Monday, March 2, 2009

February 2009 VREB stats

Found here.

Real estate sales rebounded in February with a substantial increase over January. A total of 403 homes and other properties sold in February through the Victoria Real Estate Board’s Multiple Listing Service® (MLS®) up 63 per cent from the 247 sales in January. There were 619 sales in February of last year. Prices for single family homes and condominiums, meantime, rose slightly. There were 3,844 properties available for sale at the end of February. That represents a 16 per cent increase compared to February of last year and a modest increase from the 3,678 properties available for sale at the end of January.

Victoria Real Estate Board President, Chris Markham, says the dramatic increase in sales is a very positive sign. "The big increase in sales over January is very good news and shows us that despite the widespread economic uncertainty we still have a vibrant local housing market." Markham added that although last month’s sales were still well below the figures for February of last year, it’s important to remember that the early part of 2008 was still marked by an exceptionally strong market. "It was not until the latter part of last year that we saw significant declines in the number of sales," noted Markham.

Markham added that overall continuing stability in prices last month is also welcome news. "The average prices for single family homes and condominiums rose last month while prices for townhomes dipped slightly." The average price for single family homes sold in Greater Victoria last month was $542,396, up from $526,148 in January. The six-month average was $544,357 while the median price was $485,250. The overall average price for condominiums was $286,985 last month up from $259,742 in January. The average for the last six months was $293,775. The median price for condominiums in February was $250,000. The average price of all townhomes sold last month was $381,383 down from $393,982 in January. The six month average was $398,036 while the median price in February was substantially lower at $360,000.

MLS® sales last month included 223 single family homes, 109 condominiums, 47 townhomes and seven manufactured homes.
Comment highlight:
Nick said,

These folks are shameless. If they were on the Titanic watching first class passengers fleeing on lifeboats, they'd be selling the steerage passengers on their prospects of moving up to a nicer room.
True, Nick. Nothing new in these numbers and nothing unexpected. UPDATE: Just spin, and quotes that don't tell the true story and mislead buyers and sellers alike to make decisions in this market based on less than full, complete and accurately compared information. Thankfully, readers of HHV have the good chap Roger and his analysis to rely on, like this:

110 comments:

greg said...

Talking about increases month over month while neglecting drops year over year is becoming par for the course.

Anonymous said...

And of course they leave out that there are over 10 months of inventory..clearly not indicative of a market that is stable with continual monthly gains.

Anonymous said...

I am personally very enthusiastic about these numbers and more importantly the spin. The potential sellers see that sales are 'picking up', the promised spring rebound here, and they begin to list again. Listings skyrocket while the sales pickup remains at multi year lows compared YoY. The sellers will start wondering where the buyers are and start dropping prices racing each other to the bottom.

I feel buyers have more constraints than the sellers and (should) think a little more rationally about whether now is the time to purchase. Sellers have the $$ in their eyes and likely aren't looking at the big picture.

So, I will be thankful for the spin as VREB unwittingly helps this crash along. Hopefully soon even a bitter renter like me making a measly 95k combined can afford a house.

Anonymous said...

I know what you mean. The wife and I make over 120 combined and there's no way I'd do a 450 k mortgage ever.

Anonymous said...

Insider story of why and how the RE industry spin, from Macleans,

http://blog.macleans.ca/2009/02/23/the-shocking-truth-about-the-value-of-your-home/

omc said...

I am expecting the same patern as last year. last year things started of all hot in the early spring...then plop. I would expect the same this year, except at 35% lower sales than the year before as things hit home.

One of my economist friends described a housing bust 2 years ago, and what is happening fits exactly. I don't know if I would even call this "rebound" a dead cat bounce; there just isn't enough "bounce".

I would have liked to see a further decrease though, that way we could have had the -20% beer. I like beer.

phil said...

I am happy their are a few more fools buying into the spring season, as expected.

The courthouse steps will be a lot less crowded in '13!

roger said...

I put my analysis of the February VREB stats into a graphics image. It is now in a format more suitable for easy posting on other blogs and forums. It is also real easy to email to folks as a counter to the VREB spin.

VREB February Stats Analysis

http://i41.tinypic.com/o5rwqo.png

NanHousing said...

Roger, I added your pic to the "Crashing on Van Island" discussion on Real Estate Talks. Its getting to be a well read thread!

Anonymous said...

I have question.Does anyone know what the listing to sales ratio would be for February 2009? Wouldn't this be a more useful way of looking at what is happening in the local market? Rather than looking at single number, such as the number of sales?

Anonymous said...

I find sales/new lists ratio to be quite unuseful actually. It doesn't take into account the total expiries or cancellations in a month.

For example, if a lot of people cancel their listings and the sales/new lists is low, looking at the ratio alone, it seems like the market is dead. But this isnt the case since there is a balance created with all the expiries which arent taken into account.

Also, there are a lot of "faux listings" where after 3 months houses are relisted with a new price and new mls number. On PCS these listings appear brand new and also appear to have never been reduced.

mln said...

Real estate sales pick up in Greater Victoria

Pretty much just rehashed the VREB press release verbatim.

roger said...

anon 3:50 said:

I have question.Does anyone know what the listing to sales ratio would be for February 2009?

Here is a graph of sales/active listings for the last few years.

I will be updating the Victoria Real Estate Stats gallery with all this type of data later this week. You can see the stats up to January by clicking here

hhv said...

Apparently Carla has magically transformed to Carl. Must have been in such a rush to get the spin out they forgot to check her name...

Mr.4AM said...

The bigger the spin, the longer it goes on for, the bigger the crash. I for one welcome our VREB/Times Colonist spinsters overlords, as I'm looking forward to cheap housing. I can wait :)

On another front, itulip put out another great article today on how low can the Dow go?. Scroll down until you see the first chart.

