Wednesday, February 11, 2009

So it isn't different here after all

I've been waiting with baited breath while our Vancouver siblings have been witnessing receivership sales and "once-in-a-lifetime" blowouts of pre-sale condo contracts gone sour. I've always thought that our downtown luxury condo market in particular, and the condo market in general, has been the playground of wanna-be Trumps over the past several years. In Vancouver, would be condo-flippers upon learning that the banks wouldn't lend on the agreed upon purchase price in a declining market, simply walked away from sales contracts.

Will we see this now in Victoria?

It should come as no surprise that the TC in their never-ending quest to be late to a real estate market downturn story is now reporting that we're seeing assignment of contract offerings. Here's the highlights, with my cheeky comments below:
Real estate buyers lined up in advance to snap up the best units before they sold out in a matter of hours.

Now some of yesterday's buyers with pre-sale agreements are putting units back on the market before the high-end, steel-and-concrete condominium buildings are completed.

Several units bought as pre-sales have been listed in Greater Victoria real estate advertisements recently.

The question is whether these offerings are the beginning of a trend, spurred by a worsening economy.
Good question. I believe the obvious answer is: ya think?

Let the spin begin:
In one case, a buyer wants a different unit in the same building and in another, the person is moving away from Victoria. Sometimes people are in tight financial situations...
Emphasis mine. Can we assume one buyer needs to spend less money than they originally planned and the second is maybe on the pointy end of job losses?

Bill Ethier, a real estate agent with a listing for an assignment at a downtown condominium said, "I would say there probably appears to be more now because they are not selling as quickly as they did."

Buyers now want to hold onto their property and are prepared to wait until a project is finished. Their attitude is, "I want to go inside and actually touch and feel ... that's kind of where the market is now," he said.

With over 16 months of inventory in the Victoria condo market (new condo supply is much larger, though I can't quote exact figures) and prices approaching 26% less than last year, I'm thinking that may be because buyers don't want to "touch and feel" anything except the cash stuck between mattress and boxspring--if, and this is a big if in a nation with a higher debt to income ratio than the US, it was ever there.

Hold your breathe, obligatory moment of truthiness coming:
someone may have speculated and never planned to live in a unit. A buyer may have placed a downpayment on a unit with the idea of turning it over for a profit before the building is finished. In all these cases, a buyer may wish to seek an assignment to sell their right to buy the unit.
Let's have a little fun with words to uncover the un-spun truth here shall we? Replace the emphasized words above with these ones, in this order: did, did place, plan and must. We get this:
someone did speculate and never planned to live in a unit. A buyer (or more?) did place a downpayment on a unit with the plan of turning it over for a profit before the building is finished. In all these cases, a buyer must seek an assignment to sell their right to buy the unit.
Wasn't so hard now was it? Granted, the TC does need to have interviews to establish what went on, and I'll bet it's really hard to find a presale specuvestor to "own up" publicly to their wanna-be Trumpism right now.
Tony Gioventu, executive director of the Condominium Home Owners' Association, wrote in a recent Times Colonist column. "The current credit crunch has also placed a number of small investors at serious risk as they might be struggling to qualify for financing to complete their sales agreements."
Notice how he doesn't say a "small number of investors" but rather opts to state "a number of small investors"? Will we see blow-out sales and walk away's in Victoria? Time will tell.

I've been doing some digging lately in mortgage contracts I have access to but haven't found an answer to this question yet: Can a bank, after granting financing approval to an individual mortgage holder on a presale agreement or builder mortgage, reappraise the market value and refuse to lend on the agreed upon purchase price? If they can, look out, things will get very ugly very fast in the Victoria new condo market.

141 comments:

HouseHuntVictoria said...

from the last thread:

roger said...

HHV,

Victoria is fortunate, so far, because our unemployment rate is 4% but it is going up at about .3% per month. We have some advance warning here of recessionary conditions and more time to prepare than our fellow citizens in Ontario.

Therefore, I would like to suggest a new topic for you when this one has run its course. The subject would be how to protect yourself and your family in this downturn. Many of us have been through one or more recessions in the past and we could contribute some positive suggestions on what folks can do to weather the storm. Hopefully, this might help some of the readers, many of whom never post but visit the site on a regular basis.

What do you or the other readers think of this suggestion?


I like it.

roger said...

HHV,

I will lhold my surviving a recession suggestions until the next thread so that we can talk about this one.

Anonymous said...

Most likely the condominium was never appraised. A common misunderstanding about these new condominium sales is that the lender orders an appraisal. Nope, in most cases the lender accepts the purchase agreement - no appraisal.

If the purchaser had gone to the lender and been approved for the mortgage, then the lender will honour the contract. If the buyer is now coming to the lender, a prudent loans officer may opt for an appraisal, but the appraisal is still not a requirement for most lenders. A decade ago CMHC removed the appraisal requirement on high ratio financing.

roger said...

HHV said:

Can a bank, after granting financing approval to an individual mortgage holder on a presale agreement or builder mortgage, reappraise the purchase price and refuse to lend on the agreed upon purchase price?

I think that most pre-sale buyers never had any type of mortgage financing in place when they signed the purchase agreement. The build time is just too long for any bank to give firm pre-approval without lots of strings attached. Over a period of several years the interest rates and the buyers creditworthiness and income will change dramatically.

Most of these buyers either hoped to assign the property for a profit or take possession. In the case of the latter they would be making arrangements about 3-4 months before closing. Prices have dropped but interest rates have gone done over the last few years. So their payments will be lower than they expected but they will have negative equity from day one. I bet the banks will only loan money on the value set by their appraiser (i.e. today's market value). This leaves the buyer with a second mortgage or a burnt hole in his pocket.

The last phase of the Aria will be interesting to watch. The developer had restrictions on assignments and there are still units left to sell. In a couple of months the building will be completed. More desperate owners trying to rent on Craigslist at inflated prices.

Anonymous said...

Things that I have done to prepare for the recession.

Paid off debts

Quit smoking

Took up jogging and cycling

Try not to use the car and cycle
or walk to the store or around town.

Don't buy alcohol when we go out to dinner.

Question, each purchase and ask do I really need a new one or can I buy second hand. ie my snow shovel.

Try to buy from local merchants rather than the big box stores.

Instead of a vacation to Disney land, bikes for the family and camping.

Re-fill my own ink cartridges.

roger said...

Further to my last post...

Not only will the buyer of one of these recently built condos be losing money from day one they will also be paying the BC property transfer tax and GST for the privilege of taking possession.

Talk about salt in the wound!!

roger said...

anon 11:09 said:

If the purchaser had gone to the lender and been approved for the mortgage, then the lender will honour the contract.

