December 2007: YOY increase in sales volume, YOY increase in average and median sales prices around 10%-11% from December 2006, but month-over-month decreases in average and median sales prices somewhere in the neighbourhood of 6%, bringing us back down to October 2007-type numbers of $495K-$500K median and $550Kish average.
2008: I'm starting to believe, the more I read about the sub-prime stuff and the extent to which the Canadian financial industry is trying to avoid any economic damage, that a recession is highly likely to begin in the US in the first and second quarters. January/February are typically bad months for consumer spending. This Christmas season was disappointing for retailers around North America. I expect 4th quarter 2007 numbers to reflect this. Our economies are 70% consumer driven.
That said, I don't see the economic engine that is development in BC to slow down soon. I'll go on record to say that, while I want a correction to start this spring, I expect that YOY numbers will be flat, the spring will show "usual" 5%-7% price gains over 2006 spring month numbers, but a slow fall will bring prices back to "zero-appreciation" YOY.
Other news: I came across this interesting story on a US blog. Check it out, it is a long read, but entertaining and informative. Here's the background. And here's a notable quote:
Jimmy was a banker and in spite of that he was a buddy of mine. One of the few that didn’t have his head in the sand and instead of just trying to push loans through to get the commission, he actually cared about the likelihood of repayment. He was a brand new banker, and in being such was crippled by his idealism and integrity. One day, obviously frustrated he pulled me into his office, closed the doors and asked me, “Look, I need your help. What the heck is going on here?”
I said, “What do you mean?”
“Well, this business, these loans. They’re all garbage. The other bankers are bringing deals to the table that are worthless. Condo deals, town homes, and I’m not the economist you are, but I read your reports and I at least understand the market’s oversupplied. There’s no way those developments are going to sell. But their loans get approved anyway, meanwhile I’m getting yelled at because I’m not meeting my quota. It’s almost like they want us to bring in bad loans. It just doesn’t make sense.”
And then I realized what was happening. Jimmy was new.
Update: doesn't everyone want to live in Victoria anymore?RANKING OF HAPPIEST PLACES TO LIVE
1. Saint John, N.B.
2. Quebec City
3. Charlottetown
4. Moncton, N.B., Kitchener, Ont. (tie)
6. St. John's, N.L.
7. Saskatoon
8. Regina
9. Winnipeg
10. Halifax
11. Vancouver
12. Edmonton
13. Ottawa-Hull, Toronto (tie)
15. Hamilton
16. Montreal,
Calgary (tie)
18. Victoria
17 comments:
It's interesting that in those areas where the initial downturn began almost two years ago now (ie Florida), there seemed to be a much longer period of time where prices were flat before they began their downturn. Edmonton and Calgary, on the other hand, seemed to change from up to down with no "flat period",and the downturn is accelerating much quicker, much sooner.
Maybe it is like being the back cars on the roller coaster afterall - you start getting pulled down (psychologically speaking) before you have much of a chance to stall at the top.
I was out walking the dog, this afternoon. Grey skys, raining and cold. As I was walking around the neglected old war shacks that give Victoria its "character" - I was thinking - why the heck am I living here?
And the only thing that struck me, was that I'm making some good coin and saving and saving. Perhaps the thing that has come out good in this real estate market, is because of my refusing to buy into this real estate hype, I have built up a healthy retirement plan.
My mother-in-law just moved here. I tried to tell her about the weather. She did not believe me - of course. Her real estate agent said it was like California. Now she is thinking of moving back home - to the South of France. She is getting very depressed with the rain.
What a joke. Are you seriously suggesting that Winnipeg and Hamilton are better places to live than Victoria??? Give me a break.
8:46 Anon...
Damn, I would have taken your mothers house in France on trade. Let see, my overpriced place should get me what? 3-6 South of France estates? Right? Right?
Anyone? Anyone?
Bueller?
"What a joke. Are you seriously suggesting that Winnipeg and Hamilton are better places to live than Victoria??? Give me a break."
Yes, but you present a very powerful argument ;)
I am a Winnipegger who has spent the last year in Victoria. Both cities have there charms but by no means is Victoria a clear winner.
If anything, the more time I spend in Victoria, Winnipeg looks better by comparison.
My Winnipeg friends sure like their lovely $300,000 homes. My parents sure like their affordable river front condo and lake-front summer cottage, and their Arizona rented home for three months of the year.
"What a joke. Are you seriously suggesting that Winnipeg and Hamilton are better places to live than Victoria??? Give me a break."
It's funny how linking to an article in the TC and quoting it here, means that I agree that Hamilton and Winnipeg are better places to live? I never said that. I've lived in several cities across Canada. Victoria is my favourite. That said, I know, and so does the TC it would seem, that not all people who live in Victoria are as satisfied with their lives as those across Canada.
futura,
I grew up in Winnipeg and have many friends that live there still. They love it and don't have to be there. Many lived other places and moved back. I think the question is happiness.
My husband's colleague is from St. John's and he was very happy there with friends and family.
I know many people who moved to Victoria and have not made many friends or feel connected to the city. That seems to be the main complaint. It is not a friendly city. We live in Oak Bay and have met only 2 neighbors. When we lived in Ten Mile point and had a house built our new neighbors threw eggs at it. They are all still fighting up there to this day. None of the neighbors speak to each other.
