Friday, August 13, 2010

Market tracking

When I started this blog, I was interested in individual properties - namely 2 bedroom 2 bathroom condos priced under $250,000 and 3 bedroom 2 bath (minimum) single family homes with suites priced under $425,000. I'd chart sales, listings and watch individual properties. Units sold quickly, usually under 30 days, and usually sold for close to asking price, sometimes more, sometimes less, but usually not too surprising.

As time went on and it became clear to my wife and I that we'd be waiting and not buying in this market at that time, my market tracking morphed from individual neighbourhoods and unit-types to a more market-wide approach. I think there's some validity now that the market has turned and is headed down to start tracking individual property types in individual neighbourhoods. We're still not buying anytime soon, but I think we need to more closely watch what a three or four bed two or three bath house in Gordon Head (or insert your neighbourhood here etc) is priced at and sold at for the remainder of this year if we're to get a better understanding of the market shifts.

If we're going to do this right (and one of the reasons why I picked the Gordon Head neighbourhood to profile) we'll need to have a decent sample size of similar product. Back when it was a new neighbourhood, many Victorians would have said Gordon Head was "cookie cutter." We now call them Gordon Head Boxes. The houses aren't really the same, but they're similar enough that we can get a good sampling for our market tracking exercise.

Take this listing for example: MLS® number 282024. It's a standard 4 bed 3 bath Gordon Head Box without a suite, likely why it's priced ($568K) below the neighbourhood average. It's likely slightly bigger than it's competition at 2300 square feet, but a few hundred square feet can easily be eaten up in poor layout, so I won't be too quick to judge this one without having stepped inside it. It's been on the market for 18 days and hasn't had a price reduction or accepted offer yet.

Here's another example: MLS® number 279093. Again we have a 4 bed 3 bath Gordon Head Box, doesn't have a suite, is a few hundred square feet smaller than it's competition but has the same 7000ish square foot lot. It's priced at $599,000 today, but it was originally priced at $629,000 and has been on the market for 79 days.

Both of these homes are priced above assessment, but within eight to ten per cent. It will be interesting to see if they sell, what they sell for, or when the owners decide to not sell and take them off the market.

Here's one just like those two that sold recently: MLS® number 279899. After 30 days on the market and one price reduction, this property, not too unlike the above examples, originally listed for $585,000 sold for $560,000, almost 11% over the BC Assessment value. For this neighbourhood and this property type in today's market conditions, this one sold fast and for agent's-commission-close-to-asking. If I were the old owners of this house, I'd be happy with the deal I got.

Here's another relative comparison with an entirely different outcome: Originally listed at $590,000, MLS® number 279060 took one drastic price reduction to $550,000 and 55 days on the market to finally sell at $533,500, 10% below original list and about 1.3% below assessed value. It's bigger than any of the other houses in our comparison and it has a two-bedroom suite. I chose to highlight this one because it's the polar opposite of the previous sale and I think it's a good indicator of many sales to come for this property type in this neighbourhood. 

So what do you think? Can we glean any market tracking insights by comparing similar properties within the same neighbourhood? Can we use this kind of analysis to better judge market conditions or is this isolated sub-set just too small to get a true sense of market activity and value?

35 comments:

Taigaa said...

I have been doing this type of tracking for about 6 months for the neighborhoods and price ranges we are interested in. Here is my spreadsheet and summary. You can clearly see the average selling price above assessed dropping over the months. Hopefully the tables paste ok.

Areas: Cordova Bay, Mt Doug, Broadmead, Northridge, Royal Oak
Price up to $750k

Average Selling Price % above assessed # Sales
17.13% Nov-Feb 13
14.60% March 13
10.11% April 16
10.36% May 23
11.74% June 7
4.15% July 11

DavidL said...