Banks are very nervous about credit right now. They want solid loans even with CMHC protection. They will use every clause of the pre-approval agreement to protect their interests.

- Has the borrowers financial situation changed? (employment, other loans, assets)
- Has the borrowers credit history remained the same?

The folks that will really get whacked are those that bought fractional ownership properties. In most cases there was a rental component that made the deal work and tourism is not looking bright right now. One of those will be completed in Victoria later this year.

hhv said...

The Parkside has had to go to the length of creating their own mortgage securitization firm in order to fund the remainder of their development too. All the traditional partners stopped funding them in the last 6 months.

hhv said...

further to that funding thingy... we've seen developers have the funding pulled, the natural progression would be to see banks not fund the actual purchasers believing the risks just too high. I guess they could demand CMHC insurance be bought, be even then, who knows?

Anonymous said...

Actually, some of the banks were involved with the developer to promote using their bank. So, buyers of these unbuilt condominiums were guaranteed financing right from the start.

beckalodeon said...
This comment has been removed by the author.
beckalodeon said...

OK, back to the article for a sec; for the life of me, I cannot figure out what this is supposed to mean:

Buyers now want to hold onto their property and are prepared to wait until a project is finished. Their attitude is, "I want to go inside and actually touch and feel ... that's kind of where the market is now," he said.

If this is what the writer meant, it defies logic. How is a buyer who wants the hell out of a pre-sales contract congruent with someone who first wants to "touch and feel" their money pit?

I can only speculate that the writer actually meant to say that prospective buyers want to actually "touch and feel" what they had been buying on a 'wing and a prayer'.

Am I off the rails here?

B2B said...

I think they meant it to begin "Buyers want to hold on to their money"! LOL


The Parkside has had to go to the length of creating their own mortgage securitization firm in order to fund the remainder of their development too.


But...but...I thought people didn't securitize mortgages in Canada...I thought this was why we were immune....OH NOES!!

roger said...

B2B said:

I think they meant it to begin "Buyers want to hold on to their money"!

The few buyers that are willing to buy have so many to choose from!

Greater Victoria - Condo MOI

MOI - Months of Inventory is a common real estate term. It is derived by dividing the total active MLS listings in a given month by the total MLS sales in that month.

roger said...

Looks like the Americans are coming to Vancouver and snapping up condos according to this legendary REALTOR®. Can Victoria be far behind??

Ian Watt - YouTube Video

greg said...

I love how it's raining in Ian's video, good advertising!

Also, how is Vancouver a good deal down 10-15% when US markets like California are down 35-50%?

greg said...

Also, his details on getting the capital gains back when you sell seem a bit inappropriate at this point in time....

hhv said...

Paul B says goodbye.

He's right too.

omc said...

Since I live in Oak Bay, which seems to attract the out of town crowd I can report that.... No they aren't coming! I am sure most people here have seen that moron and his scare tactics before.

In the last few years it was Alberta money, tons of Albertans running around dutifully following the realtors. Before that Europeans and americans. Now, no one. You can really notice the lack of fancy cars with out of province licence plates. We are leading the drop, YAHHH! If it keeps going like this it's going to be cheaper here than vic west soon.

My parents winter in Palm Springs and they tell me how bad it is right now.

boomer said...

The giant brains are frantically running around in the US and (to a slightly lesser extent) Canada wailing that the Government (ie.current taxpayers and several generations of offspring) must go hugely into debt to stimulate the economy IMMEDIATELY or it will be a nightmarish catastrophe.

Like what? I have yet to hear anyone put parameters on what exactly is going to happen if trillions of dollars are not immediately thrown into the disfunctional economic machine.

Eminent Economists including Nobel winner Krugman are now saying that trillions may not be enough to prevent---what?
The breakdown of society and commerce?
If so-its time to buy a gun.

hhv said...

First time I've seen this.

How close we did come to complete meltdown eh?

olives said...

HHV, if you keep posting videos like that, people are going to start talking about gold LOL

greg said...

Don't mention the G word, Olives!

olives said...

sorry Greg, I couldn't resist. :)

hhv said...

Mindboggling

The poll found that some 71 per cent of respondents said it is a somewhat good or very good time to buy real estate.

In November, only 60 per cent of respondents told Ipsos Reid it was a good time to buy.


The TC and Van Sun have confirmed that BCer's really need basic market economics education.

olives said...

Today's Mish "Worst Recession in 100 Years" is very sobering:

"Mr Balls said yesterday: "The reality is that this is becoming the most serious global recession for, I'm sure, over 100 years, as it will turn out."

He warned that events worldwide were moving at a "speed, pace and ferocity which none of us have seen before" and banks were losing cash on a "scale that nobody believed possible"."


A 15-year downturn sounds like an 80 percent drop in real estate prices?

olives said...

Good time to buy?

Another 20 percent drop of the North American stock markets will help cure that optimism.

hhv said...

What's really funny is that of the 71% who think its a good time to buy, only 1% are actually buying... I guess they can't put their money where their mouths are

roger said...

The key points in that article were easily missed due to the writing style (spin).

In the latest poll, 82 per cent said now is not a good time to sell a home.

This means the majority believes prices are falling now but...

only 42 per cent of respondents to the recent Ipsos Reid poll said they expected prices to be lower 12 months from now.

However, they just can't believe prices will continue to fall. Recession ... What recession? The Olympics are coming etc.

Three in 10 respondents said they were considering a purchase in the next two years, up from 20 per cent when the same question was asked in November.

So 70% of people are not even considering buying in the next two years and their opinion is worth listening to?

The market price will be determined by buyers that are willing to step up to the plate not by the peanut gallery in the stands.

Anonymous said...

Yes.. don't mention the "g" word Olives; Greg will pull out every bit of what's left of his hair out...

hhv said...

it's reversion to the sheeple principle... get the blind to believe their following the crowd at all costs...

olives said...

"peanut gallery in the stands."


Do you mean us Roger?

olives said...

"In the latest poll, 82 per cent said now is not a good time to sell a home.

This means the majority believes prices are falling now but..."


Now is not a good time to sell a home because we are at a bottom and prices will only increase from here. I know this because a buddy of mine holding onto his second (now rental) home told me so.

roger said...

Olives said:

Do you mean us Roger?

Yep - we are just bystanders sitting in the stands. However, it's a great show. Peanuts, Beer - get your peanuts here!

greg said...

What is this Roger, a BC Lyin's game?

patriotz said...

In the latest poll, 82 per cent said now is not a good time to sell a home.

This means the majority believes prices are falling now but...


Does it? If I believe that now is not a good time to sell something, that's because I think I can sell it for more later.

But maybe that's just me.

dub said...

In the latest poll, 82 per cent said now is not a good time to sell a home.

