cause.
REBGV detached benchmark down 1.8% in July.
Here we go!
http://tinyurl.com/5eb5z5
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