Here's The Main Dow chart (inflation adjusted) for those that don't want to read the entire article.

We've got a minimum of 15-20% further downtrend on the DOW (and by extension most other North American indexes) in order to align to the 1.64% yield trend curve (red line), and if we overshoot... look out below!

Mr.4AM

PS. Thanks for the Feb RE snapshot Roger. I'll pass that along to some friends.

Anonymous said...

I read through the VREB releases and your analysis and I can only conclude that your bias has skewed your views. Investing in housing in Victoria is probably the best decision someone can make. This is part of the best place on earth, everyone wants to live here and they're not making anymore land. We live on an ISLAND!!!

roger said...

anon 7:41,

Thank you for sharing your opinion with the bears. I am not sure you will get any takers. BTW - Is this your favourite drink?

vg said...

The world financial system is coming apart at the seams and the retarded MSM thinks prices shouldn't be going any lower than a 2007 price level while the US drops to 2000 levels ?

And the stock markets are back to 1997 levels and we are somehow immune ? insanity.

What's even funnier is when Ozzie tries to verbally punch out Peter Grandich the other day with a real slag on his stock picks. When the real estate guys go after the stock guys we got real problems.

Anonymous said...

I think people just need to chill out about the stock markets. Obama's got your back.

Nick said...

Ha, thanks for the front page billing HHV. :)

Honestly, it's no wonder daily papers like the TC are dying out. Reading the way the TC shills for the RE industry makes me question everything they report on and how much they spin other things. I think I'll politely tell the telemarketer that the next time they call.

Anonymous said...

Anon 10:48; the only thing Obama's got is a filled crack pipe.

vg said...

Can't believe that TC article,pumping the buying like a bunch of street hoes. Do these people not have a concience ?


“I fell in love and just had to have it.” He moves in April 1."


"We are getting a lot of first-time buyers out here.”

HouseHuntVictoria said...

That story has been edited since yesterday too VG. I sent Carla an e-mail linking to Roger's graphs and rebutting the baseless claims made by Markham.

Carla went out and found some buyers to tell their side of things in support of the "market is heating up myth." And she didn't even bother to fix the way her name is spelled. I guess she doesn't really want to be recognized for this piece.

The TC has no journalistic integrity nor credibility in my books.

HouseHuntVictoria said...

Here's the e-mail I sent yesterday:

Hi Carla,

Read your piece in the TC this afternoon about real estate sales picking up. Can't help but wonder why you essentially published the presser without doing any kind of alternative analysis or seeking of outside sources for some kind of journalistic balance?

Perhaps in future writing about the local real estate market you could use the VREB numbers a little more judiciously to present a more balanced viewpoint for the people reading your columns rather than just repeat the spin of the current president or the VREB's communication team.

I'll link to a set of graphs that use the VREB numbers published over time and created freely through the numbers available on their website. These graphs paint an accurate picture of current market conditions compared with year over year and month over month changes going as far back as January 2005.

You can also see clearly from this graph, that Mr. Markham's claim "that although last month’s sales were still well below the figures for February of last year, it’s important to remember that the early part of 2008 was still marked by an exceptionally strong market." is pure hogwash. Clearly, sales in February 2009 are significantly lower than the past 3 years, and February 2008 did not represent an "exceptionally strong market" when compared to 2005, 2006 and 2007, because February 2008 was lower than the previous three years. So while the market did "pick-up" from an even slower January 2009, February 2009 sales statistics are not representative of a "a vibrant local housing market." Rather, February 2009 sales statistics paint an abnormally slow February, and current sales to active listings ratios show a clear downward trend that in basic economic terms (supply and demand) demonstrate an ongoing price pressure to the downside. Don't the readers of the Times Colonist deserve to know the truth?

Respectfully,

HouseHuntVictoria

Anonymous said...

Tony Joe, of Re/Max Camosun, was surprised to see multiple offers this past weekend on a $700,000 Saanich house that clients wanted to check out. “Not only that, but we’ve had a couple of properties sell recently that were sitting on the market for months.”

This says nothing about whether or not the house in question was priced well below market value or not. A house getting multiple offers is meaningless without context.

And big deal if a couple of houses sitting for months got sold. They very well could have gotten a massive haircut and priced well below assessment.

Carla is unable to tell it like it is due to lobbying and the newspaper needing to take any and all 'advertising dollars' they can.

Anonymous said...

Given the large Canwest monetary losses, and the physical thinning of the times Colonist, I think we can only sadly expect the reporting to go from bad to worse due need for ad revenue. Heck, based on that last article it seems as if they don't even bother writing their own articles anymore. The newspaper may become one big advertizing spread. Got dollars? You just got yourself a printed article. Might as well toss out the editor.

NanHousing said...

http://tinyurl.com/dddldp

The stats for the rest of the Island came out today and what a bloodbath it is. Board totals show year over year sales are down 47% while avg prices are down 11%. These stats are only for Houses. Can't wait to see what condos and townhouses come out as.

greg said...

Just a silly question HHV, but why are you networking lately with so many realtors like Tim Ayres, Oliver Katz and Ian Watt? Are you looking for property, working as a mortgage broker or finishing the pre-licensing course?

;-)

hhv said...

none of those greg, just interested in what is being communicated out in the different channels.

Anonymous said...

TORONTO — CTV Television Inc. is slashing 118 jobs at the newsroom operations of its A Channel television stations, and cancelling morning shows in some cities.

A Channel-branded stations are located across Ontario in Ottawa, Barrie, London, Windsor and Wingham, as well as in both Victoria and Halifax.

Anonymous said...