This means the majority believes prices are falling now but...

Does it? If I believe that now is not a good time to sell something, that's because I think I can sell it for more later.

But maybe that's just me.


I agree; I read that more as though people think prices are low and if they wait, they'll get a higher price. Especially if it's the same people who think that now is a good time to buy, which would indicate, to me, that they think prices are lower than they should be...

dub said...

... actually, it would be interesting to know which percentage of the people in the poll are currently homeowners...

roger said...

Patriotz said:

Does it? If I believe that now is not a good time to sell something, that's because I think I can sell it for more later.

We are talking about housing now. So you believe house prices are going up later. How much later?

Vancouveritis said...

On the topic of Ian Watt, here's an interesting tidbit. Some of you may remember Tim Ayres in HHV's blog comments a few months ago. (I think he's been scared off over the last little while.) Well, back in December, Ian Watt posted one of his delightful video posts on YouTube. And there is Mr. Ayres, waving to the camera. Not much to report. I just thought it was interesting that Tim and Ian are "good friends", whatever that means.
If I were a realtor, I don't think I'd want to be associated with Ian Watt. To each his own.

YouTube clip.

hhv said...

don't you feel safe driving on streets where you know there is some guy driving a leased mercedes too busy talking into a camera to pay attention... and they want to ban cell phones in cars... sheesh.

Reid said...

Three in 10 respondents said they were considering a purchase in the next two years.

If you are looking to buy, buying in the next two years in likely going to be very smart. I fully intend to buy in the next two years, but it will not be this year, but rather next year and possibly towards the end of next year. By then this recession will have finally hit home, the denial will be over and some very good deals will be available. Buying in the next 3-6 months will likley be very stupid; the attitude in Victoria needs to align with the reality of the world today. One simply needs to be wait out the denial.

roger said...

Readers might recall the issues associated with the Stonehaven condo project at Bear mountain. The TC ran this article last October:
Bear Mountain builders hit with marketing fines

I see that the prices were lowered recently on 12 of the remaining units by 40-60K per unit. Prices now range from 229K-459K. The Juliet was the last development to have these kinds of discounts.

Just Jack said...

And 9 in 10 are considering purchasing in ten years.

I'd be more interested in how many in 6 months or how many in the next year. Do you suppose they never asked these questions? Or, just never reported them.

Always look at the source. Who commissioned this poll?

greg said...

don't you feel safe driving on streets where you know there is some guy driving a leased mercedes too busy talking into a camera to pay attention... and they want to ban cell phones in cars... sheesh.

I just hope he's rambling off the top of his head, and not reading this stuff off cue cards taped to the dashboard, or scrolling on a DVD screen...

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

The headline about the Ipsos-Reid poll in the TC & Vancouver Sun read: Majority believe it's a good time to buy real estate in B.C.: poll

So I went to the IPSOS site and hear is the actual story about the poll:

British Columbians Expect Home Prices to Continue Dropping In 2009, But Outlook Is Improving

Four-in-ten (42%) Expect Housing Prices to be Lower in a Year, Down From 57% in November

Seven-in-ten (71%) Say It’s a Good Time to Buy a Home, Up From 60%


Vancouver, BC – According to the recently released Ipsos Reid BC Home Buyers report, four-in-ten (42%) British Columbians expect housing prices to be lower in twelve months, down from 57% in November. Overall, British Columbians are forecasting a 3.0 percent average drop in home prices in their community, an improvement from the end of 2008 when a 6.7 percent decline was projected. Three-in-ten (32%) predict prices will remain the same while two-in-ten (20%) predict prices will be higher.

Residents of the Lower Mainland foresee an average decrease of 2.3 percent while those in the rest of BC expect a decrease of 3.8 percent.


Here are the actual questions and press release

The price dropping part of the poll was completely downplayed in the article. The MSM just wants to keep pumping.

hhv said...

two things we can take from the numbers: 62% of respondents do or have owned a home... of course their values won't drop. And Victorian's see the biggest price declines in their market. I thought we were different here?

roger said...

The Tyee had a two part series on affordable housing in Vancouver. It is also applicable to Victoria.

Fixing the Crazy Cost of Housing

Affordable Housing: Five Myths

Vancouveritis said...

don't you feel safe driving on streets where you know there is some guy driving a leased mercedes too busy talking into a camera to pay attention... and they want to ban cell phones in cars... sheesh.

Yes, this guy scares me in a number of ways, including the high volume shouting match he has with the camera. Can he hear the traffic above his own voice?

He's interesting to say the least.

hhv said...

out of interest in online communications more than anything else, i "watch" what the realtors are doing in the way of online marketing.

the majority of real estate marketing, IMHO, is aimed at making the general public aware of who the REALTOR is, rather than any one particular property.

Some people, like Tim Ayers, use the various communicating tools in a way that mixes both individual property viral marketing and personal marketing probably nearing a 40/60 split respectively.

Ian Watt OTOH, he's all about creating a following for himself mostly. It seems to be working for him, he's a colourful character, kind-of Don Cherryish really. I don't agree with most of what he has to say, but he seems to be spending a lot of time doing what he's doing.

Either it's working for him, or he has too much time on his hands.

mln said...

It's always good to see articles on affordability, but I take some issue with this part:

Not even the hardest hit regions of the United States have suffered an across-the-board drop in housing prices of 55 per cent. In California, for example, home prices appear to be bottoming out at about 40 per cent below the peak.

Last I saw, CAR had reported 50% drops for California, some areas at 68% down from peak.

And in a province where one out of every 10 workers earns a living in the construction industry, a 55 per cent drop in housing prices would likely drive family incomes down even further, thereby widening the gap.

And house prices would magically stay where they are? Prices would (of course) fall even further.

Even at those rates, many small investors have been renting their investment condos for less than the total of their mortgage, strata fees, taxes, maintenance and management costs. As the real estate market rose, annual appreciation more than offset operating losses. But as the market falls, many may seek to raise rents in order to break even.

The rental market doesn't care how much you paid for your condo. Just because you paid 50% more than your neighbour does not enable you to charge 50% more rent.

Much of the B.C. housing market simply remains so out of balance that market forces of supply and demand simply do not function.

Ok, now we're just getting silly. All of the above statements point to a market that was (is) totally out of control and in the midst of bursting bubble. The laws of supply and demand haven't been repealed, it's a bubble. Normal affordability hasn't been thrown out the window forever, it's a bubble.

Anonymous said...

I get tired of reading junior reporters take on the market. Statements about household incomes to value percentages, arrgh. That only xx amount of people are able to afford the typical home just irritates moi.

