Monday, February 28, 2011

Frothy February

Here's your February market update, MLS numbers courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands. These numbers are not the official February totals, which should be released late morning March 1, 2011.

UPDATE: I've updated the numbers below with the official data wherever possible.

Month to date February 2011, last week's numbers in (brackets)
Net Unconditional Sales: 488 (315) +
New Listings: 1,276 (919) +  357
Active Listings: 3,714 (3,526) +188
Sales to new listings ratio: 38% (34%)
Sales to active listings ratio: 13% or 7.6 MOI approximated (8% or 8 MOI approximated)

February 2010 totals 
Net Unconditional Sales: 621
New Listings: 1,460
Active Listings: 3,280
Sales to new listings ratio: 42.5%
Sales to active listings ratio:  19% or 5.3 MOI

Two things stand out for me in these numbers:
  1. Prices won't be falling in February. Despite a significant drop in sales volume (25% or more), the lack of new listings volume doesn't put enough pressure on the marketplace for noticeable price drops, yet, though it's definitely building.
  2. Sales built consistently as the weeks of February went by. Especially in the entry level SFH category. This is in harmony with what we expected considering the coming mortgage rule changes. I expect this category of housing sales to be short lived into March. 
If this was the sales flurry that all the pundits predicted would be brought forward by the CMHC mortgage rule changes, then the bears have dodged a bullet. You can expect the usual suspects to be absolutely ecstatic in the media tomorrow, but the truth is these numbers have to be disappointing for everyone. Sales volume is down, but the listings volume is down too, almost one for one.

That said, it's obvious from our weekly updates that sales volumes didn't meet expectations and the "mad rush" to get in before the 5% down 35 year amortization buyer crowd became priced out forever was short and underwhelming (but not over yet).

FURTHER UPDATE(s) yes I've since added to this...
The spin doctors are in high gear over at the VREB and they didn't even blame the weather.  Apparently, the sales volume drop can be explained by saying something that isn't true:
Fimrite added that although February’s sales were below the sales totals for February of a year ago, the beginning of 2010 was marked by an unusually strong market that softened as the year progressed .

2010 wasn't "unusually strong" it was actually normal. See for yourself:

Here's the truth:

Percent changes YOY
Net Unconditional Sales: - 22%
New Listings: -23%
Active Listings: + 13%

Percent changes MOM
Net Unconditional Sales: + 31%
New Listings: + 8%
Active Listings: + 12%

Listings aren't jumping very fast for this time of year. I think it's safe to say potential sellers aren't showing a marked increase in confidence in the market right now. OMC in comments says we're experiencing normal new listings volumes for this time of year. When I use the 2010 experience as "normal" we're not, but when you dig back a few years, it's obvious we are. 4500 total active listings by the end of April is definitely within sight, and that's high volume.

This line of spin we're being force-fed that low sales volume is indeed normal isn't even true when you go digging back to the 1990s. Take a look:

When looking at these numbers we need to realize that the number of dwellings and the number of people have grown exponentially in Victoria since then. Obviously the market in Victoria in the early 1990s was very hot, even when we compare it to the 2002-2007 period of craziness. It was actually more active, but those sales represent higher per-capita and per-dwelling sales activity than current numbers do. In other words, 488 sales in February 2011 is a substantial drop in market activity from 488ish sales in 1996.  


omc said...

I remember last year having the feel of the top of the bubble. There was a rush to come to market before spring to sell before the prices dropped. A couple of friends that were selling houses actually told this to me. The # of new listings this year feels more normal to me. We still have more active listings, but many of these are less desirable and overpriced from last year.

The spring will be interesting to watch, not buy. Sellers are extremely slow to react to dropping prices.

snap said...

Does the newer PCS system not show properties that have been sold and for how much?

The system a realtor set me up on ( seems to remove a listing once it has been sold.

Marko said...

The realtor has to select "Pending" homes as well - than you can see what they sold for!

Marko said...

