The value of all property transactions through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) hit a new record of over $4.1 billion in 2007, up from $3.3 billion in 2006. The value of single family home sales was over $2.5 billion while the value of condominium sales was over $756 million. Victoria Real Estate Board President Tony Joe noted that both sales and prices for all major property types increased last year. "Last year was another exceptional year for the local real estate market. The total number of sales increased over 12 per cent while the overall average price for single family homes rose 8.5 per cent; the average for condominiums rose over 11 per cent and the average for townhomes rose 10.5 per cent," said Joe.Meantime, the sale of 14 single family homes in Greater Victoria over $1 million pushed the average price to a new record high of $624,450 last month; the median price, however, was considerably lower at $536,000. "It’s always important to bear in mind that the average price in a given month can often be significantly affected by the sale of high-priced homes," noted Joe. The six-month average for single family homes in December was $581,419.
The average price of all condominiums sold in December was $332,793; the average for the last six months was $319,980. The median was again lower at $292,900. The average price for townhomes sold last month was $445,960; the average for the last six-months was $415,648. The median price was $387,900.There were 408 MLS® sales last month, up from 385 sales in December of last year. There were 623 sales in November. Sales last month included 202 single family homes, 120 condominiums, 46 townhomes and 8 manufactured homes.
There were 2,799 properties listed for sale on the MLS® system at the end of last month, up from the 2,650 properties in the same month a year ago.
Before we see any changes, something is going to have to give. Year over year, we've seen listings increase, but we've also seen sales increase. What will we see over the next few weeks and months? Will listings climb while sales slide? Will listings decline and prices increase with increased sales? If this trend continues, that "soft landing" that many economists have predicted will likely be the case. An 8.5% increase will just come back down to normal 5-6% gain, or slightly less.My YOY predictions, not to mention my month-month ones too, were completely out of whack. I over-estimated YOY SFH gains by 1.5%-2.5% and completely missed the boat on MOM; I guess some people got some high priced homes for Christmas this year.
If you could look into a crystal ball and see that a crash is NOT coming, but a flat period of 5-7 years is, would you think about buying in the next couple of months?
Greg has particularly good analysis on these numbers.
14 comments:
I don't see how I COULD buy even if I knew a correction will fail to materialize, with a decent house in a good area now being $700,000 plus. I have a quarter million in cash sitting here as a down payment, but even on a professional's income of $100,000 a year (less overhead), I can't manage a $500,000 mortgage. So, if I'm priced out, I just can't fathom how all this buying is being facilitated. Must be purely switching of houses on the part of long-time owners, plus some richniks from elsewhere, all doing it via el cheapo interest rates and promiscuous lending standards.
VicREBear
I hear you Vic, I'm still surprised that it's houses and not condos that dominate the sales numbers.
I keep waiting for some sort of external shock to start the correction, but it may be that this thing will just have to collapse under its own weight. A rise in unemployment is unlikely since construction jobs actually feed into the cycle. The collapse of the forest industry seems to have gone on unnoticed. The end of the US bubble doesn't seem to phase anyone.
Now I'm expecting that we'll just see appreciation level out, which will cause the speculators some pain, and after a flat period the market will be flooded by people who have to sell because the property isn't generating any income to pay the mortgage. After that comes the crash.
My prediction is that YOY prices will be about flat this time next year, but inventory will be a lot higher and sales will be lower. The crash starts in spring 2009.
Thanks for the plug hhv.
I figure the pain is already occurring at the higher end of the market, conveniently unnoticed, as noted by Scott Simmons from One Percent Realty.
We'll see if the asking prices for some of those properties start moving down into the near median price range, and what effect that might have.
Tougher mortgage rules are going to have an effect sooner, rather than later, as well.
My $0.05.
I too wonder who's feeding the bottom of the market.
To reply to VicREBear above, i'm surprised you cannot find anything in your price range. Are you afraid of simply putting on a coat of paint and new carpet in an late model Broadmead house? there's nice places in Broadmead for less than 900K that may need a coat of paint and new carpets, but that's almost a given for a 20 year old house.
to the last post I would say that to suggest the homes in Broadmead (your example) need only a coat of paint and new carpets is a GROSS simplification of the reno requirements of the bulk of those homes. Most are at the stage that a new roof must be considered, plus the cheapo kitchens and baths also need a major overhaul. I feel that it is not just the asking price that is unrealistic - it is also the price in junction with the huge amount of work and cash needed to make the home comfortable. Most Victoria homes are simply a huge money pit.
anon at 6.34, are you joking????
I agree with VicREbear completely. It is the smart ones that refuse to buy now, who are preventing this huge problem from continuing.