The truth, only about 2 to 4 percent of the total housing stock in Victoria sells per year. Out of the population of Victoria, surely 2 to 4 percent of the people make much, much more than the median household income. And these are your buyers - not the guy working part time at Mac's, not the person who just started working in a government office.

The other way that prices can get out of whack, is buying up in the market. You made $200K on the place you bought a decade ago. Now your income has gone up a bit, so you can afford to pay a little more a month. At the same time the interest rate is a little less so you can finance more. Bidda Bing - Bidda Bam your into a new house in Bear Mountain.

Eventually, the real estate pendulum swings back towards normality, but not until the previously mentioned group of buyers is exhausted. And that is what started happening in our market back in 2007 as the volume of sales started to decrease. Eventually in May of 2008 we reached a tipping point and prices started on their long descent.

Simply put:

When the market was going up.
-The reason home prices will go up this year is because prices went up last year.

Now, with the market going down.
-The reason home prices will go down this year is because prices went down last year.

Of course, the preceeding sentence will only ring true to most people come May, because then the real estate board can't spin the year stats.

Ryan said...

It's always good to see articles on affordability, but I take some issue with this part:

Yes, that article reads like it was written by someone who has never heard of a bubble. If prices have to fall 55% to be back in line with market rents, that's how far they will fall. "That's a really big number" is not a counter-argument.

Similarly, the section on supply and demand made no sense to me. I really didn't see an argument in there, other than "the market has been out of whack so long that this must be the new normal".

Anonymous said...

I think people on this blog have a fundamental misunderstanding of what's happening here in terms of market sentiment. It's become clear to me that most people feel the government is going to put on the superman costume and bail everyone out. Obama's just emerged from the phone booth and it's all up from here. We all know that superman is just Clark Kent in some cheesy costume on some cheesy set but they don't know that yet.

roger said...

Many of you have heard of Nouriel Roubini who is known as Dr. Doom in the US. He is one of the economists that predicted this recession. This video clip from earlier this week is quite informative. The interviewer keeps trying to tell him we are hitting the bottom but he pushes back every time.

I wish he had someone in Canada like this . Garth is as close as we get but he is a bit over the top.

Nouriel Roubini on Bloomberg

roger said...

anon 3:28 said:

I think people on this blog have a fundamental misunderstanding of what's happening here in terms of market sentiment. It's become clear to me that most people feel the government is going to put on the superman costume and bail everyone out.

No I think it is you that has the misunderstanding of what people on this blog think and post. This is a bear blog and most of the regular posters have been talking about a recession and falling housing market for a a long time.

Try reading the archives before you make unfounded, sweeping statements. Or are you just a driveby spammer?

Anonymous said...

I'm saying that you misunderstand what non-bears (sheeple) believe. Not what bears believe. I'm a bear too.

Anonymous said...

Obama, he said he will create 3milion jobs during election, now he is saying "save or create 3million jobs"

today he said the recovery will take years, not months.

From the change of his attitude, i could image as he learned more and more inside infomation, he is getting more and more realistic and discouraged.

Anonymous said...

More "good people are hurting".

Oil $35, gas here is $0.999.

Are we bad guy, no, we are sure good guy. Who is hurting us?

Who made renters feel like second citizen? Who made us could afford a house? Anybody feel sorry for us?

Normal people are being used as tools by bankers, politatians, special intrest groups (REA?)

Anonymous said...

That 3 million started as 1 million and grew and grew and grew. The 95% of americans getting a tax rebate will receive $13 a month. Eventually it will go down to $8. The sheeple have been had by a slick community organizer. It's his first real job so let's give him a break though.

boomer said...

anon 6:44
i suppose you mean trillion

mill-bill-trill-quadrill

funny how billion seems to be becoming chump change

patriotz said...

me: "Does it? If I believe that now is not a good time to sell something, that's because I think I can sell it for more later."

We are talking about housing now. So you believe house prices are going up later. How much later?


"If" is a hypothetical. I wasn't saying what I believe.

What I actually believe is that now is a very, very good time to sell, because prices are going down and staying down for a very long time.

patriotz said...

Affordable Housing: Five Myths

This article is chapter and verse the same garbage that was being spouted in the US two or three years ago.

The whole theme of the article is "house prices can't go down a lot because it would be icky".

We have already started a house price bust that is leaving the US in the dust, and are now facing the worst global recession in a lifetime, and this idiot still doesn't get it.

NanHousing said...

The question "Is it a good time to sell?" should be worded as:

"Is it a good time to unload a property and get out of the currently stalled market during an economic slowdown?"

Anonymous said...

Score one for the MSM. Finally the underlying truth about why we are in just as deeply as the US.

http://www.timescolonist.com/news/Household+debt+rises+Canada/1285142/story.html

roger said...

HHV,

It isn't different here and it isn't different in other Canadian cities. Here are the latest updates from the Canadian Housing Price Charts Blog

Plunge-O-Meter

City Price Chart

womp said...

I saw "islander" post on Garth's blog something about 2009 predicted to be the worst sales in 30 years.

Tomorrow is the middle of the month... any possibility of a sneak peak at sales numbers Jack?

Anonymous said...

Home sales fall by 41 per cent

Sales of existing homes fell to the lowest level since the mid-1990s last month, with activity dropping by 41 per cent in January from a year ago.


Other markets that experienced large price declines last month included Victoria (-15 per cent), Saint John (-14 per cent), and Calgary (-11 per cent).

Anonymous said...

REA know this report is coming out, so they throw out some garbage "poll" first.

hard number vs. garbage poll.

only fool will believe poll.

Anonymous said...

Full report is here:

http://business.theglobeandmail.com/servlet/story/RTGAM.20090213.whomesales0213/BNStory/Business/home

roger said...

Anon & Others,

It really helps readers if you post clickable links to stories. Here is how you do it:

How to make clickable links

You can also use TinyURL to shorten long URLs

Anonymous said...

I think it is a great time to sell - if you had plans of selling in the next 2-3 years now is definately better than waiting. There are still a few fools out there that are willing to pay the current ridiculous prices - I doubt they will be around by the end of the year.

In addition, I would also consider buying now - if I found a property I felt was ideal - and would accept an offer of 50% off. I think some of the estate sales and owners of 'investment' properties may be willing to consider such an offer later this year. Otherwise, we'll wait it out too. Nobody ever 'has to buy'.

roger said...

anon's link didn't work. Here is a clickable version:

Home sales fall by 41 per cent

Last month 16,343 resale homes changed sales across the country, according to a report Friday from the Canadian Real Estate Association (CREA). The average price fell by 11 per cent from the year before to $273,607.

“Canadian existing home sales turned in another brutal performance in January, sliding by more than 40 per cent from year-ago levels,” Mr. Porter said in a research report.