Tuesday March 1, 2011 8:00am:

Feb Feb
2011 2010
Net Unconditional Sales: 488 621
New Listings: 1,276 1,460
Active Listings: 3,714 3,280

Please Note

Left Column: stats for the entire month from this year
Right Column: stats for the entire month from last year

a simple man said...

omc - you rocked it with a guess of 490 - only 2 sales off.

Honourable mention to Leo S who predicted 500 from the start of the month.

a simple man said...

When does Double-Agent return from his holiday down south?

I miss his graphs.

Waiting said...

@snap I have to mark things as possibilities and then it shows them when they are pending in the possibilities tab. I mark them all and then I can watch what is selling and for how much. If I just leave them in the listings update section they vanish as soon as they are pending.

a simple man said...

and I just put them all in the discard section and all the pendings and sales show up for me there.

Marko is surely right - that the realtor has to determine how much data to show you.

Leo S said...

Double agent said he would be gone until April.. Still a while off!
Did anyone know who he was?

738 sales last March.. Who's up for a guess on this year?

Waiting said...

621 for March

a simple man said...


Just Jack said...

I think most of the people on this blog are looking at the Victoria proper market, so let's take a deeper look into the sales from Burnside to Rockland.

Last February the city had 26 home sales that ranged from a low of $350K to 1.7 million. From the small home on a small lot where the kids play darts with syringes to big homes on big lots and you can watch the Lt. Governor take a shower in the morning.

That's a bit of a wide for any real family. So why not look at properties that fit the typical Canadian family mold and limit the home size between 1500 to 2500 square feet and the lot size from 4000 to 8000 square feet. Then the number of sales drops to 10 and range from $485K to $682K with a mid-point at $572K.

In my opinion, that's typical middle income family territory for a home. And I find Fernwood and Fairfield being the hot spots. Property values in Fairfield being very slightly higher than Fernwood for the typical Ma and Pa Kettle home.

Traditionally, the price difference between these two area had been significant. So did Fairfield drop in popularity or Fernwood become more desirable or a combination of both?

Nope, the neighborhoods haven't changed. What has happened is that Fairfield reached a price ceiling and prices flattened out. People poured into Fernwood who's first choice was Fairfield but were priced out. And Fernwood prices rose to almost match Fairfield for the typical property.

The important part to all of this rhetoric is that, in my opinion, Victoria has a price ceiling around $625K for the typical middle income family. That's it. Our prices are never going to a million for the average family at the current interest rate, amortization and lending guidelines.

So what happens next?

As prices get too expensive, people chose less desirable areas and drive those prices up to or near the price ceiling. The number of sales decline as the pot of middle income buyers is drawn down. Price compression happens where 20 grand more gets you a substantially better home and it seems that most homes are listed close to the same price.

The market has become shallow and dysfunctional and the market has to correct to bring back the proper balance between neighborhoods and types of houses.

And that's where we are right now, on the precipice looking into the abyss.

Leo S said...

So 20% fewer sales and flat prices..

How anyone could argue we're going to be up 7% in sales over last year when we start the year off down 20%, with every single indicator being dampening factors on the market for the remainder of the year is beyond me.

Looking at the Vancouver market though, it's just insane. Glad I'm not a bear in Vancouver.. Their prices rose 15% in the last 6 months of 2010. Crazy.

Just Jack said...

I wonder what Cameron Muir thinks of Bear Mountain?

With slightly over 10 months of supply and the average days on market stretching into 60 plus, I wonder how long it will take for prices to crack.

Wait, they already are...

Like the recent sale on Alton for $538K down from the original purchase of $545K in May 2007. or the sale on Nicklaus at $854K down from the original purchase at $883K in September 2007.

That's a roll back in prices of almost 4 years or the time to get a degree in engineering or 35 real estate agents to consecutively get their licenses.

Just Jack said...