Why should anyone pay $700k-$900k for a dump? The past 3 years market was a delightful time for people with problem-homes to unload their crap at top dollar.
All the fools who bought at bidding wars are probably sorry now. They are finding out that buying a home without inspection conditions are a huge gamble.
I cannot tell you how many homes seemed to need 'only a fresh coat of paint', then had to be demolished because they were full of mould and uninhabitable.
VicREBear's gross income SOUNDS impressive, and God bless him/her, but please realize that if he/she borrows $600k at 6%, the interest payments alone are $3000 per month.
I know professionals who gross $100k, yet their net after rent, office expenses, staff salaries, auto, etc, are probably in this $36k range. VicREBear is right to hang in there.
Even people with cash choose to rent. The sad part is that neighbours and friends look down on renters, and feel sorry for them. In actuality, the so-called owners really are owned by their banks. What good is showing off, when one is mortgaged to the hilt?
Canadian Ivey PMI plunges to historical low in December
Fri, Jan 4 2008, 15:12 GMT
http://www.fxstreet.com
FXstree.com (Barcelona) – Economic activity has decreased in Canada in December for the first time in the whole year. The Ivey PMI has fallen to 45.9 in December from 58.7 in November.
The employment index has decreased to 48.0, inventories fell to 42.9, Supplier Deliveries decreased to 39.0, while Prices rose to 60.1.
This is the first time in 2007 that the Ivey PMI shows figures below 50; the boundary between economical expansion and contraction. In December 2006 Ivey PMI posted a decrease to 49.4, and in December 2005 it was 48.3.
Anon 7:26,
Thank you Thank you Thank.
We are home owners but need more space and I have just had enough waiting. I was going to call my RE agent today and say I don't care - find me a big box in Broadmead.
We are going to sit - and the kids are back at school!
Cheers!
Hi anon 11:53 PM,
You must be in the same situation that I am; making a low six-figure gross income but paying out 50% of it in overhead. Also, being 46 years old I really can't stomach the idea of taking even a 25 year mortgage and continuing to pay it until I'm 70. And all that for some crap-box house that I just wouldn't be happy with because I'd know, every day, how ripped off I'd been! This is the trouble with having lived in Victoria most of my life - I remember what it was like when this town was quiet, pleasant and relatively affordable - before it metastasized into a "world class city".
VicREBear_
I was looking at the VREB Stats today and saw something of interest to the bears.
This is a VREB pdf file showing average sales over the last few years. You will notice that the average price has jumped a lot in the last few months. However, look back to the period December 2005 to April 2006. You will see several 60-75K jumps in monthly price.
I wondered how often this occurs with median and average prices so I plotted VREB data and made this graph You can see this happened three times between July 2005 and April 2006!!
I suspect after two positive jumps over the last two months resulting in a 636K record we will see a big dive next month. How will VREB spin that after all the hype this week?? This might set the tone for the spring once the MSM reports the drop.
I gross about 200K per year with a net cash income after setting aside retirement funds of about 60-70,000.
I love Oak Bay, and rent a small apt and live a simple life.
I have no stress, no monthly payments to anyone but rent, which is less then 1/20th of my savings interest per month.
I drive a 4 year old Volvo that I got a bargain on a few years ago.
Life is pretty simple, and rewarding... No need to 'move up' in the world.
And anyone who says Oak Bay home owners look down on those that chose to rent is totally uneducated and plain wrong about that.
Walk around the old school areas of oak bay and you will mostly see 15 year+ well used old no name brand dusty cars and a few trucks from the late 70s.
Wealthy people respect frugality, thats how they got 'rich'.
Those people you see driving BMW's are most likely making only about 70K per year gross, and have found out the very simple truth that with that 'high' income level you can own a BMW and mortgage a million dollar home... through in a few suites from Outlooks for men, and you have a 'rich' 'successful' person.
Morons, and slaves they will be... please do not feel pressure to 'buy' a home at all because of these peoples insecurity.
I would highly recommend looking at this.
http://en.wikipedia.org/wiki/Envy
and read this book:
The financial parable written in the early 1920s, "The Richest Man in Babylon:"
http://www.amazon.com/Richest-Man-Babylon-George-Clason/dp/0451205367/ref=pd_bbs_2?ie=UTF8&s=books&qid=1199387616&sr=1-2
I meant to say
"Throw in a few suites from Outlooks for Men on one of 3 'platinum' credit cards and you have a 'successful man'
Million Dollar Home:
$3200 a month
BMW Montly Lease:
$700 a month
Credit Card Payments:
$200 a month (minimum payment)
Living Expenses:
$1100 a month
TOTAL YEARLY COSTS: $62000
TOTAL YEARLY SAVINGS: -5000
Knowing you are not a slave to your envy.... priceless
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