In my Saanich West neighbourhood, the house next door was listed in mid-March 2010 for $540K. It sold two weeks later for $525K - which was $50K above the assessed value. A block away, another house (built the same year but with larger yard, and a larger and nicer interior) was listed on May 20th for $569K. The price has been reduced several times and is now listed at $515K - only $5K above its' assessed value. The agent has been working hard, with open house most Saturdays ... but it has now been on the market for almost 3 months.

Yes, I think this is a sign of the times. Within a few months, I believe that most houses will be selling below their assessed values (unless the assessment is exceptionally low).

I have a few friends who are currently trying to sell their houses. Even with price reductions, active marketing, etc. - they have had no offers.

Taigaa said...

Some recent actual sales in this area:

Address Area Assessed Sold Date % diff

945 Woodside Place Broadmead 676 670 28-Jul-10 -0.89%
5-4530 Pipeline Royal Oak 470 495 31-Jul-10 5.32%
535 Normany Royal Oak 490 549 30-Jul-10 12.04%
4253 Arbordale Mt Doug 576 615.5 30-Jul-10 6.86%
4218 Carey Northridge 397 384 30-Jul-10 -3.27%
1536 Palahi Mt Doug 556 668 26-Jul-10 20.14%
124 Goward Prospect Lake 607 640 9-Jul-10 5.44%
4362 Elnido Mt Doug 483 582 9-Jul-10 20.50%
729 Miller Royal Oak 418 424 20-Jul-10 1.44%
4358 Elnido Mt Doug 469 512 22-Jul-10 9.17%
4359 Cedar Hill Rd Mt Doug 501 600 24-Jul-10 19.76%
952 Falaise Broadmead 511 525 26-Jul-10 2.74%
5194 Lochside Cordova 641 591.5 6-Jul-10 -7.72%
1124 Temple Cordova 601 435 7-Jul-10 -27.62%
4209 Buckingham Mt Doug 482 520 5-Jul-10 7.88%
5008 Georgia Park Terr Cordova 692 655.1 6-Jul-10 -5.33%

markoj said...

Sales have really picked up in the last few days; we will certainly have more than 400 sales, and possibly 500+ for the month.

SFH sold average also rose today due to a 2 million dollar sale to $580k.

We will see what the rest of the month brings!

Marko

Alexandrahere said...

Marko:

My PCS must be lying to me. So far this week for SFH min 2 beds;2baths in the four core municipalities of Victoria, Oak Bay, Saanich (east&west) & Esquimalt with a price range of up to $775K:

NEW: 19
SOLD: 5
P/C: 17

Condo's same areas for the most part; min 2 beds 250K-675K:

NEW: 21
SOLD: 3
P/C: 12


HHV:

Hey! really glad to see that you are now looking at purchasing a SFD somewhere down the line and not a condo. I know that you will be much happier. Leave the condo ideas for your retirement years.

I'll sure keep my eye out for you. I am excited for you....you have been doing the right thing by waiting and I know its been hard... but the payoff is something that you will be grateful for for the rest of your life.

Phil said...

At today's insanely low interest rates it's still about $1000 more per month to buy one of those places than to rent it (not even counting maitenance,taxes or down payment!)

We have a long way to go folks. Likely a minimum of 5 years until renting and owning start coming back to traditional (investment/rental) values.

jesse said...

Phil, good to bring this up. What would the places highlighted by HHV rent for, or can one even find places like these to rent?

JustWaiting said...

MarkoJ said - "Sales have really picked up in the last few days; we will certainly have more than 400 sales, and possibly 500+ for the month."

Marko - My PCS accounts (over 600 listings) are not showing a big jump in activity this week. Sales should be somewhat better than last week which had a holiday in it.

Please don't follow in the footsteps of Fred Clowner :>) Please give some details to back up your 500 pending sales this month prediction.

How many Greater Victoria pending sales are you seeing for August 1-13?

bullbear said...