I know there are a lot of reluctant people not willing to leave their 1940's Fernwood box, but man there are some nice deals out in Metchosin. Like the one that just sold on Rocky Point road. Big 3,600 square foot house on 1.5 level acres for $595,000 The vendor bought the property almost 3 years ago for $569,000 when the average Fernwood home was $70,000 less than today. Seems the property ladder for them turned out to be a step stool.

So today you could almost evenly swap your Fernwood home with two main floor bedrooms and free basing basement tenant for the bigger house and acreage in Metchosin where the stallions and mares lope past your breakfast french doors, and the softly fluttering wings of humming birds awaken you each morning as the golden arms of the early morning sun embrace you. Or as a boom car rolls past your Haultain home at 6:00 in the morning.

Your choice.

Marko said...

"So today you could almost evenly swap your Fernwood home with two main floor bedrooms and free basing basement tenant for the bigger house and acreage in Metchosin where the stallions and mares lope past your breakfast french doors, and the softly fluttering wings of humming birds awaken you each morning as the golden arms of the early morning sun embrace you. Or as a boom car rolls past your Haultain home at 6:00 in the morning"

Or you could walk everywhere, have a suite rented for 16 years with only one month vacancy - currently rented by two phd Uvic students (my parents' case), have your kids walk to Oaklands, Lansdowne, and Vic High instead of having to drive them for 12 years.....each to his own but there are some huge ups to living in Fernwood as well.

If you work from home and don't have kids - Metchosin possibly makes sense.

Nampa said...


I've enjoyed stumbling upon this blog. I currently own in South Oak Bay and am considering selling as I am worried about a potential crash later in the year. I believe I can pocket a profit. What are your thoughts on this? Are the house prices going to tumble later in the year, or is South Oak Bay immune to such events? I would appreciate any feedback.

Marko said...

The cost of the sale will probably be around 3.5% including lawyer fees etc. When you go buy again you are looking at approx 2% property transfer tax. To make it worth while you need to sell now and hope the market drops 10% or more.

omc said...


That is purely up to you, as no one truly knows what the future will bring. As Marko has pointed out, you need 10% just to make it worth your while. Most of us think this will happen, some think way more, and some think a slow drop for many years to come.

I guess it comes down to if you would want to buy your own home back again, or if you want something else. If you are wanting to move, selling now and waiting makes sense. If you like where you live, I wouldn't bother.

Oak Bay is not immune, prices are already down from the peak.

omc said...


Do you have quick access to the # of new listings for the last few years. I don't think that this Feb was particularly slow for new listings.

Just Jack said...

You have to ask yourself.

Am I using my home to finance my current lifestyle and/or future retirement?

Or is it a place I hang my baseball cap or in the case of Oak Bay your Derby.

If its the latter then it don't matter. Unless you don't like south Oak Bay anymore and want a change.

If you're using the home as an ATM machine and carrying a lot of debt, then you might want to do some serious planning which might include downsizing, moving farther from the core areas or even renting. Then diversifying your real estate winnings into financial instruments that pay you rather than you pay a mortgage.

The nice thing is that you have choices today. If the market goes into a spin, you may start to lose those choices, especially if you end up owing more than the property is worth.

Because the price of assets go up and down, but the debt endures.

Oak Bay can't be immune to price drops. Because Oak Bay is not a market by itself. Oak Bay is part of the residential marketplace. It is just one spoke of the many that keep the wheel on the residential cart.

Other spokes are the many surrounding districts as well as different types of ownership such as condominiums and townhomes.

But being in South Oak Bay, the odds are in your favor and time is on your side. As Oak Bay would typically experience price drops after Fernwood and Fairfield. So, you should have lots of warning before the wheel falls off the cart.

All bets are off if you own waterfront or if your Len Barrie.

Dave said...

Few days old but interesting theory once again from the Planet Money blog that may be applicable to Vic.

The idea is that prices in the US are likely to fall further because of the glut of homes on the market.

A Columbia Business School real estate professor studied the Boston condo bubble from the '80s and found that those who bought at peak were much more reluctant to sell than those that had bought before.

