Thursday, November 1, 2007

October Sales: Need's Analysis

Roger's words:

VREB stats are now out. More positive spin from VREB. Lets take a look at the facts.VREB in italics; Last months numbers in brackets.
  • The average price of single family homes sold in October was $556,222 (584,193); the six-month average for single family homes was $570,454 (572,007).
  • The median price was considerably lower at $495,000 (520,000).
  • The average price of all condominiums sold in October was $343,334 (341,014); the average for the last six months was $321,993 (318,198).
  • The median was again lower at $291,000 (288,500).
  • The average price of all townhomes sold last month was $407,031 (402,213); the six month average was $404,163 (402,246).
  • The median price was $369,950 (375,000).
  • MLS® sales last month included 375 (335) single family homes, 196 (150) condominiums, 79 (77) townhomes and 22 (21)manufactured homes.
  • There were 3,311 (3381) properties listed for sale on the MLS® system at the end of last month, down slightly from the 3,426 properties in the same month a year ago.

Now for the analysis:

1. Sales of homes and other properties in the Greater Victoria area soared 20 percent in October compared to the same month a year ago. There were 708 sales through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) in October, up from the 590 sales in the same month a year ago. There were 632 sales in September of this year. This is true but the tone leads the reader to believe that the market is still hot and rising. What is happening is that more buyers are buying houses at a price that is cheaper than last month!!

2. Meantime, prices for single family homes moderated somewhat while prices for condominiums and townhomes showed little change. Victoria Real Estate Board President, Bev McIvor, says the strong sales and stable prices show continued consumer confidence in the market. McIvor added that it’s normal for overall prices to fluctuate on a month-to-month basis depending on the properties that sell in a given month. “While the average price of single family homes moderated slightly last month, the overall average price so far this year is over seven percent higher than at the end of last year.”

Moderated somewhat - moderated slightly - stable prices !! The statement is true for condos and townhouses but the average price for single family homes dropped by $27,981 (4.8%) and the median by $25,000 (4.8%) in one month!! stable prices show continued consumer confidence in the market. Oh yeah - for those of you registered for real estate PCS you know that there are big price reductions every day and some nice haircuts given out in October. Bears - stay tuned - we are on a roll here. The cold weather and Christmas season are coming up fast. Next month sales will be down, lowballers will be active and the inventory is still high. I can hardly wait for the November and December numbers.

H/T Roger...

UPDATE: I'd just like to add how funny it is in a month that the average and median prices in SFH both dropped 4.8% that VREB decided to compare the average to the 6-month to make it seem less so of a drop. Ah, spin.

16 comments:

roger said...

HHV

Thanks for quoting me.

Can you please put the VREB words in italics or bold? It is really hard to separate my comments from VREB's after you reformatted my post.



Thanks a lot

oh please said...

In Calgary house prices are down 10% since the summer but condos are still strong. Maybe it's the same phenomenon - more houses are simply unaffordable. It could also be that condos and townhomes are more likely to be purchased by first time buyers, and those who have never lived through a housing crash have no idea what's coming.

It'll be interesting to see what the FVREB and Van stats are. I'm going to go out on a limb and say FV regions with decreases will be in the majority.

Anonymous said...

Here is an October 30th news release from CREA about Canadian home sales:

http://creastats.crea.ca/natl/

S2

vg said...

From the previous thread:


VG said:

"I'm actually suprised at both your comments that this market will not correct, I sense your confidence is shaken and your throwing in the towel,always a sign the top is in."


roger said:

"Au contraire VG. As I clearly stated above I am looking for prices for all houses to drop by 10-15% not just a few price reductions on overpriced houses."



well roger, looks like there's 4.8% of the 10 %, won't be long for the next 5.1%.

As far as my prediction goes they are consistent every month,lower prices and lower sales. Last month I got the sales right with the 25% decline but missed this month by a mere 38 SFH sales,thats pretty damn close when talking severla hundred sales. Next month I anticipate being right on both.

As far as interest rates go you better pray they go up some if you seriously want to buy here cause that will be the last catalyst needed by spring.

I'll stick with the RBC on this one, inflation fears are rampant and that is why the other shoe dropped today in the stock markets and there is mention now the US may have to reverse course and raise rates in order to rein in inflation. Don't think it can't happen,they need to save the US dollar at some point,they won't let it drop to oblivion or else we are all hooped.

roger said...