Agreed Phil, at least 5 years. If you average the last two centuries of world banking crisis recessions, the average takes 6 years from peak-to-trough for real estate prices. Hence, US could bottom 2012-13, Canada 2014-16. However, since we're now passing baby boomer peak spending (age 50) like Japan did in the 90's, we could easily replicate their 20 year experience of falling prices.

Marko said...

Fair enough, let us wait for the stats on Monday morning. I could be wrong.

Marko

Marko said...

PS...when I say picked up...I mean like break 400 for the month, still down almost 50% from last year.

Just Jack said...

By using a smaller subset, you are trading quantity of data for quality of data. The trouble is that in order to get a reliable estimate you may have to expand the date of sale to about a years worth of data.

Since prices have been relatively stable over the year, this should give you a good benchmark to compare the home you are looking to purchase to that of the average home. Then, all you have to decide is whether the home you are looking at is better or worse than the average and by how much 5, 10, 15 percent.

The problem with using assessment to value ratios is that you are relying on the opinion of person(s)from the BC Assessment and not knowing when the property was last inspected. And opinions vary from one person to another greatly. Since Victoria has had an explosion in home renovations, I don't find the assessment to value ratios to be reliable.

I think you could get a reliable and reasonable value estimate, by looking at the last sale of the most similar home in the neighborhood, even if the sale is a year old. All you would have to do is adjust for the date of the transaction. And this you could do, by comparing the average at the time of the last sale to the current average. To get a reliable average, I'd want quantity over quality, so I would use a short sale period but a larger geographic area of similar property types.

You can also get the sale price and date when the property you are looking at last sold from BC Assessment. If the property sold in the last decade and has not changed much, then by comparing averages or medians you should be able to get a clear picture of the property's worth today.

If you do all of the above, you should be able to reconcile both a reliable and reasonable estimate of the property's value.

Now if you do all of the above for sales over the last quarter and plot the data of house size against price, you will get a nice graph showing the price per square foot for homes. Then all you have to do is masterfully relate the size of the home you're looking at to the price per square foot graph - and bob's your uncle you've got an idea of the property's value.

DavidL said...

Just Jack: You raise many good points about flaws with reading too much into property assessments. All the houses ob my street were built between 1976 and 1979 ... in the past six years, about half of the houses have been resold.

When I compare my neighbours property values online (in January), the properties seem to be fairly assessed. Obviously one block of houses does not represent the entire market, however they are representative of the typical mid-market ($500K to $600K) single family homes in Victoria.

This is why I find it so interesting to see what what is happening to the real estate market in my "typical" neighbourhood.

Skeptic said...

Take a look at this CMHC 2010 mortgage survey click here

Some shocking stats in there but CMHC only sees things through rose coloured glasses. For example:

Survey results show that first-time buyers are educating themselves on various mortgage options prior to obtaining a mortgage. A large proportion research terms and conditions (84%), compare the costs of different interest rate scenarios (71%), and check for competitive interest rates (65%).

So... Over 1/3 don't check for the lowest interest rate on the biggest loan they will ever make!

According to the survey, a very high proportion of first-time buyers (90%) feel that they made their mortgage decision with a good understanding of the mortgage options available to them, 85% said they had a good understanding of how much mortgage they could afford before buying

So.. 15% did not have a good understanding of how much mortgage they could afford before buying!

90% of repeat buyers and 71% of first-time buyers used their own resources for a down payment

So.. 29% of first time buyers couldn't come up with a down payment. And 10% of repeat buyers couldn't afford to make the downpayment on their next home.

Skeptic said...

Jsan,

Saw your last comment in HHV's previous post. Great stuff. Please repost here so others don't miss it.

JustWaiting said...

Sometimes you burst out laughing when you read real estate advertising. Today was one of those days.

Times Colonist - Emergency Realtor Service - Call 24/7

Way over the top!

Alexandrahere said...

JustWaiting....that is funny. These guys never quit!

Alexandrahere said...