The thinking is that people's loss aversion caused them to list at stubbornly high prices. Sounds very familiar to the Vic market as Just Jack has been informing us: lots of listings at high prices.

"But this psychological quirk is also slowing the healing process. It makes people reluctant to lower the asking price on their homes, which in turn contributes to the glut of houses on the market."



Just Jack said...

Hey Marko, sorry about dissing the hood, but Fernwood is a good example of what is going on in general in the marketplace.

In 16 years, Fernwood has improved greatly when drugs were dealt openly by the old laundry mat on Haultain and where you could always find a couple of winos in the summer under the apple tree. Of course on the other side of Bay street, things still need improving - there are a lot of whack jobs around those apartment buildings on Spring Road.

Of course Fernwood is eclectic. From the "bubble man" to the City Mayor and all types in between. I mean where else would the manager of a daycare, protest the government by sleeping in a tent on top of the Fernwood Daycare.

Fernwood is a "blue collar" neighborhood it always was and it always will be. A trendy bar and a couple of coffee shops won't change that. Fernwood is like a pair of comfortable torn old shoes. And I think its one of the better hoods in the city. At least now with the Mayor living here, I don't have any pot holes on my street anymore. Now if I could only get my 70 year old neighbor to wear a shirt when she's mowing the lawn.

think said...


I've put data on a graph for the past few years - so these are estimates (may be off by 10 or 20 units but not much)...

Feb 2008 new 1268 sales 619 sell/list ratio 48%
Feb 2009 new 1100 sales 403 sell/list ratio 36%
Feb 2010 new 1460 sales 621 sell/list ratio 42%
Feb 2011 new 1276 sales 488 sell/list ratio 38%

... I think prices will slide this spring and summer, the trend I really watch is total active listings and we are up to 3714 now from 3283 in Jan - and that is climbing quickly. If we keep adding listings at this rate we will be well over 4500 by the end of April - and thats going to put downward pressure on prices for sure, especially if sales stay as pathetic as they are.

Nampa, I sold my house in Oak Bay and I'm stepping out of the market for a while - a price correction is well overdue.

Waiting said...

@Nampa....tell me about your home...I'm looking for a house in Oak Bay

omc said...

Thanks think. I was kind of expecting that; we are not experiencing low levels of new listings, they are in fact normal. What is out of the ordinary is the low sales and high level of active listings.

Just Jack said...

Another point why Fernwood is Crazy person land.

An old timer home on busy Fernwood road just sold for $55,000 MORE than a 1986 built home on a quiet street of similar well built homes in Sunnymead.

That's $675,000 for Fernwood Road. I think I just saw a pig fly by my window.

Nampa said...

Thank you for the information all. I enjoyed reading your comments. I think that I have a fear of a very serious correction. But again, who can predict the future.
@Waiting - It is a beautiful home on Hampshire, a few blocks to McNeil Bay. I've had a few Realtors value it at around 739,000.

Waiting said...

Would love to hear more. I grew up on Hampshire actually! If you are serious about selling at some point you can email me at

Robert Reynolds - HMR Insurance said...

FYI my parents are looking to sell in South Oak Bay.

Newport Ave and Central
3 bed + den, 2.5bath
full developed basement
hardwood floors, granite counter-tops, character, etcetera... etcetera... etcetera...

Maybe I can get a finders fee LOL

In all seriousness I really want to thank HHV for the avalanche of new posts the last few weeks. I, and I'm sure the rest of the lurkers, really appreciate the posts. Keep it up.

a simple man said...

second that - thanks HHV - your last post before this was mentioned on the greaterfool blog numerous times. Great posts.

Olives said...

EVERYONE knows that only Fairfield is insulated from price drops.

a simple man said...

Olives - you are right - so everyone should buy there and not even think about buying in Oak Bay! Too risky.

Olives said...

Well either Fairfield or Fernwood - I hear they have flying pigs there.

Waiting said...

@nampa should have been not .com Blonde moment.