TC should investagate why a RE office on Oak Bay Ave. is closing its door.

20 realtors two weeks ago, 8 realtors one week ago, now the door is locked.

Anonymous said...

Shorter work week pitched for B.C. civil service

Seen as way to save money and avoid layoffs

greg said...

haha HHV,

just kidding....

greg said...

TC should investagate why a RE office on Oak Bay Ave. is closing its door.

Who's that?

Anonymous said...

Murray Coell, minister responsible for public service development, said employees voluntarily limiting work hours could help reduce the need for job cuts — although he was quick to characterize layoffs as “the last thing that will be considered.”


I think it will change after the provincial election. Expect layoff as the first choice.

Anonymous said...

Who is that?

21c

vg said...

thanks hhv, I thought that article was changed from yesterday. Easy way to cut corners on your journalistic integrity. Just keep the headline and edit the content. Don't they realize most would skip the article if they read it yesterday thus reducing readership and what was written ? Maybe that's what she was hoping for writing that drivel.

phil said...

They were saying the same crap (as the TC) in the US two years ago...

For example:
http://movetoarizona.com/blog/?p=71

Anonymous said...

Do you guys see something listed 10% above assessment even getting any offers? I know someone who has listed about 10% above assessment. Oddly enough 2007/2008 assessments were identical in the new freeze regiment.

Dave said...

The market has definitely improved in the last couple months. Like I said previously, multiple offers are not unheard of.

Inventory hasn't grown too dramatically and sales are now picking up as is normal in spring. Accordingly, I don't think there will be much downward pressure until after the sales peak in the summer.

vg, equities are indeed crashing down but the Victoria economy is still holding up just fine. There is still full employment and the government has no immediate plans to cut back the civil service.

I tend to agree with the following article that the current economic downturn won't effect all regions equally.

http://seattletimes.nwsource.com/html/jontalton/2008798304_biztaltoncol01.html

Worth a read and thinking about.

Anonymous said...

dave BoC tends to disagree with you;
It has seen “weaker-than-expected activity in major economies” since January.
There’s been “a sharper decline in Canadian economic activity” than the BoC “projected.”
Canadian economic output might not start improving until “early 2010.”

http://www.bankofcanada.ca/en/fixed-dates/2009/rate_030309.html

adw

omc said...

Dave, or is it Fred? You are obviously a realtor, and I believe you have not read the entire report. The release made was very misleading and downplayed year over year stats and didn't mention months of inventory. Both of those indicate that the market is just as weak January's. Things always pick up in February over January, and I'll make a predition; the numbers will be better all the way through April. That is if you don't include year over year.

All of the major banks and CMHC are all predicting significant loses in the Victoria market. Care to comment?

omc said...

Oh, and Dave, can you explain to me how some how our over inflated housing market is unaffected by world events and markets please. They must have missed that one when I took my economics classes.

hhv said...

"vg, equities are indeed crashing down but the Victoria economy is still holding up just fine. There is still full employment and the government has no immediate plans to cut back the civil service."

Dave, I'm with you until you hit here. Fact is, local economy isn't "full employment" nor insulated. TV media is dying a rapid death. Gov't is openly discussing cuts to the civil service and are having a very public discussion about reduced hours in an effort to save jobs. The Tech world is hurting with the contract freeze the public sector has. Year-end is end of this month. Wait until end of April when the contract non-renewals force layoffs. Most of these people are "self-employed" types who won't qualify for EI.

Last night, a local REALTOR commented on his condo viewing lately, he stated 85% of the 30 odd units he's toured thus far this year have been empty and these have been two bed units priced between $200K-$300K. Is this speculation? Lost jobs?

The reality is it takes time for the pain at the top to roll down to those of us down low. But roll down it will.

After the Spring election, all bets are off. Victoria will likely prove to hurt more precisely because of it's government heavy economy. The Libs will not spend like drunken sailors in the public service.

omc said...

I just reread Dave's post. Sorry I got the jist wrong there.

omc said...

..and I was rude.

I don't agree with likening Vic to Seatle as we don't have any industry to support the house prices. Our job market is extremely limited, the 49% increase in IE from december was just behind the 3 top ontario auto industry towns.

The CMHC report supports this as they are calling for bigger loses here than in Van, and our vacancy rate is to increase as people lose their jobs and move away.

roger said...

I just finished the latest slideshow based on February stats. You will find it in the Victoria RE Stats Gallery.

Greater Victoria Stats Analysis

You can stop the slideshow and single step the slides using the Pause and < > controls. Clicking the big X will switch to full screen mode.

As always feedback is appreciated.

roger said...

Further to my last post....

If you find the stats presentation informative please pass the link below to anyone you think might be interested. Post it on other blogs, RE forums, facebook, twitter or via email. We need to give potential buyers and sellers the opportunity to understand the current RE market conditions in Victoria.

http://photoshare.shaw.ca/gallery/needinbox/

hhv said...

Great stats analysis again Roger. You out do yourself everytime!

hhv said...

When you see the sales to listings presented as sales to active and sales to new, you can really see how this market has a long way to go yet. I echo the earlier sentiment regarding jump in sales will encourage new sellers to list their homes. We'll see soon if this will be the case.

roger said...

HHV,

Yes the jump in sales may inspire potential sellers to make the leap and list their property. I have noticed that many other parts of BC ( Vancouver, North of Malahat) did not have the traditional big jump in listings in February as well.

March will definitely set the tone for the market for the spring. Will active listings take a big jump due to new listings? The 3 month average is still trending down. Will prices go flat for a few months? Will buyers jump on the bandwagon tempted by low interest rates or will recession talk keep them on the sidelines?

Lots of interesting questions - time will tell.

IC4 said...

