Monday, December 1, 2008

November numbers

Cautious Buyers Lead to Decline in November Sales

December 1, 2008

The number of property sales throughout Greater Victoria declined in November as buyers remained cautious due to concerns over the economy and direction of the market.

A total of 268 homes and other properties sold in November through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) down from the 316 sales in October. There were 623 sales in November of last year. November’s sales were the lowest monthly sales since December, 1999. The number of properties available for sale at the end of November was 4,459. That represents a 40 per cent increase compared to November of last year but a further decline from the 4,680 properties available for sale at the end of October.

Victoria Real Estate Board President, Tony Joe, says it’s clear the uncertain economic climate is having an effect on the housing market. "More people are taking a ‘wait and see’ approach and are less inclined to buy or sell unless they have to given all the uncertainty we hear about almost every day. Despite this, so far there has only been a modest effect on prices for single family homes and townhomes." Joe noted that the average price of single family homes in Greater Victoria last month was $524,128, down from $565,741 in October; the six-month average was $562,772 though the median price in November at $500,000 was up slightly from $495,000 in October.

Condominium prices were most affected last month. The overall average price for condominiums was $273,890 last month, posting a significant decline from $323,028 in October. The average for the last six months was $308,133. The median price for condominiums in November was $258,450. The average price of all townhomes sold last month was $447,370 up from $389,731 in October due in large part to two sales, one in Victoria for over $775,000 and one in Sidney for over $950,000. The six month average was $425,086 while the median price in November was substantially lower at $372,250.

MLS® sales last month included 153 single family homes, 77 condominiums, 20 townhomes and seven manufactured homes.

Thank you Tony, your credibility went up from last month's lows, at least in my eyes. Overall, these numbers are not great for impatient bears, nor are they great for the "this time it's different crowd." More of the same from last month really.

Highlights not shared: April 2008 average SFH price was $626K, this month $524K, an approximately 17% decline.

110 comments:

olives said...

I'd say that's a pretty massive decline in the average in only 7 months. what constitutes "crash" HHV?

roger said...

Here is a repost of the VREB stat analysis:

November 2008 Statistics - Monthly Analysis

October 2008 shown in ()

MLS Sales - 268 (316)
MLS listings - 4459 (4,680)

SFH Average - 524.1K (565.7K)
SFH 6 mo. Avg. - 562.8K (574.8K)
SFH Median - 500K (495K)
All SFH Sales - 153 (184)

Condo Average - 273.9K (323K)
Condo Median - 258.5K (280K)
All Condo Sales - 77 (76)

Town Average - 447.4K (389.7K)
Town Median - 372.3K (369.5K)
All Town Sales - 20 (26)

Year-over-Year Analysis

GV - Greater Victoria
November 2007 shown in ()

MLS Sales - 268 (623) - Down 57%
MLS listings - 4459 (3196) - Up 40%

GV SFH Average - 524.1K (596.5K) - Down 12%
GV SFH Median - 500K (510K) - Down 2.0%
GV SFH Sales - 126 (310) - Down 61%

GV Condo Average - 273.9K (313.6K) - Down 13%
GV Condo Median - 258.5K (293.5K) - Down 12%
GV Condo Sales - 77 (177) - Down 56%

GV Town Average - 461.0K (474.2K) - Down 2.8%
GV Town Median - 382.5K (421.0K) - Down 9.1%
GV Town Sales - 19 (62) Down 69%

greg said...

They left out the million dollar plus sales metric again, guess I have to wait to mid-month for detailed results.

Maybe there weren't any...

Anonymous said...

The pie is getting smaller. With 268 sales and 1400 Victoria PROFESSIONAL REALTORS®, that's cause for concern. But I forget, we have the lowest unemployment in Canada, and all these well paying jobs that are waiting to be filled, so not to worry. All these jobs no doubt pay well enough for confident buyers to qualify for mortgages for the average Victoria home. NOT.

roger said...

I wonder if the TC will publish the VREB graph of average SFH price in their article tomorrow?

Median price is a better indicator of the RE market but VREB does not publish a graph of this data.

Just Jack said...

I don't think its a crash or a bubble as it seems to be consistently a 2 to 3 percent drop each month. That's still an annualized 30 to 35 percent drop. Ouch! But it give's the over extended buyer time to get out of the market. Imagine if it was 30 to 35 percent over a couple of months. That certainly would be like falling off a cliff, most definitely a burst bubble.

So, if you bought your home one year ago and have to sell today, then you have lost money. If you bought your home two years ago, after expenses you will probably break even. If you bought three years ago you would have made money on your home at the rate of about 5 percent a year over the last three years.

I don't think most speculators are hurting just yet. Right now they have the faint hope that things will be better in the spring. At the present rate of decline the typical single family home may be $50,000 to $75,000 cheaper by April 2009.

Then the Gordon Head basement suited home (which typically rents for $2,800 per month) may be $450,000 by then.

{This ones almost for you Patriotz at 160 times monthly rent}.

just yankin your chain Patriotz

Art Vandelay said...

Whatever the nominal decline in average (or even the median) price hides the extent of the crash.

Much like banks were able to pretend their balance sheets weren't impaired as long as they didn't have to price-to-market, VREB can pretend there hasn't been a precipitous decline as long as transaction volume remains low and the 4000+ listings that go unsold, well, go unsold. Because property that doesn't sell doesn't count into the averages.

I'd bet if you canvassed a broad cross-section of lenders or property assessors, you'd find that the values attributed to properties are falling more dramatically.

Setting aside the effects that inflation has on prices, I'd expect us to re-trace back to 2002 prices, and maybe even 1999 prices. Now, with the Bolshevik coup-plotters talking stimulus to match the worldwide model, and the hyper-inflation that will surely follow, nominal prices might hold up. "Value" will still be down in terms of how much gold (or loaves of bread) you could trade your house for, but prices might not actually look all that crappy 18-24 months from now.

All that fiscal stimulus has to go somewhere.

olives said...

"Bolshevik coup-plotters" LOL

isnt' stimulus just another term for more debt and bigger crash further down the road....????