Quite a nice 1967 cathedral entrance style home in Lakehill sold for $475,000. It is at 4040 Hodgson. Good layout,(but only one bath up),with oak hardwood floors, three bedrooms, dining room and eat in kitchen. It is a bright home and could easily accommodate a bach or small one bedroom down. Maybe a similar home will go for $435K in another six months?

Leo S said...

Hey, it's an almost balanced article... http://www.cbc.ca/money/story/2010/08/15/home-sales.html

omc said...

Wow, things are getting a bit interesting as of late. There are 3 separate bear articles on real estate on the globe and mails top 10 read list right now. Houses selling in Oak Bay are now taking a kicking with 2096 Avondale selling for 80k under bc assessment. $645k for a big 60s house on a 1/4 acre in a nice neighborhood will drop kick the gordon head box market.

Marko said...

I still think we will get to 400 this month! Things did pick up a bit little last week, but as you can see by the numbers, it doesn't look good.

Month-to-Date Market Statistics
Posted by
Aug 16 2010
Monday, August 16, 2010 8:30am:

MTD August
2010 2009
Net Unconditional Sales: 186 764
New Listings: 477 1,094
Active Listings: 4,289 3,509

HouseHuntVictoria said...

Sales to new listings ratio is still below 40%.

Current mid-month sales to active listings ratio is 4%. By month-end it should climb to a whopping 9%.

Listings remain extremely high at 4250+.

Haircuts are everywhere.

Bear beers are definitely in order.

Alexandrahere said...

Good morning all: Here are my stats from last week 9Aug - 15 Aug.

SFH

Victoria,VicWest,Esquimalt,Oak Bay, Saanich East & Saanch West. Min 2 beds, 2 baths from $375K to $775K.

NEW: 23
SOLD: 10
PC: 21
OM: 12

The average selling price within the criteria was $550,800. The average original asking price was $587,300 so houses in this range sold for almost 94% of the original asking price.

Some notable sales were:

2170 Wenman 675K to 580K down 95K
2096 Avondale 750K to 645K down 105K

From the 10 sold listings, 5 had suites in place and 3 had "excellent" suite potential.

Condo's (apartments & townhouses)
Price range from $260 to $625K with a min. of two beds.

Victoria: most areas (not downtown)
OakBay: All
Esquimalt:All
Saanich East: Most areas
Saanich West: Gorge,Tillicum, & Interurban

NEW: 23
SOLD: 4
PC: 15
OM: 12

Of the four sales, one was a townhouse and three were apartments.

Rhino said...

We have completed 9 of 21 business days in August. Using Marcos # of 186 sales MTD, that would give a projection of 434 sales for the month of August.

Skeptic said...

Home buyers, especially first timers, often follow the herd. If they see a big slowdown in sales they head to the sidelines. What happens to the stragglers when they read today's headlines?

CTV news - House prices forecast to sink further

G&M - Canadian home sales sink 30%

Financial Post - Housing market feels impact of HST introduction

NewVicResident said...

It is true that we are 9 of 21 business days in to the month, but it won't be a constant number of sales per day. The beginning of the month is always "top heavy" because of the hangover from the previous month. It will be interesting to see how the rest of the month goes, and then how Sept starts (most likely having a smaller hangover from August then August had from July).

Skeptic said...

A Nobel-Winning economist says Canada cannot afford to be complacent about economic turnaround in face of bleak global conditions

G&M - Krugman warns Canada not immune

Canada's shining bank regulatory system cannot be counted on to shield the country from an impending economic buffeting, renowned U. S economist Paul Krugman told the Canadian Bar Association on Sunday.

Mr. Krugman said that Canada cannot be complacent in the face of disturbingly bleak global conditions, because Canadians spend too much relative to their household incomes and the country's housing bubble has yet to burst.

“Canada is by no means insulated,” he said. “Canadians borrow an awful lot. Savings rates have been very low. Household debt relative to income is very high here.”