Well, my observations of the Victoria market leads me to think that the Spring market will be quite sprightly. Crisis? What crisis?

In other news, I have suddenly stopped receiving PCS listings from north of the Malahat. :(

Wonder if something has happened to the REALTOR, did he quit maybe?
I wrote to another REALTOR asking for house listings but no reply. I am a serious future buyer and can't understand the lack of interest in my requests?

Anonymous said...

Anon...goggle rhonda heaslip...you can sign up for pcs on her site.

roger said...

Lipstick on a pig...

Take a look at this:

VIREB Stats Package

Then read this headline:

House sales north of the Malahat jump 72 per cent from January

Vancouver Island single-family house sales north of the Malahat jumped by 72 per cent last month from January in a trend seen in the capital region as well.

Even though the number of sales north of the Malahat increased in February to 196, they still trail the 369 seen in February 2008.

"It is encouraging to see that there is more market activity and more sales, with increases in all VIREB zones," said board president Ray Francis. "However, we're cautious, because from a historical perspective we're still below what is considered a normal February in terms of sales volume."

"In this tighter marketplace, we're seeing fewer sales in the higher end and more activity in the middle and lower price ranges. This tends to pull down the average sale prices."

Dave said...

I don't agree with likening Vic to Seatle as we don't have any industry to support the house prices. Our job market is extremely limited, the 49% increase in IE from december was just behind the 3 top ontario auto industry towns.

Victoria’s economy is a lot more diverse than you give it credit for (e.g. provincial government, military, shipbuilding, marine services, high technology, software, tourism). And that’s just with a population of only 300k.

I believe that Victoria still has the lowest unemployment rate of all the metropolitan centres in Canada.

Anonymous said...

Roger, the Nanaimo Daily News article today was titled "Housing Market Continues Downward Trend". The writer of the article told it like it is and didn't allow much spin.

roger said...

Thanks anon for the article. Here is a link for those interested.

Housing market continues downward trend

Sales plunge 50% compared to last year while prices drop 12%

"The reason for the big jump in house sales in Nanaimo and Vancouver Island during the one-month period is that houses are now being more properly priced than in the past few years, so there's some real good value out there right now," Francis said

B2B said...


Victoria’s economy is a lot more diverse than you give it credit for (e.g. provincial government, military, shipbuilding, marine services, high technology, software, tourism). And that’s just with a population of only 300k.


Most of those depend directly or indirectly on government (taxpayer) money. This is the last place you want to see jobs - effectively people are relying on handouts from their fellow taxpayer.

We simply don't have much real, private-sector industry that can stand on its own two feet. Much of the "high-tech" in town, it seems to me, is for government contracts. I am told by one resident of the VI Tech Park that without government contracts, the place would be more than half empty.

NanHousing said...

In other words, he is admitting that houses were indeed overpriced and prices are coming back down to where they should be.

In the midst of an economic recession and inventory sky high, there is absolutely no other explanation other than prices coming down low enough for people to get excited combined with lower interest rates.

Unbelieveable how two different newspapers can report the same story and one outright ignores the facts of the matter. Kudos to the Nanaimo Daily News for not getting influenced by advertisers or $$$.

boomer said...

IC4 said "I am a serious future buyer and can't understand the lack of interest in my requests?"

I agree with that comment and have often had the same experience with realtors..As someone who personally spent many years in sales and marketing (and also participated in a substantial number of RE transactions) the lack of follow-up (and even the common courtesy of a reply to an email) by "professional" realtors has always bewildered me.
Sales is ALL about following up leads-even if a bit unlikely.

dub said...

Regarding Victoria's 'high-tech' industry (aside from local government contract work);

These high-tech companies sell, primarily, to economies outside of Victoria.

As a matter of fact, one of the larger companies that I am thinking of does very little business to the Victoria area (aside from employing residents). The sell to the rest of North America and Globally, of course. When these economies buy less of their product (which is currently the case), they lose revenue, miss future targets. This effects their bottom line, etc.

Hopefully this doesn't lead to local layoffs, but it's easily arguable that the NA and global economy will have a direct impact on local high-tech firms. To think otherwise is just burying your head in the sand.

Vancouveritis said...

Roger,

You have created a great slideshow. I especially liked your last slide. House prices have a long way back down to match your average inflation rate.

Stats Canada shows the average Victoria "family" income to have decreased slightly (in 2006 dollars) from 38,200 in 1978 to 37,300 in 2006. Average income (real terms) has not changed much in 30 years.
Income Trends in Canada 1976 to 2006
(You'll have to download their "table browser" to view the data.)

I can't find any info on what inflation rate they have used here.

However, it follows that today's homes should be selling for about the same price as SFD's in 1978 (in 2006 dollars). i.e., the price of a home should have followed the inflation rate (Roger's red line). With incomes remaining stagnant, there is no reason for home price increases to have deviated from the inflation rate.

Should we expect the average SFD price to drop from the peak of $584,000 to around $200,000? That would be a 65% drop.

beagle said...

Dave,

Victoria does have a good core of Government, High Tech and Military business but I'm worried about the psychology of the people employed in these core drivers. If they have watched the retirement portfolios go down and the value of the house go down they may pull back spending and hunker down. Especially with the constant media drone talking of depression even. With Construction and Tourism in the tank we need these core people to keep spending or the small sales and service businesses will suffer as well. It's the little businesses that pay the freight for the public sector.

Talking to fellow business owners and customers it appears the local economy has started to noticeably contract. The question I here everyday is "How's business"? I rarely hear that question in the good times.

hhv said...

"Should we expect the average SFD price to drop from the peak of $584,000 to around $200,000? That would be a 65% drop."

I don't think so. Incomes have essentially doubled, because in that same 30 year period we've gone from one income households to two income households.