VicREBear said...

"All that fiscal stimulus has to go somewhere."

It'll go just where all that stimulus has gone in the States - into hoarded bank, insurance company and private industry (ie: auto companies) reserves, and will never see the inside of your or my wallet.

hhv said...

Olives,

Which is why we should all go out and support the "Coalition of the Swilling" at the first opportunity... not.

Not to turn this whole discussion into politcs, but Canadians are getting exactly what they elected in the economic update, the opposition doesn't like having their pork barrel funding cut, so they throw all principle out the window and create an economic nightmare for the rest of us.

olives said...

It is a nightmare and is not going to inspire any confidence in our country.

On a positive note (I suppose) Roger's average price graphs show house prices now below what they were two years ago November, 2006.

olives said...

HHV, from reading various comments on CBC and Globe & Mail sites, it's amazing that so many people think that the chaos, confusion and instability is somehow a good thing. ??????

hhv said...

I don't get it Olives, every other "stimulus package" has been a disasterous failure of chasing bad money with good... and this is what they want to do here...

olives said...

Vancouver average SFH price down 10 percent in one month. A total of 19 percent since the top in March 2008.

Ryan said...

The Harper government has done nothing to prevent or deal with the economic crisis. Personally I don't think government can do anything at this point, so the longer this round of tomfoolery the better. If they're fighting amongst themselves they're not doing anything stupid. And at least the NDP/Liberal coalition will give us something for our money, instead of just tax cuts for the rich and more dead soldiers in Afghanistan.

Harper is an arrogant prick who managed to hold onto power because the Liberals and especially Dion were spineless. He deserves to be pushed aside and humiliated for thinking he can govern with a minority as if he has a majority. If he'd done things that only pissed of two of the opposition parties at a time, he'd be fine. But no, he had to go and piss off all three by saying he would cut off their money. It's like he hit his head on the bathtub one morning and lost all common sense.

Anyway, no need to get all huffy about politics. It's just theater at this point. 16 months of inventory, now that is news.

greg said...

Not to be too Keynesian about this, but a fiscal stimulus package spent on public works is going to do a lot more for economic recovery than billions handed over to private corporations to save their balance sheets.

The whole point of stimulus packages is you reduce debts and deficits during the good times (as opposed to cutting taxes like George W) so that in the bad times the government can spend some money to keep the economy ticking over.

Unfortunately, they are now spending like drunken sailors over at Finance, and last I checked, it was Flaherty at the helm, not any coalition forces.

Perhaps if Harper actually governed like he was a minority PM, things wouldn't be where they are going now.

With the blood in the water, do you think the opposition will hesitate a second to take down Harper?

For all those conservatives who don't like the sudden turn of events, you've got to remember that Harper didn't have a majority of the popular vote.

There are quite a few examples of this kind of thing happening in various parliamentary democracies.

Even the Reform/Alliance/Conservatives went through something similar when they merged their parties a few years ago. Joe Clark wasn't too happy about it, I know that much.

Did PC members vote for Harper when those parties merged? Ummm, no, they didn't.

The fact the opposition has decided to form a coalition rather than formally to merge their party structures is just a brilliant manouevre at the federal level.

It gives them time to fight and work together, and see if there is reason to make the union more permanent before the next federal election. Then the Canadian electorate can decide whether they should turn on the parties involved.

Either way, this intrigue is no different than what happens in Europe all the time, so the conservatives should just suck it up and move on and deal with it.

For the people complaining this is unfair because the Bloc is a separatist party so they shouldn't be allowed as members of a colition, they seem to have awfully short memories because it was the Bloc voting with Harper that took down Paul Martin a couple elections ago.

The Bloc is just another special interest group like all special interest groups, and in a democracy you can no more prevent them from acting in parliament or participating in the government than any other party can be blocked.

Personally, I think this is great. Something different and unusual, that will get people more interested in politics.

As to this being a coup d'etat as Mr Harper himself has been whining, I'm shocked that a Prime Minister could be so ignorant of the political process, or so cynical that he would compare the great parliamentary democracy of Canada with a banana republic.

Too bad Steve's authoritarian tendencies had to get a wake up call, or maybe too good, depending on your point of view.

For all those chicken little's shrieking that the sky is falling, well it might be smart to see what they actually intend to do and how that plays out, before righting off the experiment.

But in Canada, where the conservatives have been acting more and more like republicans with attack ads, muzzling of MPs and dishonourable behaviour (money for Cadman's widow, anyone?), crying about the opposition playing hardball is laughable.

Goodbye to the sweater, Act 1.

olives said...

Greg, do you really see this coalition as viable and being able to "work together"?

hhv said...

Greg,

I suppose I started this nonsense here in the first place.

I couldn't disagree with you more. And I'm not a conservative. I have more respect for my fellow Canadians than to accept this little "experiment" as legitimate. What they are doing is subverting the democratic will of the people. The coalition did not campaign on this collective action. They campaigned on a promise not to get into this collective action.
If they want to run on this, they should do it offically.

If this happens, I predict the west, led by Alberta and Saskatchewan will create a soveriegntist movement unmatched in Canadian history.

Public opinion polls haven't come out yet, but the preliminary online ones I've seen show considerable non-support.

That's all I'll say and will respectfully ask that we revert back to our regularly scheduled programming here.

hhv said...

K, last word, really.

I suggest you all read the accord, especially the part on non-confidence votes.

There is absolutely nothing concrete or new that isn't already on the conservative agenda in there. And we are stuck with a Liberal led gov't, no matter what, for the next 2.5 years minimum.

vg said...

That's it, if you guys don't stop talking politics then I'm going to start talking gold again. ;)


How about them Vancouver house prices crapping out ? we should be falling at the same rate in due time. We just have more people in denial in this town, that will change over the next few months.

hhv said...

There's a story in the condo prices... 8% drop in median MOM and 16% drop in average... and plenty of new condo product left to come online.

Maybe condos will be the stick that drops the jenga game?

boomer said...

I hear Paris Hilton is promoting her new perfume "Fairy Dust"

watcha all think?