Each of the country's 25 major markets reported a drop in sales from year-ago levels, and all but four of these experienced declines of at least 20 per cent.

In these major markets the declines were the greatest in Vancouver, down 59 per cent, followed by Calgary at 49 per cent.

Other markets that experienced large price declines last month included Victoria (-15 per cent), Saint John (-14 per cent), and Calgary (-11 per cent).

hhv said...

SFH sales in my filter have picked up over the past week. No drastic reductions, nor any over prices... but considering how few listings there are, an additional 3 or 4 sales won't have much impact.

Anonymous said...

HHV,

Reductions.. There are lots of reductions. Here are just a few of the many this week. Some have reduced twice with a third in the future.

Red1

Red2

Red3

Red4

Anonymous said...

the long trend is down,
the bottom will be years, not one day.

so why care the sale of one week, or one month, for one property, spined by one gang, bought by few fools?

omc said...

SFH sales have falllen off a cliff in my PCS. less than last month

Reid said...

Sales of lower priced properties will likely pick up in the coming weeks/months as the average Victorian including most buyers still feel the city is insulated from this economic crisis (just go out to a shopping mall or restaurant for the evidence). Combine this with 4.19% 5yr mortgage rates and buyers who really only care what their mortgage payment will be (rather than the huge debt they are taking on) and their will be sales.

The average person in this town will have to see real layoffs among family and friends before the crisis will sink in. Then we will see real price declines.

Higher end properties will still not sell as those buyers are financially astute.

omc said...

That may be true, but think of the mess it is going to do to the average house prices this month!

vg said...

"The poll found that some 71 per cent of respondents said it is a somewhat good or very good time to buy real estate."


If you live in Arizona its a great time to buy, if your in Victoria you have to be whacked to buy now.

I just saw a house on Shelbourne today that has been for sale
forever with a realtor and now the seller has erected their own sign beside it with the price of "$379,000 , 3 bedroom " written in felt pen. Talk about signs of desperation. We will see more of this in the coming months.

roger said...

omc said:

That may be true, but think of the mess it is going to do to the average house prices this month!

The low end FTB market will probably be fairly active as Reid has pointed out. The move-up market however will not be doing very well. Many sellers will not accept "subject to sale" offers. This means fewer sales in the mid to high end. The stats will be skewed and median and average prices will stay the same or drop further.

Take a look at what happened in January in Greater Victoria single family homes:

- 141 Total
- Over $1M - 2 sold
- 800K to $1M - 9 sold
- 600K-800K - 24 sold
- 500K-600K - 27 sold
- 400K-500K - 51 sold
- under 400K - 28 sold

roger said...

I feel sorry for the first time buyers that are buying this month. The high end houses have lots of inventory and as anon 1:02 showed there are lots of price reductions. Prices are dropping significantly at the mid to high end.

In 6-12 months the FTB will get a much better house for the same price. Today's buyer will be living with tenants in a suite downstairs or in a crummy area/house for years.

I just wish their was some way to get the message out to people. I try with the stats gallery but only a few people take the time to look at them.

Reid said...

Roger, I agree with you the problem sits with education. When I first bought a home the culture was to put 20% to 25% down and then do everything in your power to try and pay the house off in 15 to 17 years. The concept was that if you could pay off your house you had a much lower cost of living the rest of your life; in essence you were set. Problem is that you must make sacrifices to accomplish the debt reduction. But when I bought that first house it was soon after the 1981 recession and people understood the reality of debt in that environment.

Unfortunatley today people are OK with huge levels of debt and really only focus on what their payments will be. They appear disinterested in paying off the debt, but rather living beyond their means. There is a very strong likelihood that interest will be a lot higher that they are today in three to five years (if they are not we are likely in a more serious decline than any of us want to think about). When there people refinance at 6% or 7% after a paying a 4% mortgage they will be shocked.

I have concluded that since we do not educate our youth money management and financial discipline in our schools, homes or universities, people tend to learn about it through recessions (and it tends to be a costly lesson). Since we really have not had a hard recession in BC since the early 1980’s most people under 45 simply have not learn the lesson yet.

You should be commended for all you have done to educate people as this is the most important thing we can all do. It can make a very material difference in their lives. We should all lobby government to get this into the school system given its importance. The unfortunate reality is that we are entering a recession that I feel will be at least as bad as 1981 and those buying houses at today’s prices will be disappointed.

Some of the people buying houses today with little down and overextending themselves will end up learning a tough lesson. Anyone who can avoid buying today through reading these blogs will be blessed.

Reid

roger said...

Reid,

Thanks for your post. I fully agree with you and hope that some of the blog readers take your message to heart.

Roger

olives said...

I love your stats gallery Roger.

patriotz said...

I feel sorry for the first time buyers that are buying this month.

I don't feel sorry for them at all. Nobody has to buy at any time.

Any one who buys at an inflated price, and prices are still very much inflated today, is just stupid.

roger said...

Patriotz said:

I don't feel sorry for them at all.

Your lack of compassion for others comes as no surprise. At least you are consistent in your posts.

Reid said...

They are not stupid, but rather uneducated. Many of these buyers rely on professional mortgage brokers that have been advising them to borrow unrealistic amounts of debt and then professional realtors that advise them to buy at the maximum their mortgage limit will allow and buy soon as prices will be rising. Then all their financially illiterate friends all tell them to buy as you cannot go wrong and better than wasting money on rent.

Most of them just want to fulfill the dream of owning a home, but they do not understand what they are getting themselves into or how ugly things could get if they lost their job, interest rates rise, a recession hits, etc.

omc said...

Hi Roger,

That the average and median could be skewed lower is exactly what I wish to point out. I am looking in the mid to upper (almost no sales) and I forget where hhv is looking, but I believe it was under $500k.

I wonder if we will be having that -20% beer sooner rather than later.

patriotz said...

Your lack of compassion for others comes as no surprise.

Hey Roger, compassion is something you feel for people who are victims of circumstances beyond their control.

Not people who decide to pay more for things than they are worth.

The people who paid ridiculous prices for houses over the last half-dozen years are themselves responsible for the bubble, and the resulting economic crisis.

So pardon me if I reserve my compassion for the innocent bystanders, not the fools who created this mess.

patriotz said...

I have concluded that since we do not educate our youth money management and financial discipline in our schools, homes or universities, people tend to learn about it through recessions (and it tends to be a costly lesson).

"Experience keeps a dear school, but fools will learn in no other"

Ben Franklin

Anonymous said...

I actually feel sorry for myself. I stood back and watched this bubble grow while everyone and thier dog bought a place and urged me to as well.

Now that the SHHTF I am worried about MY job, and am sickened by the government using MY tax dollars to "stimulate" the banks into trying to keep this bubble going a little longer.

patriotz said...