I'm thinking a correction to around $400K avg, depending on which numbers you use (BCREA or VREB, I'll choose BCREA) will bring us back to our inflationary line. Overly simplistic, but reasonable I think.

roger said...

Should we expect the average SFD price to drop from the peak of $584,000 to around $200,000? That would be a 65% drop.

I take it this is the graph you were referring to in your question.

Real estate tends to rise at the rate of inflation plus a premium. Looking back over 30 years inflation +2.7% seems to be a good fit to the data. Of course there will be deviations and you can see the average prices oscillating above and below this curve (dotted black line).

I think the BCREA predictions are a bit optimistic. My guess, which is only that, is that we will trend down for a number of years and will probably overshoot this line. I bet the annual average for 2010 is 475K and will bottom out around 450K by the end of 2011. Several plateau years will follow that.

** Readers should note that this graph is based on annual averages which are calculated by dividing total yearly sales volume by total sales for a specific year. The monthly averages in any particular year could easily be lower and median prices will be lower.

beagle said...

Should we expect the average SFD price to drop from the peak of $584,000 to around $200,000? That would be a 65% drop.

It's hard to compare now to 1978 because of the amount of dual incomes now but also because many of these homes classed as single family are actually multi family units. Back in 1978 income producing suites were much more rare. We had rumpus rooms!

olives said...

Right everyone - it's different this time!

Personally, I was interested in the graph which showed what deflation does to housing prices.

vg said...

"vg, equities are indeed crashing down but the Victoria economy is still holding up just fine. There is still full employment and the government has no immediate plans to cut back the civil service."


I'm afraid your wrong Dave,the government is just warming us up for civil service cuts and there won't be any job sharing going on to save them.

You think senior employees in their last 5 years are going to jeopardize maxing out their pensions and keeping the wage limit at the highest possible to preserve the rate of pension in order to sacrifice some junior employee with years of work life ahead of them ? dream on.


As far as Victoria's employment scene goes, "diversity" means "vulnerability". All jobs outside the government rely on contracts which can be cancelled at the stroke of the pen. This is just getting started and Victorians are late to the game like they have been since the beginning of time.

This is some sort of suckers media game. For cripes sake there may not even be one frigging local TV station left in this town yet realestate is booming ? wait til the gangs take more of their crap over here. It's just a matter of time.

Reid said...

I am currently travelling in the Interior (tourism/resort town) and talked with a local real estate agent in a community that has been hit hard over the past three months as unemployment has increased by 4% in this period alone (complete contrast to Victoria which really has no idea what hard is).

Here people a very concerned about their jobs. People could care less about interest rates, long term price trends or where housing is going.

People are simply stressed and concerned. Victoria bears - you just have to wait until the unemployment hits and there are limited job opportunities and then attitudes and real estate buying will change.

At lunch today and guess what - there was only one other table occupied.

The agent told me that they have not had a single home sell in three months after years of a sellers market. The one potential sale at $500k a house assessed at $650k fell apart this week as buyer pulled the plug.

Interesting point was that over 50% of the buyers used to come from outside the community. Today there are no local or out of town buyers. The local buyers are stressed and there simply are no out of town buyers anywhere these days.

This agent has no delusions about the market or trying to spin it. "No one is going to buy unless it is a steal" (his read was minimum 25% below assessed and more like 30+% below assessed). As he told me "I am busting my butt and making absolutley no money."

If you believe that large layoffs and unemployment are coming to Victoria, just wait as things will start to a lot more like what I am seeing here.

omc said...

I would be interested in knowing the % of out of town buyers in our market. We don't have the wages here to support any where the prices that exist. We are what, 35% down in sales?

Dave,

Again my apologies for misreading your post that time. I know Victoria is well diversified, but it has a very shallow pool of employment. We don't have any industry such as Seatles Microsoft. Most of the high tech here, as I understand it, is government contractors, satelite offices from American firms with a few mom and pop outfits. The local only high tech firm that I hear is sound is Reliable Controls. The wages are very low here in comparison to other areas for most professionals too.

roger said...

OMC - the answer to your question is here

greg said...

Markham noted that beyond BC and Alberta, three per cent of buyers originated from elsewhere in Canada showing little change from 2007; buyers from overseas represented just over one half of one per cent of all buyers, virtually unchanged from 2007.

Thanks Roger, release of these stats must be a big relief up at Bear Mountain...

Anonymous said...

"As far as Victoria's employment scene goes, "diversity" means "vulnerability". All jobs outside the government rely on contracts which can be cancelled at the stroke of the pen. This is just getting started and Victorians are late to the game like they have been since the beginning of time.

This is some sort of suckers media game. For cripes sake there may not even be one frigging local TV station left in this town yet realestate is booming ? wait til the gangs take more of their crap over here. It's just a matter of time."

WOW VG, how's that bomb shelter coming along? Your entire post is opinion only and not based in any level of Victoria reality. And you're not alone.

vg said...

"WOW VG, how's that bomb shelter coming along? Your entire post is opinion only and not based in any level of Victoria reality. And you're not alone."


It's based on years of wisdom and experience thanks. Which "anonymous" opinion was yours ? are you a multiple bidder ? or a real estate agent ?

PS no bomb shelter needed,only another 20-30% down and I'll be a buyer.

vg said...

anonymous,

you should read Garths latest about contracts being cut in a big way,maybe your "opinion" might clue in to the "reality" of my posts and the others here who have 20/20 vision of the correction that is actually happening before your very eyes.

Selling below assessment in Oak Bay ? who woulda thought eh ?

patriotz said...

I am currently travelling in the Interior (tourism/resort town)

Apart from Trail and Sparwood, every place in the Southern Interior is now a "tourism/resort town", because that's the only economy they have left.