VicREBear said...

'I hear Paris Hilton is promoting her new perfume "Fairy Dust"'

What's the scent? With a name like that, it must be the ink that Bernanke's using to print those trillions.

patriotz said...

I don't think its a crash or a bubble as it seems to be consistently a 2 to 3 percent drop each month. That's still an annualized 30 to 35 percent drop.

Oh come on off it, even the great RE bust of the early 80's didn't move that fast. Nor has any major market in the current US bust. Nor did Japan.

That's warp speed for an RE crash.

If you bought three years ago you would have made money on your home at the rate of about 5 percent a year over the last three years.

You don't make any money on price appreciation until you sell. Until that time the only money you make (or lose) is monthly ownership costs versus rent.

phil said...

"That's warp speed for an RE crash."

No kidding, I'm surprised the supertanker hasn't rolled it's turning so hard!

Anonymous said...

A request was made in the last thread for the 2008 sale price of 4304 Shelbourne . Details are here

greg said...

What they are doing is subverting the democratic will of the people. The coalition did not campaign on this collective action. They campaigned on a promise not to get into this collective action.

Until we have a system of proportional representation in place, arguments about the will of the people in a first past the post fight for control of parliament are meaningless.

Believe me, a lot of things Harper has done weren't announced or put to the test in either of the election campaigns either.

Like I said, that's parliamentary democracy at work, not a coup d'etat. If the west would leave (I doubt it) over such an issue, woe to the country.

You can't blame the Liberals and NDP for finding an effective way of fighting back. Last time I checked, the conservatives hadn't won a majority of the seats, a majority of the popular vote, or a majority of the public opinion.

People should be judged on their record. If the Liberals and NDP and Bloc pull this off, it will either strengthen the conservative base if the public ends up disliking the manouvre, or it will provide a viable alternative at the left of the spectrum

It's good for democracy. The way parliament works and what everyone needs to understand is that if a majority of parliament votes against the government, and they can summon support to gobvern effectively, the opposition forms the new government.

This is no different than what the conservatives were doing in the previous term, where they were governing and enacting legislation with the support of the opposition parties. The opposition parties have moved away from doing that, so in effect if that doesn't happen, the result of a non-confidence vote would be another election.

How would that be better at this point?

Just Jack said...

Now are we really going to go back to the term "bubble" again. As in tulip or south sea bubble.

Patriotz, you should have been around in April of 1981 when the market tanked 40 percent in 4 months, now that was warp speed.

This market is more like watching the movie Titanic. You know the outcome, but you gotta go through all the filler to get to it.

I think as prices rewind to that of two years ago, say this coming April, then we will see "warp speed".

greg said...

Do I need to add that in the previous term Harper held the opposition parties hostage with the threat of calling an election if they wouldn't support him?

At that time, a non-confidence vote would automatically have resulted in an election. This time, Harper doesn't have that card to play.

Like I said, as far as politics is concerned, its a brilliant move.

roger said...
This comment has been removed by the author.
patriotz said...

Patriotz, you should have been around in April of 1981 when the market tanked 40 percent in 4 months, now that was warp speed.

I was around, and 40 percent was about the total magnitude of the bust, which took 2 1/2 years. 4 months? Please.

A lot of other people on this board were around too, so I suggest you be more careful as you're just making yourself look silly.

Anonymous said...

It's great to see little bear trying to eat big bear. The frustration glows day and night.

I've been watching my outlying area closely and sales prices have not come down more than 5% on SFH since this time last year (admitedly sales volume is near zero) - April was just stupids'ville. Condos might be a different story.

roger said...

Reposted due to incorrect link

What a difference a year makes!

Tony Joe's comments in today's news release sure are different from those made by VREB last year.

I guess it is pretty hard to spin when sales are down by 57% YOY and you have a SFH price graph like this one

Anonymous said...

"If this happens, I predict the west, led by Alberta and Saskatchewan will create a soveriegntist movement unmatched in Canadian history."

That'd be nice. No more Alberta speculators and diesel driving polluters here. They're the bunch that made housing so so unaffordable here. Let them keep their Klein bucks. The new coalition at least favors infrastructure projects that would create real jobs, not tax breaks for the rich.

On another note, yes, coalition governments are the norm in Central and Eastern Europe as it is in Israel. It's the true form of a democratic process. Hopefully, one day, we'll also reform our parliamentary electoral format to be based on proportionality.

dub said...

Anon 6:32

Great, thanks for pulling that up!!

Anonymous said...

Mrs. HHV here...for the record, this past weekend, I recommended Mr. HHV start a political blog COMPLETELY SEPARATE from this one...

Dumb Canuck said...

Mrs. HHV - Thank you. Perhaps HHV can start a combined political/gold blog.

We come from all political stripes here and most of us probably don't want to see this turn into a 'bash the other political party' blog like most MSM media blogs on random topics have turned into.

As for me, I'm still trying to vote Rhinoceros...

roger said...

I updated the Victoria RE Stats Gallery tonight with the new VREB data.

New slideshows:

Greater Victoria Stats Analysis

City of Victoria - Sales & Prices Tumble

The controls at the top of the slides will pause and single step the slides.

Dumb Canuck said...

One 'geek' (thank you Tim and Fred) comment: for the SFH waterfront stat in the vreb Nov. report, an average price of 280K, total volume of 560K, means that the median cannot logically be 485K, but should be 280K.

Hopefully more calculations of the VREB median throughout the report are not incorrect (though if there is one error someone should check the full report for more).

Art Vandelay said...

Sorry, I can't help it, but:

hhv writes: "If this happens, I predict the west, led by Alberta and Saskatchewan will create a soveriegntist movement unmatched in Canadian history."

I'm in, especially given Anonymous's latent Marxism: "That'd be nice. No more Alberta speculators and diesel driving polluters here. They're the bunch that made housing so unaffordable here. Let them keep their Klein bucks. The new coalition at least favors infrastructure projects that would create real jobs, not tax breaks for the rich."