I stood back and watched this bubble grow while everyone and thier dog bought a place and urged me to as well.

You don't feel compassion for the people who tried to get you to ruin your own financial situation as they did theirs?

Why you heartless wretch. What would Roger say.

boomer said...

Although my opinion mostly concurs with the bears on this board that RE prices will probably slip further, it is worthwhile to keep in mind that we will not know that we have hit the cyclical bottom till we’re past it.
At the troughs in any market chart the prevailing sentiment is always universally pessimistic –that’s why it’s a trough.
Massive government stimulus, low borrowing rates, increased pressure on the banks to lend, and increased affordability for those with secure jobs MAY actually start to work.
The Obama White House certainly is counting on it-and we all should hope so as well-notwithstanding our focus on Victoria Real Estate.

omc said...

I think we all feel a level of stress over the market, that we don't miss the bottom. What I have seen from past slumps is that MOI dropping is a good indicator of the bottom with increased sales.

I don't think we are any where near the bottom because: all the chartered banks are calling for further drops; prices out west are too high and would have corrected without the recession; Our market depends on retirees who are not coming right now as their own houses are worth less than they can buy here and they are scared.

I am bearish but I don't hold the same belief that the sky is falling. I would like a 50% reduction but I am not going to hold my breath. If you miss the bottom, well so what? There are no economic factors for the houses to sky rocket again, most expect stability at the lower prices for a while.

boomer said...

btw.
patriotz's posts are to the point and logical.
slight bluntness in style doesn't bother me.

olives said...

I'm surprised that there's discussion of a "bottom" at this point since the downturn has only begun. OMC and Boomer, I take it neither of you believe we are in a deflationary depression? Is that what you mean by "sky is falling" OMC?

boomer said...

" concurs with the bears on this board that RE prices will probably slip further,"

olives---quoting myself above-

however-to rebut,

"the downturn has only begun"-
--not in the good ol'USA.-- which is where all the action is.


IYO,are we completely doomed to "deflationary depression" or is there some possibility that the ridiculous amount of money being thrown at the economy and banking system will actually have an effect?

roger said...

Boomer,

Did you watch the video I posted earlier? The U.S. economy and housing market is nowhere near the bottom. The stimulus won't even start to seriously kick in until 2010.

Nouriel Roubini Video

roger said...

Just Jack

Last month 138 single family houses sold in the Greater Victoria area. I am predicting about 180 for February as shown in this chart - click here. We should be at about 90 right now since we are halfway through the month.

What do you think - am I close??

boomer said...

Roger-- The onset of "deflationary depression" is at least 50% confidence -or lack of.

Less than a year ago we (with plenty of published evidence) were looking at oil to trade at $200bbl+, rampant inflation, rising interest rates, and a looming labor shortage. Don't know about you but I'm happy that I didn't invest heavily in those market "certainties"-although many did, with the resulting market crash.

The stock market now wants badly to go up, but keeps getting knocked down by economic data---and given the omnipresent global pessimism evident-a little good news may have a very significant impact on the upside.
The same applies to the economy generally. This thing got real bad real fast-I'm not sure the upswing wont be rapid as well.

In any case,I'm not predicting anything-- but I'm sure leery of the degree of certitude of the doom merchants.
Contrarians often do very well.

Cheers-happy V.day

Dumb Canuck said...

Following up on Roger, February 13, 2009 4:27 PM

Here is the Feb. 14 MLS inventory and MOI for the January sales. Adding PCS multiplies the inventory and MOI by around 1.6. (does anyone know if the PCS inventory matches the MLS inventory across different prices classes?)


(Sales, inventory, MOI, MOI with PCS)
- Total - 141, 1109, 7.9, 12.6
- Over $1M - 2, 201, 100.5, 160.8
- 800K to $1M - 9, 94, 10.4, 16.7
- 600K-800K - 24, 275, 11.5, 18.3
- 500K-600K - 27, 238, 8.8, 14.1
- 400K-500K - 51, 184, 3.6, 5.8
- under 400K - 28, 117, 4.2, 6.7

Lots of high end inventory with very few sales. Not as much inventory below 500K, but it is moving. This will give tremendous downward pressure on houses priced more than 500K and lots of price compression for a while (a lot of variability in house quality for around the same price just over median sales).

roger said...

Dumb Canuck,

That was an interesting post. In the 500-600K bracket there is an 8.8 MOI whereas the 400-500K range has an MOI of 3.6 which is quite low.

The under 500K buyers will be unhappy with their purchase by the end of the year. SFH is dropping by 1-2% per month now and this is due to price reductions above 500K. I am starting to see reductions under 500K as well.

olives said...

boomer, what do you mean the deflationary depression is "coincidence"?

You're right it's difficult to make predictions, but "olives" can get away with it because she can always change her identity, so she'll never embarass herself too much :)

Seriously, I recall reading years ago about the credit cycle, austrian theory, kondratieff cycle, elliot waves, etc. etc., and thinking it was all pretty interesting. In the past 4 or 5 years I started to think, maybe it is all going to occur, watching the different bubbles happen. Now that the credit contraction is occuring and the global financial system is in chaos, I no longer question it.

Historically I understand that credit crunches/busts of credit cycles have ALWAYS led to deflationary depressions. It sure seems like deflation is occurring now.

As for being a contrarian - us housing bears did just that of course. Last year when oil was $147 or so and was hyped to go up to $200, I purchased some HOD.

I don't get the impression the majority shares my views - and if they did I'd be worried!

Dumb Canuck said...

Roger - In the data that I've been collecting, I've seen quite an increase in the number of higher end listings, but the number of listings in the lower brackets is going up and down a lot. My guess is that there are quite a few sales less than 500K (proportional to listings), but very few sales above 500K. It would be interesting to track a set of houses at one price point between 500 and 550 K (the compression point) to see what happens to them (i.e. how much do they go down, at what point do they sell, etc.)

Anonymous said...

It's time for a dead cat bounce. That's the rebound everyone is talking about.

Just wait and see how the crash picks up steam after sellers run out of greatest idiots, just about as Spring hits.

Anonymous said...

Looks like multiple offers on this one. Under 400K FTB's eager to buy NOW.

Fernwood Special

With only 6 DOM makes you wonder if they got a home inspection...

boomer said...

olives-"confidence"-not coincidence

olives said...

LOL boomer (I needed a nap). I think it's 100 percent confidence, and things won't turn around until the psychology turns back, and there's a lot of nasty things need to occur before that can happen

Reid said...