Doesn't look like a viable business model to me.

Anonymous said...

2020 vision? I wouldn't take too much credit as bears for predicting a correction over and over and over and over again ad nauseum in a normal cyclical market until it finally turns around - and turn around it has. No disaster, nothing out of the ordinary yet.

Talk about spin the washer has been set on high here in the past week.

Anonymous said...

What do all of you guys do for a living that think you're going to buy a Victoria house in the next few years where the only economy left, according to you, will be the crack shack downtown?

patriotz said...

I wouldn't take too much credit as bears for predicting a correction over and over and over and over again ad nauseum in a normal cyclical market

You think the biggest bubble (and bust) in history is a "normal cyclical market"? Says it all.

And why shouldn't we take credit? We had sense enough not to buy at the top, didn't we?

Anonymous said...

Queenswood Realty in Cadboro Bay is now Century 21 Queenswood so a lot of realtors from the C21 on Oak Bay Ave went over to C21 queenswood...that's why its closing.

Anonymous said...

More likely you didn't have enough cents and got lucky. I figured you might be the first to jump in the deep end of the opinion pool.

Go ahead and take credit for the most obvious correction in history if it makes you feel better.

And no not a realtor, not an unhappy homeowner, no prospects of losing my job...no significant debt issues, just watching a whole lot of bear BS.

Anonymous said...

"PS no bomb shelter needed,only another 20-30% down and I'll be a buyer."

Follow Roger's graphs and discussion. Sure prices could come down another 20%, but not very likely, IMO. The more logical non-radical expectation will be for prices to come down modestly followed by a long flat period and long term trending up of interest rates through perhaps 2013-14 where it will start all over. That's history.

If you don't buy in the next year the mortgage payments will start trending back out of reach with interest rates. That's your future, IMO.

Anonymous said...

A question regarding assessments: Do the assessed value of SFH and condos correlate at all? Like if a SFH is assessed at $500k, and a condo is $300k, is a 30% below assessed a fair target for price drop over the next few years?

roger said...

I was going to answer some of the anon questions but I couldn't tell if it was one person posting today or not.

So anon's if you want to have a constructive dialogue just use a nickname. It is easy - just select Name/URL, enter your nickname and use a few spaces for the URL. Otherwise most of us will assume you are a drive-by poster or just trying to poke the bears.

roger said...

I have a question for some of the bulls that are passing by....

Why do you think that real estate can go up for several years at 14% a year but it can't go down significantly??

It dropped 26% from the peak in 1981. Every other commodity, business or tradeable asset (gold, stocks, oil, copper, wheat etc.)also has big up and down cycles.

Some facts to back up your opinion would be nice (if possible).

greg said...

Queenswood Realty in Cadboro Bay is now Century 21 Queenswood so a lot of realtors from the C21 on Oak Bay Ave went over to C21 queenswood...that's why its closing.

So Queenswood, which was an existing agency, where I believe Chris Markham (VREB President) works, has taken on the Century 21 franchise, and some RE salespeople, and Royal Victoria Realty has what?

Oh yeah, if you look at it that way, its not really a shell game. It looks like a franchise wasn't making enough to pay the franchise fees or something. Or maybe wasn't making enough on the agency portion of the commissions to stay in business. Or something like that.

Bottom line is, some salespeople are now out of work? Or did they all go to Queenswood? And of course, sounds like an office closed.

Doesn't sound like something that should be happening in a healthy market on the "rebound".

Anonymous said...

Roger: Who needs facts when realtors are essentially crooks running a con game?

In a declining market, certainly.

olives said...

"...the most obvious correction in history..."

I think most people here would agree with that statement.

IC4 said...

Anon 7:57 AM

Sweet! Thanks for the tip.

mln said...

If you don't buy in the next year the mortgage payments will start trending back out of reach with interest rates. That's your future, IMO.

If interest rates put the mortgage payments out of reach for buyers, how are prices going to just stay flat? The market relies of on a certain turnover of properties every year. If no one can afford those properties, prices will fall until they can.

I think we'll see a period of higher interest rates as well, but I don't think it's a good argument for purchasing a house when you know it will be 10% cheaper next year. You're agreeing to 25 years worth of payments--jumping into the market out of fear so you can snag 5 years at low interest rates does not make sense.

vg said...

'If you don't buy in the next year the mortgage payments will start trending back out of reach with interest rates. That's your future, IMO.'


I assume you will take credit for this prediction ? Alot of bull BS is more like it.

The facts are clear,the financial markets are worse than 82 but you say we better buy in the next year ? I say you need to study economics and affordability indexes,this is the end of a "business cycle", look it up.

hhv said...

I always find it very interesting when someone pops round here, or elsewhere, and pokes a "hole" into a bearish position. It's usually based on either one of two things: 1. an emotional "we live in paradise, boomers are coming, there is no where to rent" type position or 2. and my personal favourite, the "moment in time."

I've found most people who advocate buying right now push today, or better yet, right now, as being the best time to buy. "It's a buyer's market! There's so much choice! Interest rates will never be this low again! ACT NOW BC."

These are all nonsense positions. They don't take into account anything unforeseen, and completely ignore what is happening outside of our newspaper delivery area.

Worse yet, they ignore what is happening within our newspaper delivery area and celebrate the miracle! that is an under-performing early spring market. A miracle that can only mean that Obama has parted the dead sea, the bears have drowned and the bulls have firm sand under their feet again.

You see bears, we are fools, idiots even, in the eyes of the true RE believers, for daring to look at sales to listings ratios, for daring to think long term, for crunching numbers and acting by not acting.