If you think government spending creates "real jobs" you have such a fundamental misunderstanding of how an economy works that it's no wonder this country is in the mess it is.

Anon goes on: "On another note, yes, coalition governments are the norm in Central and Eastern Europe as it is in Israel. It's the true form of a democratic process. Hopefully, one day, we'll also reform our parliamentary electoral format to be based on proportionality."

Jaw. On. Floor.

You want Canada to model itself after European basket-cases like Italy or Ukraine or, gasp, sputter, Israel? Are you even old enough to remember when Israel had a 1,000% inflation rate?

Have the locals libraries stocked up on extra copies of Das Kapital?

Honest, I don't care whether Harper comes or goes. He, like all politicians, is evil.

But if the Reds and Whites think their coalition is legitimate, let all Canadians vote on it.

It's surprising that people - the Globe boards are full of them - are keen to dig out the Magna Carta if that's what it takes to excuse this coup, when a vote - however expensive - would settle the matter in a way that most residents of this democracy would feel is fair.

Just Jack said...

Anonymous 8:17 Said:

"I've been watching my outlying area closely and sales prices have not come down more than 5% on SFH since this time last year (admitedly sales volume is near zero) - April was just stupids'ville. Condos might be a different story."

I agree with you anonymous those April numbers seemed silly to me as well. So I think we may be over estimating the actual drop a little. More months of continuing declines will improve the accuracy of these numbers. Perhaps our single family home values are falling at a little under 2 percent per month. People are certainly not chasing the market down at 2 percent per month.

Anyway, I don't think that the average Joe on the street is noticing a significant change each month. At best Joe Six Pack may feel his home is worth a little less, but not a large amount. Maybe this is why, there has not been a panic to sell by speculators,investors or the average Joe. Most fiquring that this is only a minor correction that will be turned around in the spring. Sales are down a good 50 percent or more, but properties are still selling and most of them within 5 percent of list price.

This is far different than 1981. I was working in Vancouver in real estate at that time and the phones literally stopped ringing in one day and the market free falled. Sellers were chasing the market down with big, big price reductions. We are not seeing this YET.

In order to have a crash like 1981 we need more unsold inventory and worse economic numbers. Perhaps our greatest fall in prices may not occur until April 2009 when those who de-listed their properties put them back on the market.

So, I disagree with Patriotz (what's new about that) this is not the crash or the burst of the bubble.

This may just be the pre-cursor to the crash. And if I seem "silly" about this, its because I don't feel that over exagerating helps someone reading this blog and thats something worth being careful of.

Just Jack said...

Now, the drop in condominium prices that certainly looks spooky to me. Although with the low, low sales this may be an anomaly as well. For the last six months condo prices in the Victoria Core have been bouncing around from a low of $276,000 in August to a high of $297,000 in May. October being at $295,000 ($296 per sft.).

But a November median of $242,500 ($276/sft.)is off the chart for a decline of almost 18 percent (lump sum) in one month. However, in October the median property that sold was 118 square feet larger, so the actual decline may be only around 7 percent.

And you thought 2 percent in single family homes in one month was a bust!

Anonymous said...

Thanks!

That is, thanks Roger for your awesome charts and thanks Mrs. HHV for allowing Mr. HHV the time to maintain this blog.

I know my wife bitches that I read this and a couple of other blog almost daily, so I appreciate your patience, tolerance and supporting this cause. I have no questions this blog and a couple of other ones have really helped some significant number of people not follow all the bullish lemmings off the real estate cliff.

And of course thanks HHV for actually running the blog. :-)

G said...

From today's TC article:

"Geoff McLean of ReMax Camosun said the real estate industry is in for a rough ride as the local sector adjusts from selling 800 units a month to 300 or less. "You've now got both economic uncertainty and a traditional slow period in the winter months coming up," he said yesterday. "Pricing has to be competitive and there are still sales ... but it seems you have to be a real want-to or a need-to buyer or seller."

He expects about a third of the inventory to fall off the market over the coming months because "it's so overpriced it won't sell any way."

McLean also expects some colleagues to fall by the wayside. There are currently 1,366 real estate agents in Greater Victoria and that could slip to 900 or less, said McLean, citing a mid-1990s downturn that clipped the rolls from 1,700 to 860."


Guy really telling it like it is.

Just Jack said...

As a tag note to The McLean article, this is where the Days-on-Market indicator starts to rise quickly while the months of inventory reduces. In the 1990's market slide this indicator reached into the 70 to 90 day period. This is when I started to see some affective low balling offers with very worried vendors.

Geoff is a nice guy, I've dealt with him for years.

PS where's my calendar Geoff? It seems a little late this year?

roger said...

Just Jack said:

I agree with you anonymous those April numbers seemed silly to me as well. So I think we may be over estimating the actual drop a little. More months of continuing declines will improve the accuracy of these numbers. Perhaps our single family home values are falling at a little under 2 percent per month. People are certainly not chasing the market down at 2 percent per month.

Take a look at this slide of average and median prices in the City of Victoria. Full set of graphs here.

Just Jack said...

I said only a little, so instead of 17 maybe its 13 or 14 percent. Immaterial really. The trend is down. These areas in your graph are hard to pin down. James Bay tends to really skew any type of analysis.

I like to group similar neighbourhoods together such as Fernwood, Mayfair, Hillside and Sears. These tend to have a more homogeneous house and lot size and generally appeal to the same type of social economic purchaser.

While, James Bay and Fairfield seem to have more in common with Oak Bay. To reduce some of the noise I sometimes try to bracket the house and lot size. For example: 1,500 to 2,500 square feet homes on 4,000 to 8,000 square feet lots. Unfortuneately, with the low sales, this is causing some wide swings too.

Yet, no matter how you look at the data, the trend is consistently and steadily down. At some 2 percent a month, there is always a possiblility of a rally in prices for single family homes which may just turn out to be a dead cat bounce. Perhaps this is why I am reluctant to call this a "crash" and I am being more cautious in saying a substantial correction.

In contrast, I don't think there is any possibility of a rally in condominiums, there is just too much inventory that HAS to be sold.