There could well be a dead cat bounce in terms of sales volumes over the coming weeks because for the most part this recession has not affected Victoria yet in terms of job losses. Many FTB are not stressed about losing their jobs yet, prices are down and interest rates are at all time lows. They are bring told it’s a good time to buy.

I estimate that between 4,000 and 8,000 jobs will be lost in the greater Victoria area over the next 12 to 18 months. Additionally a lot of workers will see their incomes drop as business slows (those working in construction or real estate related industries for example). To date we have seen limited job losses, but they are coming. There is going to be job losses by the end of March in the public sector as government is currently trashing their budgets.

Once these job losses become reality, the attitude in Victoria will change. People will start to hunker down and they will not be out taking on $500,000 mortgages. In the meantime, this is still a city in denial. If anyone is seriously thinking of buying right now do yourself a favour and take a holiday to California, Florida or Arizona and experience a downturn and look at real estate. If you cannot travel that far head up to the Cariboo or Northern BC and see what is happening and how much things has changed even in the last four months. This downturn is coming fast, it just has not hit Victoria yet, but it will.

Do not let a dead cat bounce bother you, it is unsustainable. Stay patience as you will be rewarded.

patriotz said...

IYO,are we completely doomed to "deflationary depression" or is there some possibility that the ridiculous amount of money being thrown at the economy and banking system will actually have an effect?

Consumer price deflation can be averted but asset price deflation cannot. These are two different things and it is crucial to understand this.

Japan has seen very slight consumer price inflation overall from 1990 to date combined with massive asset price deflation (stocks, RE).

Asset prices cannot remain above a level that gives a competitive return on investment, and that means that RE prices must fall until ownership costs are back in line with renting. No other outcome is possible, unless wages and therefore rents rise substantially, and that just isn't going to happen.

Anonymous said...

I think now that the stimulus bill has passed the US will recover quickly. The program to pay for mortgages of over extended homeowners will be the most effective program ever. It will :

1) Encourage more homebuying
2) Encourage homeowners to renovate their homes again since they won't lose them to the greedy banks
3) With the repeal of welfare reforms everyone will be able to buy again

It's going to be a tough time for the bears.

omc said...

ummm, sure, what ever you say Fred. Lets just amke sure they use a proffesional Realtor.

roger said...

The boomer myth is alive and well. Today's letter to the editor of the TC.

Think positive on economy

Let us have a little balance, a little optimism, a little faith as an antidote to all the gloom and doom. Where is mention made of the demographics that drive the population of Greater Victoria?

This jewel of a city is the retirement capital of Canada. With an aging population worldwide, the next 10 years will bring the largest influx of retirees to Victoria. They will be looking for quality accommodation.

The Victoria International Airport is set to truly become international with the planned runway extension, bringing direct European and Asian flights and a whole new set of homebuyers, ready to enter what is for them a very affordable market, relative to their own.

And let's not forget the Winter Olympics that will put Beautiful B.C. front and centre on the world stage.

All these are positive factors that point the way to a sustainable and healthy housing market that will benefit everyone. Now is the time to steel our nerve and think positively. Some good will come out of all this.

Linda M. Langwith

Victoria

roger said...

Garth has an entire post dedicated to Victoria. Some of the comments from readers are priceless. I love the one about people carrying pictures of their house in their wallet to show people while on vacation.

Garth on Victoria

Anonymous said...

Victoria uptick = DEAD cat bounce.

NanHousing said...

Time to Pay Up!

Here is a great read in today's TC. It is amazing so many folks have ABSOLUTELY NO CLUE about anything to do with finances and how much buying something on credit really costs them in the end. I have no sympathy for those blowing their incomes on "wants" such as expensive cars and lavish meals, living paychque to paycheque and racking up their credit cards. Economic expansion relies heavily on these types and now look what is happening.

Anonymous said...

I live pay cheque to pay cheque because most of my money gets locked away in RRSPs and stocks I buy in my DRIP plans. So I kind of fit in with the folks down in the fever swamps. That is until they start talking about how much their LOC balance is! I tell you some people are so stupid it's really unbelievable!!!!

roger said...

Several posters, including me, have mentioned that buying property now using low interest, long amortization loans is a recipe for a life of debt and financial stress. When interest rates go up payments will increase when it comes time to renew.

To illustrate the point I prepared this table showing what happens to a buyer getting the best 5 year fixed rate available (4%), with a 35 year term, when renewal time comes up in 5 years. The initial mortgage is for 400K.

Mortgage Table

The best case scenario is that in 5 years the renewal will be at 5%. I predicted a very conservative worst case of 7%. Payments will increase from $1763 per month to a minimum of $1979 or worst case of $2442.

At the end of 10 years the buyer will still owe 340-348K in principal to the bank.

roger said...

Further to my last post. If the buyer has purchased a property with 5% down the CMHC insurance fees will need to be added to the mortgage. For a 400K mortgage this will be an additional $12,600. The property transfer tax of 6K will be waived for first time buyers.

Just Jack said...

The month of February is shaping up a little better in sales activity than January but that is to be expected as we enter into the traditionally busiest season of the year. Yet, we are still half of the sales volume for February 2008.

Here are my projections based on past performance of sales and extrapolating the first two weeks of sales for the month of February.

I am anticipating that there will be 330 sales this month. The sales comprising 195 single family homes, 7 half duplexes, 80 condominiums, 45 town homes and 3 others.

Broken down by area the core municipalities will have 130 home sales, 75 condos, 18 town homes.

The western communities will have 55 home sales, 3 condo and 16 town home sales.

The Saanich Peninsula will trickle in with the remainder.


The median home price with be $470,000. The average at $495,000.

The median condo price will be $255,000. The average at $262,500.

For town homes the median price is estimated at $367,500 and the average at$391,750.

The marketplace appears to be following a text book correction with falling sales and the highest months of inventory in the outlying areas such as the western communities and Saanich peninsula.

I expect any improvement in sales and prices will be highly localized in the upcoming spring market. I judged this on the months of inventory and the days-on-market. The core municipalities having the lowest marketing exposure at 30 as compared to the other areas in the mid 80's.

The trend is for purchases of single family homes in the core districts. Strata homes and outlying areas languishing on the market.

The following market synopsis cost you nothing and that is probably what it is worth.

boomer said...

Nanhousing; Ironic that the "great read" that you link to in the TC is scripted by their business columnist Carla Wilson -who on this blog has been well known as the prime TC shill for the RE industry.

Her name is not mentioned in the actual story -its anonymous- but IS attributed to her on their front web page..

Dumb Canuck said...

Just Jack - thanks - the MOI picture for higher end homes in the outlying areas must be really grim...

btw - the preceeding (not following) market synposis

Dumb Canuck said...

hearing from a contractor friend that a couple of condo buildings were foreclosed and then bought out by other developers - who are offering inside deals on suites at cost. Also hearing that municipalities are being regularly approached by developers to see about converting condo developments to social housing, or the like. No specifics unfortunately.

roger said...