The one thing we all do have in common is a need to feel validated in our positions. We, as bears, turn to each other for moral support in the onslaught of media spin while our bull cousins try to convert us to a life of instant wealthTM through over-spending for a commodity that doesn't even meet the basic definition of investment. This they do for one reason and one reason only: so that they can feel less lonely in their purchasing decisions in this time of historically low sales volume.

When we call the media and the industry mouth pieces on their spin, we are spinning ourselves. When we ask for transparency in market data and mandatory disclosure in investment-speak by the RE industry, we are heretics without a clue.

When we say we'd rather wait for a 26% correction, they tell us we're wasting our time, as if $125K was made by an average family in a year, or grew in our backyards, or could be found in our jean pockets on laundry day, and as if the market hasn't already dropped at least half that amount in less than 10 months with no sign of stopping yet.

Bears, let's face it: we're just too stupid to recognize a good thing when it stares us in the face. Or we're just too bitter. Because we rent. Or maybe we own but want to live in a community where our children won't leave because they can't afford, or choose, not to mortgage their future to stay, despite their university education and well paying job.

Bobisnotmyuncle said...

My apologizes, I'm trying to learn more about real estate trends.

A question regarding assessments: Do the assessed value of SFH and condos correlate at all? Like if a SFH is assessed at $500k, and a condo is $300k, is a 30% below assessed a fair target for price drop over the next few years?

omc said...

Bobisnotmyuncle,

Is 30% below assesed fair? Some would answer yes, some no. In my market area (oak bay etc) things were selling 12% above assesment last April, and now they are 12% below. I don't think the actual #s are the point here. What is the point here is educating yourself against the propaganda of the industry. All of the banks, CMHC and even the CREA acknowledge the fact that our market has been speculated to a point that it is unsustainable and must correct. This correction was called for with out the current economic crisis. You can read the reports, look at trends and, as I do, talk to very qualfied people with no stake and you get the same answer; sit back and wait. No one really knows how much it will drop, and if they say they do they are a realtor.

If you want to really understand what we are talking about, get the stats for malahat and north and compare it to the TC article based upon the realtors BS. Shocking isn't it.

Anonymous said...

Vancouver is the organized crime capital of Canada according to the G&M. Victoria is the homeless and hillbilly (cigarette smoking, no education, hostility on the street, use wood as primary source of heating cause'they love the particulate matter that it produces to shorten lives, drive rust buckets from the 70's) capital of the world.

Fooder said...

The discussion on Victorias job diversity passed my by a little, but I'll bring it back up. My one thought on the issue isn't to argue how much each sector brings to the table. I have to wonder have any of our industries changed over the past 10 years in a way that can justify the increased cost of living. Government, military, tourism, etc. have always been around and Victoria prices have not been like they are today.

To me Victoria has the same industry base we had in 2000. On top of that the free spending money spread cash around. It didn't create any new stable long term Victoria industries. So with the world cutting back we should slid back to our realistic base line plus inflation.

vg said...

"To me Victoria has the same industry base we had in 2000. On top of that the free spending money spread cash around. It didn't create any new stable long term Victoria industries. So with the world cutting back we should slid back to our realistic base line plus inflation."


Well said,and it is basically the same as it was 20 years before that. The high tech has added a few jobs but it is a fast changing industry and even the best companies can be toast when financing can't be found,contracts cancelled or a better mouse trap comes along.

The bottom line is every where you look right now,many TV shows,news articles,flyers etc,what are they screaming at you ? SAVE ! save this,save that,cut costs,conserve,don't be stupid with your credit cards and on and on.

Then we have the TC and the local MSM that keeps ranting BUY REAL ESTATE NOW ! BUYERS MARKET ! FTB's are buying ! Multiple bidders still ! Now how frigging hypocritical and fiscally and socially irresponsible is that ? I rest my case.

Anonymous said...

"If interest rates put the mortgage payments out of reach for buyers, how are prices going to just stay flat? The market relies of on a certain turnover of properties every year. If no one can afford those properties, prices will fall until they can."

Roger mentions 26% off peak in the 80's. This is fully expected by me, but I think we are at least half way there now and the dropping prices have already slowed. Ignore this if you wish or recite, "dead cat bounce" 7 times, and turn in circles twice. Prices will flatten off as they have done so many times before and interest rates will climb back up, hopefully not to the 80's levels.

People will be able to afford them because the inflation will put upwards pressure on our wages. In ten years our nominal wages should be 50% plus higher than they are today.

The other affect is that those with mortgages locked in over 5 years at say 4% starting within this next year will see the real cost of their mortgage eaten away by inflation and will be winners. Run inflation at 6%-8% against a 4% mortgage over 3-5 years and you'll find you are way ahead of the game - if you can afford the payments at the other end at 8%. This is all too often forgotten when looking at only the current numbers.

I didn't say this was a good time to buy, it's a good time to buy if it's a good time to buy for you. It's a personal choice based on so much more than house prices.

I said if you don't buy within the next year you will see mortgage payments slip back out of reach - assuming you're not using entire cash. If you are using cash when interest rates are almost certainly going to go through the roof in the next year or three you will miss the erosion of the real cost of your mortgage through the coming inflation. You can't use historical numbers only when it suits you. Remember our Grandparents paid $8,000 for their Victoria homes.

The other outcome as per history is that inflation will result in ever rising rents. In five years that $1,200 / month 2 bedroom will be $1,800 or more. People are already paying that now in some condos and, whether it's laughable or not, it further justifies the lower rents in creeping up over time.

Re-run Rogers numbers and include the erosion of a 5 year $400,000 mortgage with higher inflation / interest rates / rising rents and you will the picture is a little different.

roger said...