Of course this is all just my opinion and I have been wrong many times before.

mln said...

Victoria real estate sales hit nine-year low

The global economic meltdown poured over Greater Victoria's housing market last month as cautious buyers stayed on the sidelines and monthly sales sputtered to a nine-year low.

Victoria Real Estate Board president Tony Joe said yesterday it was becoming quite clear that the uncertain economic climate was having an stifling effect on the market after only 268 homes sold on the Multiple Listing Service in November.

roger said...

Just Jack said:

In contrast, I don't think there is any possibility of a rally in condominiums, there is just too much inventory that HAS to be sold.

Speaking of condos... Does anyone know if any new projects are nearing completion in the next 6 months? More inventory in the spring would be bad news for condo developers.

I walk by the Falls and Parkside downtown and construction seems to be at a snails pace. Are the developers around Victoria dragging their feet so that pre-sale buyers will not be faced with closing in the next 6 months?

hhv said...

Roger,

lots of under construction projects out in langford still... could be careominiums though.

Just Jack said...

Condominiums in Langford and Colwood just amaze me. So many for sale, so few have sold. Yet, when they do sell it is close to list price and at prices close to the first quarter of 2007.

You would intuitively think that we should see blood in the streets in the Westshore condo market if we were in a crash.

But no, nothing to see here, just keep moving along.

I can only think that the profit in condos is so high that a developer will prefer to let his construction financing costs eat into his profits rather than start dropping prices.

So once more, in my opinion, we have yet to reach the tipping point where this substantial correction becomes a crash.

Anonymous said...

rather than start dropping prices

Some of theme have definitely dropped prices. Check out The Strathmore recently... huge price drops last week.

I imagine that developers are much more likely to start dropping prices after construction is complete and carrying cost really eats into their profit.

B2B said...

I agree Just Jack. Sad to say, I think that the reason nothing dramatic has happened in Langford and Colwood condos is that the sort of person who would even consider buying one is a very myopic local, probably from a lower socioeconomic status, degree of education, and degree of world travel (think a bank teller from Colwood who thinks he/she has really made the bigtime). Such people will be unaware of the crash until it has already come and gone.

Anonymous said...

probably from a lower socioeconomic status

You're joking, right?

Anonymous said...

Hey, hey don't put words in my mouth. I didn't say they were not world travelers. They've probably been to Surrey.

Just Jack said...

I think its more to do with value for money.

The price differential between a condo in Victoria and Langford should, like houses, be greater.

A Victoria condo should have a more secure rental income stream, higher security of capital invested, and greater liquidity than a Langford condo. I would think you should be paying around a $100,000 less for a Langford condo over a similar Victoria condo.

greg said...

As far as projects finishing and adding a ton of new units to condo inventory, there are a bunch of buildings near the selkirk trestle in Rock Bay and also in the railyards that look only a few months from completion. Looks like hundreds of units, in an area contiguous to downtown.

If they all hit the market this spring, what's that going to do to a recovery of condo pricing?

Not to mention, are they full of presales, where the buyers may walk on their deposits rather than close?

Just wondering about that....

roger said...

VIREB spinmeister keeps trying!

VIREB has released their market commentary (pdf) and stats (pdf) for Vancouver Island.

Sales are down 49% from last year. The average price is up 2% YOY.

VIREB President Subhadra Ghose has been talking to Tony Joe:

“I think we’re seeing the impact of the global economic concerns, as more buyers and sellers appear to be taking a ‘wait and see’ approach”

And now for the spin:

Ghose points to an updated mid November statement from the Chief Economist of the BC Real Estate Association, who notes home sales are unlikely to fall much further and market fundamentals support an easing of downward pressure on home prices by the second quarter of 2009.

Now there is a reputable source - Cameron Muir. He has changed his story more times this year than Helmet Pastriuk.

But wait - there's more spin:

While properties listed for sale were up from November 2007, they declined slightly from October 2008. “This is a good sign going into the New Year, as less supply means more demand will start to build.

What a ridiculous statement. She should let GM know that all they need to do is cut back production and the consumers will start pouring into the showrooms.

People buy or sell real estate because something in their lives requires them to do so: growing family, separation, empty nesters, not because the media says it’s a good time to buy or sell.”

Looks like VIREB wants a divorce from the MSM. They forget how all that pumping helped them in the last few years.

Anonymous said...

"the sort of person who would even consider buying one is a very myopic local, probably from a lower socioeconomic status, degree of education, and degree of world travel (think a bank teller from Colwood who thinks he/she has really made the bigtime)"

Sounds like an Art Vandeley (aka clueless and useless George Costanza)

womp said...

The Langford stereotype is getting pretty old. It may have been more relevant in 1996 when I first moved to the island, but Anon's - have you even been to Langford recently, besides the big box stores?

I thoroughly enjoyed the two years that I lived out there, except for the commute. Langford has more "community" feel to it than any other place I've lived in Victoria (except maybe Oaklands), and I've lived in a lot of neighborhoods up and down the peninsula over the last 10 years.

Langford has been highly gentrified in the last 6 years due to the simple fact that it's the only place that young families could afford to move to, because, as Jack mentioned, the price difference was so much greater.

It's certainly no worse than Fernwood, Downtown or Hillside/Cedar Hill in terms of "socioeconomic class".

greg said...

I would suggest Hillside is worse.

Of course, what's more important, the socioeconomic class of your neighbours or the length of the commute?

I think a lot of people with families and some fear who couldn't afford Fairfield, Oak Bay East Saanich went west.

Reasonable decision if the house is new and the price is the same.

As long as you don't mind the commute.

For me, that's a deal breaker, I lived in Vancouver for ten years, and in my experience, however bad it is now in Langford, its only going to get exponentially worse.

With house prices going down, we may see some gentrification of inner city neighbourhoods.

Its already happened a bit in Fernwood, I would guess Sears, Burnside, Hillside and Mayfair are next.

Really, do you want a big house on a tiny lot or in the middle of nowhere or in the middle of a suburb (but new or almost new), or do you want to live in a neighbourhood close to town?