DavidL said...

Rhino said: We have completed 9 of 21 business days in August. Using Marcos # of 186 sales MTD, that would give a projection of 434 sales for the month of August.

With prospective buyers on summer vacations or getting their kids ready for "back to school" in September, I suspect that the majority of the RE sales that will occur this month have already happened.

Skeptic said...

I see the housing market discussion is heating up again over on Kids in Victoria.

One of the posters over there named "Marthy Mommy" was good enough to quote me in her recent post. I want to thank her and hope that she posts some of the news articles that I referenced earlier this morning. The readers over there should see what is happening to the real estate markets across Canada.

Here is some info about what happened last month in Victoria ...

1. July sales were down 44% from July 2009
2. July sales were down 16% from June 2010
3. In July average prices dropped in all housing categories.
- houses were down 5.3 % in one month
- condos were down 2.5% in one month
- townhouses were down 2.1% in one month

Skeptic said...

Tony Joe, former VREB president and RE pumper, maintains his positive attitude...

Tony on Facebook

Interesting to hear that some buyers and sellers are unfazed by recent "media sensationalism". Maybe they don't read the paper or watch TV :>)

Funny thing about the media. Just a few months ago they were the realtors' best friend.

Just Jack said...

Where have all the 'buyers' gone.
-as song by Peter, Paul and Mary


The numbers may stink for real estate in Greater Victoria - but they are far worse when you break the areas down.

This Monday, Greater Victoria had a 6.3 month supply of homes and 7.3 month supply of condos for sale. But, its NOT evenly spread out through the areas. The central core municipalities are swallowing up most of the buyers, while the outer districts have left on a jet plane back to Alberta, never to come back again.

The Westshore has 12.75 months of house inventory and an average 58 days on the market. While the city dwellers are oblivious to the changes and merrily smoking "puff the magic dragon" Even when you take out new housing, the Westshore looks like 500 miles of bad road with only 36 homes sales in the last 30 days as compared to 440 listings in the Westshore. So its best not to have a hammer these days.

And I'm not just blowin in the wind. Cause these times are a changing and you can go and tell it on the "Bear" Mountain. As most people are soon to realize this land is "not" your land - but the banks.

Double-Agent said...

Just Jack - That was a great post. Thanks for the laugh!

Marko - You beat me to it this morning. Here are some of the graphs we prepare in our office every Monday.

Sales for the last week jumped to 108 from the anemic 78 in the first week of August. click here. You can clearly see that sales are below July levels. Sales can vary from week to week so we calculate a rolling average based on the last 4 weeks of data. The current level sits at 113 click here. Extrapolating we should probably see about 420 sales for August. This is the worst level of sales in this decade!! click here

New listings are on the usual, seasonal downtrend. Active listings have dropped slightly but remain stubbornly high. click here

Sales ratios can tell a lot about a real estate market. The overall months-of-inventory (MOI) has been climbing over the last year and will probably be close to 10 by the end of the month. click here

Prices are already dropping and I suspect this trend will also continue in light of all the recent media attention.

think said...

Doing the bear dance :) Great posts! Thanks for the graphs and excellent information again Double-Agent. Correctly interpreted stats really tell the story clearly. To sum it up - the market is falling and will continue this trend for many months to come - as it should.

Double-Agent said...

Think - Thanks for the encouragement.

In the real estate business you see all kinds of sellers but they fall into two groups. Those who want to sell and those who need to sell. The latter have a big effect on market prices because they need to unload their property. This is especially true in a downward market.

Here are some examples - military families that have to sell because they are transferred.

Selling condo below cost - click here

House for sale - must sell - click here

Unfortunately realtors that advertise like this do their clients a disservice. They invite vultures and lowballs. If they put the price slightly below market value it will sell and the the owner will get more for their property.

Alexandrahere said...

Hey Jack: I'm a lovin your posts. Oh, do you remember the bet?