Just Jack,

Thanks for taking the time to give us your prediction for February. I put the numbers in the crunch-o-matic and got the following:

February 2009 Statistics - Monthly Analysis

January 2009 shown in ()

MLS Sales - 330 (247)
MLS listings - ?? (3678)

SFH Average - 495K (526.1K) Down 5.9%
SFH Median - 470K (475K) Down 1.1%
All SFH Sales - 195 (141)

Condo Average - 263K (259.7K) Up 1.2%
Condo Median - 255K ( 255K) Flat
All Condo Sales - 80 (62)

Town Average - 391.8K (394K) Down 0.6%
Town Median - 367.5K (382.5K) Down 3.9%
All Town Sales - 45 (32)

Year-over-Year Analysis

GV - Greater Victoria
February 2008 shown in ()

MLS Sales - 330 (579) - Down 43%

GV SFH Average - 495K (587.3K) - Down 16%
GV SFH Median - 470K (543.5K) - Down 14%
GV SFH Sales - 195 (295) - Down 34%

GV Condo Average - 263K (334K) - Down 21%
GV Condo Median - 255K (299.9K) - Down 15%
GV Condo Sales - 80 (176) - Down 55%

GV Town Average - 391.8K (424.2K) - Down 8%
GV Town Median - 367.5K (392K) - Down 6%
GV Town Sales - 45 (69) Down 35%

omc said...

Fairly realistic numbers. That is 21% down from April fro the SFH average.

NanHousing said...

Ouch. Anybody who bought at the peak and put down up to 20% on their house is in trouble if they need to sell anytime soon. They must be extremely pissed off.

Mr.4AM said...

As I've said before, here comes The Commercial Real Estate Crash. A 12 minute youtube video - Gerald Clemente, on the ' Worst economic collapse ever'.

Regards,
Mr.4AM

Mr.4AM said...

This one is off topic a bit, but pretty funny and only 36 seconds long. GOP leader opposes democrat 787 Billion dollar stimulous package. CSPAN sure has some dingers now and then. hehe

Mr.4AM

patriotz said...

Also hearing that municipalities are being regularly approached by developers to see about converting condo developments to social housing, or the like.

These of course are the same people who are violently opposed to "socialism" and handouts to the "bums" on welfare.

Hey Mr. Developer - how about taking a bit of your own medicine, i.e. free enterprise, and selling your sh*tboxes on the open market.

hhv said...

"“Reports of an increasing number of consumers shopping for a home have yet to materialize in the sales statistics,” added Muir.

read the whole thing here.

I'm almost starting to feel sorry for him. It's like he knows he'll have to release a revised housing market forecast next month that "dispels the market myth" that prices will rebound anytime soon or a magical floor will appear at 9% and prop up the market for the rest of the year.

Anonymous said...

House "Deal of the Week"



The featured property is a one-bedroom, one-bath, 700-square-foot condominium in Escondido (inland north county San Diego).

In 2006, during the bubble, the unit sold for $191,000, and in December 2008 - after foreclosure, the unit sold for $52,000. That is almost 73% off the peak price!


Over almost 30 years (1979 to Dec 2008) the price increased 13%. Annualize that return!

roger said...

HHV,

The charts in that BCREA report are quite revealing.

BCREA Historical Sales

I added a green line to show how low sales are in Victoria compared to previous years. The pink lines show how fast we are dropping in sales compared to the previous real esate cycle.

BCREA - Jan - Stats

Agents are paid a commission based on the sales price. This January total dollar sales volume is down 53%. Unit sales in January 2009 were down 45% compared to last year. And the average residential price (condos, towns & SFH together) was down 15% from last year.

Anonymous said...

The real estate slump continued in January across BC. Figures from the BC Real Estate Association shows sales dollar volume on the Multiple Listing Service dropped 61% last month from the same time last year. Sales fell 57%.

The average home price across BC in January was just over $400-thousand. That's a drop of 9% from a year ago.

The Association expects sales to pick up again in the spring, thanks to continuing low prices and low interest rates.

stephanie said...

Matrix gives us the sales for the current month every Monday so here they are for February so far.....

Net Unconditional Sales for February: 195
New listings for February: 546
Total Active listing Count: 3,685

womp said...

HHV - thanks for that link. I'm loving the title of the BCREA release. "BC Home Sales start with a whimper in 2009".

Honestly... I felt like I'd never see a headline like that from them.

As for feeling sorry for Cameron, he won't get much sympathy from me. He should have the ability and the freedom to make better forecasts. If he's being forced to massage them due to some kind of upper-management persuasion, then he should blow the whistle or quit - everyone should work with integrity first.

If that's not the case, then he just sucks at it, and again gets no sympathy from me. There's no reason he couldn't consider the same data that the blogosphere chews on - collectively, we've managed some decent forecasts.

roger said...

Stephanie,

I have not seen you post here before. Thanks for the info on current market conditions. You can see last months numbers analyzed in much more detail than the public VREB reports by clicking here

roger said...

TC now has an article on today's BCREA news release:

Real estate sales down 61 per cent in January

All types of housing have been affected by the economic downturn. In the capital region sales were at their lowest point in 18 years last month, the Victoria Real Estate Board said. There were a total of 141 single family house sales last month, down from 249 in January 2008. Condominum sales decreased to 62 from 125 and townhomes dropped to 32 from 43.

Buyers are watching the market closely to see if Victoria housing will become more affordable after a once red-hot market pushed prices up steadily at the same time the economy was booming. When the global financial crisis hit last year, real estate was one of many sectors hammered by slumping sales.

The average price of all types of housing in the capital region dropped by 14.7 per cent to $431,312 in January from the same month last year, the association said. Only Powell River, with a dop of 23.4 per cent, had a larger percentage decline among the 12 real estate boards in B.C.

hhv said...

When the global financial crisis hit last year, real estate was one of many sectors hammered by slumping sales.

We should perhaps forgive them for their misorder of events, as they simply are an echo chamber these days, but readers should note the financial crisis really came to a head in August-October, with the real pain in the later stages of that period. So prices started falling first.

Falling prices were not triggered by an external event. Falling prices were triggered by an extreme lack of affordability. They may fall further due to external events. But this egg hatched before the chicken emerged.

hhv said...

Roger, welcome to Twitter. I think you'll find it informative and enlightening... it has given me a new perspective information sharing.

For those new to Twitter, I like to think of it as text messaging, except instead of sending individual messages to individual contacts, you send one message to all of your contacts. It's a great way to share information quickly and mobile-ly.