I can see both sides of the argument, but personally, I don't bother with any of the outlying areas.

Because of the commute.

Anonymous said...

Tony Joe has two parrots

Bill Ethier and David Wardell say the uncertain economic climate is having an effect on the housing market. It looks like more people are taking a ‘wait and see’ approach.

BUT

With prices being down and a larger inventory, now is a good time to purchase real estate.

Anonymous said...

What constitures a long commute? 20 minutes? I mean we are just little ol' Victoria. Population, what 250,000? This ain't New York City.

Anonymous said...

I think gentrification takes decades and not years. And something about it, just feels evil to me. If all of the neighbourhoods are gentrifying were do the social outcasts like politicians live.

Just Jack said...

I like the mature city landscaping with wide boulevards and treed streets. The easy access to corner grocery stores, coffee shops, city play lots and barber shops. The diversity of architecture, eclectic houses and a place to walk the dog.

The Mill Hill and Bear Mountain subdivisions are my idea of Hell. The Colwood crawl being the road to Purgatory. Yet, I meet a lot of people from Alberta who adore Bear Mountain and think that the city is a nice place to visit, but they would not want to live there.

The world would be awfully boring if we all liked the same flavour of Ice Cream.

greg said...

Try living in Sooke with one little old road, or Colwood.

Like I said, I spent 10 years in Vancouver, at one point commuting from West Vancouver to Surrey.

It wasn't New York, but it wasn't nice either.

Up to 4 hours a day in a car surrounded by uptight drivers?

Uggh.

Since I currently walk to work in less than 20 minutes, even a 20 minute drive each way doesn't sound that great to me.

womp said...

I would suggest Hillside is worse.....

As long as you don't mind the commute.


Ha ha... and that's why we're renting in Hillside now! ;p Actually I didn't mind it so much, but my wife hated it because she was restricted to having to be in peak traffic due to her job.

The commute is only 20 minutes if you're driving well off peak hours. In peak traffic it's basically 45 minutes of stop and go. When I was living there, if I took the wrong bus, my co-worker could beat me to work on his bike, and he lived further out in Happy Valley.

Nick said...

If they ever get around to installing a commuter rail line to the Western Communities, I would move there in a heartbeat. I grew up in a more rural environment and enjoy that lifestyle, but I don't want to spend 1.5-2 hours a day in a car commuting. While oil prices are cheap now, I don't expect that to last.

Anonymous said...

I use to live in White Rock and had to commute to West Pender in Vancouver every day. When I lived there I thought Vancouver drivers were bad. Good Lord, Victoria has got them beat.

How many times have I driven down the Pat Bay with an Octagenarian up ahead holding back traffic to 30 KM per hour with her left signal light on for miles and miles. The way I fiqure it, if you can't see over the dashboard then you shouldn't be driving.

Now I do cycle, but man oh man talk about culling the herd in Victoria. I wonder how many cyclists have "objects may be closer than they appear" imprinted into their backs from cycling down Bay Street.

But Victoria is suppose to be a bicycle friendly city. A lot of people bike to work each day - though only a few make it.

Oh yeah, and people just because they make a Dodge truck the size of Latvia - it doesn't mean you have to buy it!

greg said...

Victoria has got Vancouver beat for being cycling friendly. There is nothing remotely like the Lochside Trail/Galloping Goose anywhere in Vancouver.

The ride through Stanley Park from West Van/North Van is okay, but downtown Vancouver? It's a gong show.

Of course, once you get off the trails, well, per capita, Victoria drivers are just about as bad for sharing the road - maybe worse....

B2B said...

Hi folks,

About my Langford/Colwood comments - I didn't mean to rag especially on residents of Langford, but just to point out that someone who is considering buying a condo in Langford is not particularly well informed or educated in the global sense. For that matter, neither are people buying in Oak Bay. But folks buying in Oak Bay are more likely to have older, richer friends, some of whom may actually have earned their money and may have a bit of a clue about the wider world.

Thus I wasn't trying to insult Langford condo buyers, but merely point out that they're more likely to be younger people with less money - and as a result, generally (I freely admit there will be many exceptions) less au fait with global finance and the fact that BC is not immune to global meltdowns.

greg said...

The way I fiqure it, if you can't see over the dashboard then you shouldn't be driving.

Reminds me of something a friend once said: "If you can't get on a bicycle, you shouldn't be allowed to wear bicycle shorts..."

Ryan said...

Parts of Langford would be okay, but where I am is big box country. Despite being in walking distance of stores, I don't because it's a terrible place to walk. If you lived right on Goldstream it would be okay, but the rest of it is like Surrey. I have a lot of co-workers who live out there though, because it's the only place regular people can afford a house to raise a family.

That said, I have no idea who would want to live in a 600 sqft condo in the suburbs. It's like the worst of both worlds.

As far as condo completions, Centennial Walk (near Quadra & W Saanich) has to be geting close, is around 50% sold and I heard they just dropped prices. The Orono on Jacklin appears to be on hold for the past few months, while the one further down at the end of Jacklin might be finished in the next 6 months. There's also those big towers down around Fairfield and Blanshard. They might be a year or so away though.

roger said...

Real Estate News

Housing prices to drop 20 up to per cent in B.C., economist says

VANCOUVER — Canada is in the grip of a recession that will see housing prices deflate about 10 per cent nationally and perhaps up to 20 per cent in British Columbia, according to Benjamin Tal, a senior economist at CIBC World Markets.

Tal said Canada's housing downturn is a recession-led correction rather than the kind of meltdown that brought U.S. markets low when large numbers of high-risk borrowers defaulted on their loans.

Tal said B.C. is likely to see deeper corrections in real estate prices, largely because values here shot up so much higher and more quickly that in other parts of the country.

"When you double the value of your real estate over the course of breakfast, then you pay the price," Tal said.


Housing sales fall good for Vancouver buyers

According to the Real Estate Board of Greater Vancouver, home sales in Greater Vancouver experienced an overall decline of 69.7 per cent in November compared with the same time last year.

The board said sales dropped to 874 last month from the 2,883 sales recorded in November 2007.