Anon 8:54,

Unfortunately you do not have any understanding of inflation and what causes it. You also do not recognize what would happen to mortgage rates, and the resultant effect on real estate prices, should this occur.

Anonymous said...

And again unwilling to discuss the result of inflation on a low interest $400,000 mortgage. Clearly we both understand it, it just doesn't fit the rant.

roger said...

Anon 9:32,

Please check the archives. We already had this discussion several months ago. I provided a detailed analysis of waiting a year and paying a higher mortgage or buying now at a lower rate. Actual numbers were in the post and waiting paid off.

vg said...

He clearly doesn't get it that prices can't keep going up into the "you are priced out forever" fantasy land again because no one can afford them. We have just experienced this facade by the media and people like you trying to twist reality of affordability.

This is a city where wages won't be rising anytime soon if the government coffers are draining at a rate not seen in decades and companies that won't be giving raises anytime soon if their inflation spirals out of control as you tout. Did you not notice that government are "freezing" wage hikes ? Man,talk about "Spin-o-rama".

I have a hard time believing you aren't connected to the real estate bizz with this persistant mantra that we will soon be "priced out forever" crap.

vg said...

"Roger mentions 26% off peak in the 80's. This is fully expected by me, but I think we are at least half way there now and the dropping prices have already slowed. "

Buddy, I am not sure who is spinning this harder,you or the TC. The spring rush hasn't even started. These were February numbers out,in the past 2 recessions it was the April to July numbers that set the tone and when the real buyer/seller action occurs. You are counting your eggs far too soon.

I recall both those periods being a very nasty time to be a seller when not all the buyers are stupid and most have agents that tell them to wait or low ball. Been there before,have you ?

Anonymous said...

Maybe put that shovel down for a few minutes. Where do you see me writing that you will be priced out forever? It's not priced out, it's that it will not make financial sense for you to buy in 3 years any more than it will in 6 months.

Waiting the past year has paid off in spades (assuming you didn't bet your down-payment on the stock market...you didn't did you?) and waiting another 6-12 months will pay off as well. After that (if you're unable to buy) you will be wise to wait until perhaps 2013-14 when the real cost of buying a home is reduced by inflation back to the point where we were in perhaps 99' This will not be the result of price decreases, it will be inflation.

Want to know what's going to happen between now and 2014, IMO, review the banking system crash of the 70's. Mortgaged home owners made out very well. All the while rents went up with the "unexpected" inflation that was killing the banking industry. Why are the banks still willing to offer relatively high interest rates on 5 year term deposits? What are they anticipating as they steal long term from their elderly customers?

Think monetary inflation, both CDN and US governments have just printed more money directly and indirectly than we even have enough trees for - it's coming very soon.

roger said...

Anon,

If you really want to pursue this high inflation argument go and read Mish's blog

You can't sell it here and you won't be able to sell it there either. Once inflationary pressure start to rise and trips the 3% BOC Canada limit the Bank of Canada will raise the bank rate to whatever it takes to contain the monster. If another recession develops so be it because their prime mandate is to contain inflation. They learned their lesson well from the 70's. High interest rates will quickly put a damper on house prices and they will drop again.

An as far as printing money goes. You don't understand that inflation requires an increase in the the total of money supply and credit . Sure the money supply has increased but not nearly to the extent that credit has contracted. That is why we have a credit crunch. Read Mish for details. It has been discussed extensively there and lots of charts and data for you to digest.

Anyway - HHV has started a new thread and this is my last post here. I suggest that you post as other than anon if you want responses in the new thread.

vg said...

Think monetary inflation, both CDN and US governments have just printed more money directly and indirectly than we even have enough trees for - it's coming very soon."

You don't seem to get the main point here is in all your wonderful crystal ball predictions where does it say that real estate MUST follow this inflation theory of yours and where is the gaurantee it will rise ?

If interest rates go up and prices flatline as you say and they are still 7 times the average family Victoria income then who are supposed to be these new buyers that are going to propell the real estate market higher levels then last years high ? please elaborate cause I don't see any massive real estate boom for 7 years mininum if wages are frozen as what happened in the 90's and is happening now.

Your basis for the price rise has no nuts. If most can't buy now then how will they buy in 2-3 years with no wage increases ? It will just magically go up on it's own ? These are unchartered waters ,the finanicial markets have lost 10 years of wealth in a matter of months incase you haven't noticed.


You also say wages will be 50% higher in 10 years ? at what rate of wage increase are you talking and let me know so I can go apply. Have you asked your boss for a wage raise in lately ?

vg said...

"They learned their lesson well from the 70's. High interest rates will quickly put a damper on house prices and they will drop again."


roger,

He misses the boat in spades. What happened to house prices when interest rates went to 19% ? they crashed huge. This time you won't need 19, 8 percent will be enough with the already inflated prices. He no where mentions who is going to buy these places nor any reference to the affordability index which is still near the top of the historical levels.

greg said...

Roger mentions 26% off peak in the 80's. This is fully expected by me, but I think we are at least half way there now and the dropping prices have already slowed.

That was the nominal loss in one year. Total nominal loss over 3 years was around 35%. Inflation adjusted loss over 3-4 years was close to 50% (this was a period of high interest rates and high inflation).

Not to hammer this too hard for those who don't believe this can happen again, but you might want to read something I wrote about this a couple years ago here

Anonymous said...

See you in about 6-7 years.

c21er said...

Greg,
Yes, quite a few realtors at C21 Royal Vic went to the new C21 franchise at Queenswood Realty (correct, owned by Chris Markham). There were only 8 realtors left at Royal Victoria, which is not enough to sustain that office so it is closing. No realtors from that office left the business, just going to other brokerages. This type of thing happens periodically in up and down markets. C21 Queenswood wanted to expand...