It is now going to get interesting with the real estate agents. The newbies will believe the VREB "soaring sales" spin but the old hands will see the writing on the wall.

When the median and average drop by almost 5% in a month who wants to take on clients that are dreaming in technicolor when they list their house. Marketing costs money and agents won't want to spend a lot of advertising dollars during the slow fall sales season on an overpriced listing. They will be persuading (i.e. pressuring) their clients to list their house to "reflect market conditions". Pricing high and then reducing the price in a slow market is a surefired way to sell for less. It also attracts Ken Lowball and his pals.

We should start to see more price reductions in the coming weeks as those that have to sell try to get out before December. Who besides Ken Lowball wants to shop for a house 3 weeks before Christmas?

Agents are on commission and need to sell in order to pay for the Christmas turkey and presents under the tree. Buyers will be encouraged to make an offer, any offer as sales drop off. Sellers, fortunate enough to get an offer in the next two months, will think twice before they reject or counter any offer. Their agent will also be "helping" them with their decision.

VG is calling this one right. It is going to get real ugly soon. Even a .25% drop in the Fed rate didn't stop the DOW from dropping 362 points and the TSE 252 points on today's bad news.

HADENOUGH said...

Roger,

I posted this about a month ago a very well known RE agent who caters to Oak Bay and Uplands said it was drying-up.

roger said...

hadenough

Drying up in Oak bay is right on the mark.

13 Oak Bay/Uplands house sales in October and today there are 63 houses still up for sale.

Anonymous said...

Noticed in today's real estate paper that a university woods home is back on the market. Sold in the spring, off the market these past several months, now back on (empty) with an open house this weekend! All for 'only' 1.6M. Could this mean lost financing?

Anonymous said...

A buddy of mine needs to sell his house since he is moving South.

A local real estate agent priced his house at $669,000 (4 bed 2 bath average home in Gordon Head). Took a look and that is about $80K higher then any other comparable in the market.

I guess the answer for realtors to get listings is to tell the clients what they want to hear.

HADENOUGH said...

Anon 6:47:

Of course they do. One well known agent who only markets high end property told my friend she could sell her house for $3 million in 2 months. Well they have had to reduce it twice and it has been on the market 6 months. This lady only wanted the listing.

roger said...

anon 6:47 wrote

A buddy of mine needs to sell his house since he is moving South.

A local real estate agent priced his house at $669,000 (4 bed 2 bath average home in Gordon Head). Took a look and that is about $80K higher then any other comparable in the market.


In October 61 houses sold in Saanaich East with a median price of 583K. This means 30 houses sold for more than 583K. Currently 93 houses are up for sale for more than 583K in Saanich East (18 are in Gordon Head)

So there is a 1 in 3 chance that a Saanich East house will sell in November if the sales do not cool off. An overpriced house is probably going to sit unsold for months.

Anonymous said...

I just got the "this is a seasonal adjustment" line. Yep, keep believing it.

S2

roger said...

S2 said

I just got the "this is a seasonal adjustment" line.

Yep and there will be a downward "seasonal adjustment" next month and the month after that and ....

Anonymous said...

Anon 647,

Another Univeristy Woods home just sold for $184,000 under asking. They were asking$1,399,000 and it sold for $1,215,000 (which is high - we looked at it 3 years ago).

Anyway, it was on the market 123 days.

Anonymous said...

I am starting to hear the 'seasonal' argument too. So they take the house off the market..... I think we'll see a huge surge in listings by Feb - when everyone that wants to get their money out tries to get a jump on the spring market.

My PCS site is full of empty flipper projects - they'll be on for the long haul

Tim Ayres said...

Your analyses (all of yours) neglect to mention about how higher-priced sales can skew the results.

When November stats come out, I'm sure they'll push the average and medians higher than October, and everyone will be in a panic about prices being so much higher in ONE MONTH!!! since Wolf Island just sold for $7 Mil.

We can argue all we like, but VREB doesn't have to put a 'positive spin' on the market, when the meat-and-bones segment of the market ($250K-$600K) has outperformed everyone's expectations this year.

If you're still waiting for the bubble to burst, don't hold your breath. Prices are going to moderate, but still rise, especially in that low-to-mid segment of the market.