Residential benchmark prices also fell, by 12.8 per cent between May and November 2008.
This amounts to an 8.3 per cent year-to-date price reduction for detached, attached and apartment properties in Greater Vancouver between November 2007 and 2008.

In May this year the overall residential benchmark price was $568,411, compared to $495,704 last month.


MLS sales fall below pre-boom levels amid downturn - Calgary

It is becoming increasingly difficult to sell a home in the Calgary residential real estate market.

Statistics released by the Calgary Real Estate Board on Monday show that MLS sales in November plunged compared to a year ago--and they've even dropped below levels prior to the real estate boom of the past two years. As well, average and median sale prices continue to slide as listings remain at elevated levels.

Compared to November 2007, sales in the single-family home market plunged by 39.26 per cent (to 670)while the average sale price dropped by 5.77 per cent to $435,471. The median price also dropped by 4.96 per cent to $387,300.

roger said...

Here is a quick summary of what is happening in Greater Victoria:

House prices dropping

House sales down

Anonymous said...

Good news is that you can now get a good carpenter at $28/hour rather than some with only a little expierence at $40/hour. And there has been some relief on the cost of materials too. Land costs should also be going down, but I have not found any sales to show this - yet. So building a home has just gotten cheaper.

So, why would you want to buy one that is already built - when you can now have one built cheaper?

mln said...

I would build instead of buy, but I heard we're all out of land!

Anonymous said...

WOW all this talk about which area is better, who has the most educated citizens, and who has the most money buying into what property makes me think you guys are losing your focus.

You're actually arguing over which area you're going to buy into; you're going to talk yourselves a big rush at the Realtor's doorsteps. Slow down already. For shame on you bears.

At least wait until we see what Dion's going to do once he's done with Jackelayton.

vg said...

"So, I disagree with Patriotz (what's new about that) this is not the crash or the burst of the bubble.

This may just be the pre-cursor to the crash. "


It smells of a precursor to me. My experience in 81 was the drop between January and March was the big hit, about 15% difference on what you could have sold for and I had an unsolicited offer too at the top price in January. Sales were slim but inventory was thin too, hardly any listings cause people were afraid to sell and pay outragous rents and most buyers couldn't pony up at 19% interest rates. It was a saw off.

After I sold I didn't pay too close attention, I was thankful to have gotten out with a sale and my profit. I recall it played out over the next 2 years til I rebought at almost my original price with a better house.

roger said...

Mohican has a very good analysis of the dismal November market in Vancouver and the Fraser Valley on his blog. The graphs and charts show that this downturn is BC wide now.

In particular the comparison to the US and Shiller HPI shows that Vancouver is dropping faster than the US cities did in their early months.

patriotz said...

Housing prices to drop 20 up to per cent in B.C., economist says

Since the Vancouver benchmark has already dropped 14% in 6 months, this "economist" is claiming that the bottom is only another 6% away. What do you think? Check out the link to Mohican's blog above.

patriotz said...

So, I disagree with Patriotz (what's new about that) this is not the crash or the burst of the bubble.

This may just be the pre-cursor to the crash.


What is the defining line between the "pre-curson" and the "crash"? Is there supposed to be some preset level of decline like -20% where one becomes the other? You are arguing about labels, not numbers. Is someone who is now underwater on his house supposed to feel better because it's just the "pre-cursor"? I'll stick to the numbers.

As soon as prices start falling the crash has begun as far as I'm concerned. A total nominal decline of 40% (which I'm expecting) is 40% whether or not you call the first part a "pre-cursor".

Just Jack said...

Patriotz said:

"What is the defining line between the "pre-curson" and the "crash"? Is there supposed to be some preset level of decline like -20% where one becomes the other? You are arguing about labels, not numbers. Is someone who is now underwater on his house supposed to feel better because it's just the "pre-cursor"? I'll stick to the numbers."



Good points Patriotz. But most people who have bought or re-financed in the last five years are not underwater in their mortgage - Yet.

Its not a matter of trying to make the guy feel better by labelling it a pre-cursor or a crash. But it does show that those who bought two or three years ago in the hope of flipping the property, that they can still get out of this market before the "big One" hits. Unlike the 1980's when the speed of the drop forced most flippers into bankruptcy seemingly over night.

And its about credibility. The general public, unlike the 1980's, are not aware of any serious drop in their home prices and they have the faint hope that the market will rebound in the spring. If you espouse that the real estate market is crashing - then you are going to come off as an alarmist and when the "big one" does hit, people are not going to listen to you as you missed the "big one" all together.

Right now, to me the market is more like watching paint dry than warp speed. We are about 9 months into the decline, but Joe-the-plumber doesn't know this. To him the decline has just started. Some of the people he works with this month may have gotten layed-off and he is beginning to worry about his job. If he is a sub-contractor, then the next job he bids on will be have to come in a lower than the previous one in order to get the job.

In my opinion, we are only at the first stage of the market drop. The real fall in prices comes with increasing unemployment, personal and business bankruptcies, increasing vacancy rates and lower rents.

dub said...

I think Spring will be very telling as to where prices will go. Right now, I think there's a lot more at play with Real Estate than the affordability aspect of it (which may just end up accelerating it to where it was going to go anyways... down)

It'll be interesting to wait and see what happens in the coming months...

B2B said...


WOW all this talk about which area is better, who has the most educated citizens, and who has the most money buying into what property makes me think you guys are losing your focus.

You're actually arguing over which area you're going to buy into; you're going to talk yourselves a big rush at the Realtor's doorsteps. Slow down already. For shame on you bears.


I'm talking about who the biggest fools are. You won't see me on a realtor's doorstep for several years now, until prices are 50% off, plus. So don't get all hot and bothered worrying about me buying a house.

dub said...

JJ said - e are about 9 months into the decline, but Joe-the-plumber doesn't know this.

I agree. Honestly, I think most people buy into the idea that it's short-term pain due to the credit crisis in the US... and it'll blow over pretty soon and prices will then continue their ever-skyward accent.

roger said...

dub said:

I agree. Honestly, I think most people buy into the idea that it's short-term pain due to the credit crisis in the US... and it'll blow over pretty soon and prices will then continue their ever-skyward accent.