Yes maybe Victoria is a nicer place to live than Hamilton and Winnipeg but maybe people are happier there for different reasons.
futura,
My friends that are in their early 40s also now are able to own cottages. I really miss Grand Beach. I must say I loved growing up there (maybe things have changed but I have nothing but happy memories.
I also lived in Paris and Toronto as well as Victoria and I must say people seem much happier in the Peg. A friend just moved back to Toronto from Victoria and she noticed people smile more and will say hello when you walk down the street - and this is downtown Toronto not the burbs.
I loved Toronto but I found everyone was so concerned with money and how much they had and how much they should have and what car they drove and where they lived. Victoria was a breath of fresh air but I think that is probably changing.
HHV,
Thanks for opening up the blog to predictions for 2008. Let's recap the stats. In November 2007 there were 623 MLS sales; Greater Victoria had 310 SFD sales at an average of 597K with a median of 510K. In December 2006 there were 385 MLS sales; Greater Victoria had 211 SFD sales at an average of 502K with a median of 433K.
I expect to see a drop in sales from last month because I have seen far fewer sales on my PCS account. The number of SFDs will be slightly higher than last December (10-20). I expect the average and median prices will be down from last month to 550K and 505K. The reason for last months jump was due to the sale of a number of high priced homes.
However, anything can happen with statistics when the sales numbers are low. The sale of even a few multimillion dollar homes can skew the average price to the high side.
VREB Spin alert for all bears
This months numbers will be the last for 2007 and VREB will undoubtedly trumpet the YOY gains in average price and sales. The MSM will parrot the news release, as usual. Do not get discouraged. Inventory is piling up; mortgage rates are increasing; discounts of posted rates are narrowing; credit requirements are tightening; and the pool of FTBs is drying up. Outside of Victoria the subprime mess is getting worse; predictions call for a US recession; Canada's economy is slowing down and Chinese prices for goods are rising which can lead to inflation pressure in North America.
Several agents have announced they have listings ready to go in early January. Why are they in such a hurry if the market is still hot? Because some of them read papers other than the TC and they see that the boom is coming to an end.
anon said
What a joke. Are you seriously suggesting that Winnipeg and Hamilton are better places to live than Victoria??? Give me a break.
This poster did not get the point of the article. Happiness or satisfaction with where you live is not based on the fact that there is little snow in the winter. Would Victoria still be a world class city in many residents' opinion if it had more snow and colder temperatures??
I have lived in several places in Canada and have found my personal satisfaction with my community, neighbours and cultural life to be equal to that of Victoria and in some aspects better. When I came here in 1995 I found people far friendlier, the city was safer and more community oriented.
The increase in real estate prices has resulted in a "collective arrogance" which I find a bit distasteful. Perhaps the poster needs to consider that folks in Hamilton, Winnipeg and Charlottetown might have colder weather and snow to shovel but at least the average working family can afford to own a comfortable home. Maybe this is why they are more content than many of the residents of Victoria.
I think that there is too much emphasis on FTB's. The volume of annual sales in Victoria is small. From my recollection from the MLS data the volume of sales has centered around 4200 each of the last five years. Sales volumes were actually in the 5000 range in the early 1990's when we did have higher immigration.
FTB's (sans parental help) have been out of this market for the last three years. This has been a trade up and speculate market. Hence, economic fundamentals have been pushed to the side lines. Jane Doe, is asking - How much will my properties be worth next year? Not - can I afford to live hear for the next 20 years?
As in the good old US of A, when appreciation hits the single digits, only then will Jane Doe start looking at her Income and Expenses rather than her Balance
Sheet and economic fundamentals will once more return to historic levels.
I'm watching new housing and new condominiums. This is the weakest link in the marketplace. The individual may be able to pull their listing to await a better time to sell. The developer does not have that luxuary and their sales have slowed dramatically.
I expect construction costs to come down considerably this year as it has with the USA. Which only adds to the pressure to reduce prices of existing new stock. As the "Spring" builder on the lot beside the recently completed home will have much lower cost to cover.
If you want to see some really wild Vancouver real estate predictions drop over to the Financial Planning and Personal Sanity blog
I want to wish HHV and all my fellow bloggers a Happy New Year and all the best for 2008.
Take a look at the Vancouver Condo Info Blog. It says that in Toronto people pay 45% of their salary in housing - in Vancouver 71% which is impossible and unsustainable.
I read an earlier article that said people pay 71% and I thought it was a mistake. Anyway, where does that leave Victoria?
This is just one instance but there was a house torn down in the Uplands and there is a big hole in the ground. I presumed that someone bought the tear-down and will start building.
There is a For Sale sign on the property. Plus accessibility to the planning permission and plans.
Someone bailed.
I wonder if we might not be seeing more of this?
The average home requiring 71% of the median income is not impossible when you consider that most of the market is made of speculators and trade ups. What your seeing is the affect of "bubble bucks". You made a $100,000 on the last flip and now your into the next one for $50,000 more. Your non-real estate income and monthly payment has not really changed. Your still probably averaging $2,500 a month, but the amount you put down has increased. Your now into the million dollar home at East Hastings and Main.
Phewww, you made it! Your a paper millionaire! Your the envy of all your friends - who won't come to vist you without a police escort. The only visitor that you get is from Revenue Canada who wants to know why you've not declared your income from your house flipping bussiness.
I honestly think that you will see things fall faster this year than you expect. It happened so quickly in the UK.
The fundamentals just don't jive. I think it will happen much faster. HHV I hope I am right and you are wrong.
2008 will be very interesting. I am thankful for these blogs.
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