I think the only people that believe this are sellers and REALTORS®. Buyers know that the tide has turned and are sitting on the sidelines waiting for prices to fall further. That is why sales are down by around 50% all over BC.

Spring will be when the market downturn accelerates. Inventory will be climbing to record levels and the recession in Canada will no longer be subject to debate. There will be fewer people looking to buy and those making an offer will start lowballing with the assistance of commission hungry agents.

dub said...

Roger, I guess I'm a little more cautious about calling it a bust just yet - for me, I think I'll feel more confident about it come Spring.

I think the other factor that's going to continue having a large effect is that most FTBs just won't have the $25K downpayment they now need (for an average home purchase).

I think the only people that believe this are sellers and REALTORS®

You're right - all of the people I'm thinking of are owners (though not sellers at this point) who bought within the last couple of years - most of them with almost zero downpayment, 40 year mortgages.

greg said...

I suspect a great many agents are hungry already.

patriotz said...

Roger, I guess I'm a little more cautious about calling it a bust just yet - for me, I think I'll feel more confident about it come Spring.

Rather like being a little cautious about calling WWII a victory on August 7, 1945.

It's OVER.

B2B said...

Hi folks,

Note the following post on Calculated Risk. The sales dropoff that is so horrifying the posters on there (in car sales) looks remarkably similar to the sales figures YOY for Victoria (and not even as bad as the figures for Vancouver).

http://calculatedrisk.blogspot.com/2008/12/hamilton-on-auto-sales.html

link

Anonymous said...

Rather like being a little cautious about calling WWII a victory on August 7, 1945.

Or like being a little cautious about calling the Conservative victory on Oct 14th, 2008. oh, wait...

patriotz said...

That's called "snatching defeat from the jaws of victory".

Harper has yet to learn the fundamental law of Canadian politics - you cannot give Quebec the finger and get away with it.

Rick said...

http://www.burbia.com/node/2137

I LOL'ed

Anonymous said...

"Harper has yet to learn the fundamental law of Canadian politics - you cannot give Quebec the finger and get away with it."


Especially when they're asking for an arm and a leg!

Anonymous said...

Because its o-ver
Because its o-ver
But it wont be over
till its over, over here!


jj

Anonymous said...

Housing prices far exceeded the long-term sustainable increases of inflation plus the productivity of a country, Jarislowsky said.

Canada's housing mess may not be as deep as in the United States, but prices are 30 per cent overvalued, he said.

Anonymous said...

This political upheaval is good news. More instability should put even more of a freeze on buyers pocket books.

roger said...

Anon said:

This political upheaval is good news. More instability should put even more of a freeze on buyers pocket books.

I imagine something like this will make it into next month's VREB spin release....

It’s clear the uncertain political and economic climate is having an effect on the housing market. More people are taking a ‘wait and see’ approach and are less inclined to buy or sell with all all the unsettling political and financial news reports we hear on a daily basis.

Anonymous said...

B2B said: "I'm talking about who the biggest fools are. You won't see me on a realtor's doorstep for several years now, until prices are 50% off, plus. So don't get all hot and bothered worrying about me buying a house."

Sorry, B2B, I thought you had stated the following:

"I think that the reason nothing dramatic has happened in Langford and Colwood condos is that the sort of person who would even consider buying one is a very myopic local, probably from a lower socioeconomic status, degree of education, and degree of world travel (think a bank teller from Colwood who thinks he/she has really made the bigtime)."

Do you get out of Duncan? Really, I'm sure any further comments would go unheard.

patriotz said...

Canada's housing mess may not be as deep as in the United States, but prices are 30 per cent overvalued, he said.

It makes no sense to talk about "Canadian" housing prices. Just go on MLS and compare Victoria to Halifax or Vancouver to Montreal.

Those areas that are overvalued to the same extent as California or Florida will see the same magnitude of bust. Yes, that's you, BC.

olives said...

Anon @ 9:00:

ALL areas of Victoria (and beyond) have their own "myopic locals", I think the topic just happened to be the western communities.

"Do you get out of Duncan? Really, I'm sure any further comments would go unheard."

huh?

roger said...

The Toronto Real Estate Board reports that TO has joined the sinking RE Market Club:

Sales down by 50% - Listings up 48%

Average Price down 6.4% & Median down 3.9% year-over-year (YOY)

This will be all over the media for the next few days because it is the home of the national MSM.

Anonymous said...

I hear that even 24 Sussex will have new residents this spring.

Anonymous said...

"I hear that even 24 Sussex will have new residents this spring."

And hopefully they all have to sleep in the same bed.

Anonymous said...

Hmmm... could be yummy.

Anonymous said...

TC prints "Real estate forecast grim" on front page of B2.

Re/Max looks to take the lead in warning sellers to reduce their house prices (like Re/Max must to get the market moving again).

"Seller who fail to be astute about pricing and marketing their properties may have regrets", said Re/Max

Then a bunch of drivel on how Victoria is insulated by Gov't jobs, a University and the high tech industry... bla, bla, bla.

vg said...

"Then a bunch of drivel on how Victoria is insulated by Gov't jobs, a University and the high tech industry... bla, bla, bla."



Another typical TC article, starts out interesting and factual that Victoria will lead the country down in prices then slips in the "we are insulated" BS.

The university and the goverment have been here forever and the high tech area is like the stock market venture companies,they come and they go and not all will survive in a major recession.



BTW, where's Carla these days, she's MIA.... maybe can't handle writing the reality articles ?

Anonymous said...

HHV,

I know you like scans of the TC so here are the ones from today's business section showing the downturn in Victoria Real Estate:

Business page - small

Business page - big

Falling sales and prices graph

Anonymous said...

> but a further decline from the 4,680 properties available for sale at the end of October.


One of the only good bits of news in the article for owners/sellers is that the available inventory has not risen this month, yet the article somehow makes this out to be a negative too.