Monday, June 13, 2011

Monday 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.

Month-to-date June 2011 (last week's numbers in brackets)
Net Unconditional Sales: 225 (93)
New Listings: 590 (263)
Active Listings: 4,742 (4,651)
Sales to new listings ratio: 38% (35%)

June 2010 totals
Net Unconditional Sales: 625
New Listings: 1,503
Active Listings: 4,730
Sales to new listings ratio: 41.5%
Sales to active listings ratio: 13% or 7.5 MOI 

Sales volume remains low, though activity picked up week over week. This is of course, relative; 2011 looks to be trending towards the volume lows of 2008, why reported average prices haven't dropped yet is determined by product sales and is bouyed by higher volume activity above the median rather than below. The median average price is more indicative of the true state of the market values of Victoria homes, and it's declining.

30 comments:

dave said...

Thanks for the numbers Marko. The TSX looks like it's falling under 13000 again? New low for the year. Last time we were this low was last Fall. Who would have thought.

Just Jack said...

Interesting sale on Howe Street, less than a dozen doors from the waterfront in Fairfield. It looks like a nice 1991 built home that just sold for $740,000.

Assessed at $823K.
Listed for 60 days at $839K

Last purchased November 1998 for $353K. That's an increase of 110 percent.

Yet, the median price of home in the core has risen from $226,500 to $600,00 or 165%. That would make this home about $935K. Which seems reasonable in light of the old crappers that have sold recently in the neighborhood and near the waterfront.

The home doesn't have an interior suite, but it has a newer detached garage which, given the crazy suite policy in Victoria, might be converted to a detached suite.

This sale probably made the neighbors crap their pants. I would expect a lot more listings coming up on this street as the neighbors bail out of the market.

Alexandrahere said...

Good morning all. Here are my stats for the week of June 6 - June 12:

SFH: Min 2 beds & 2 baths, priced between $375K and $775 in the core areas of Victoria, Oak Bay, Esquimalt, Saanich East & Saanich West.

NEW: 54
SOLD: 21
P/C: 33
OM: 15

Avg Selling price: $560K
Med Selling price: $560K

43% of the houses sold came with a secondary suite and 33% of those sold went for below BC assessment.

Condos and townhouses: Min 2 beds & 2 baths, priced between $250K & $580K in Most areas of Victoria (not downtown), most areas of Saanich East, all areas of Oak Bay and Esquimalt and Gorge, Tillicum and Interurban areas of Saanich West.

NEW: 33
SOLD: 14
P/C: 21
OM: 6

Avg selling price condo: $370K
Med selling price condo: $382K

One townhouse sold for $475K

5 out of the 14 condos sold went for below BC assessment.

The average prices would have been lower except there were three condos sold in the still to be completed complex in Esquimalt. Three of them sold for asking prices of $425 & $420K. They will all be on the top floor with views and are under 1000 sq.ft.

Alexandrahere said...

As far as investments are concerned, what do people do right now? The stock market is slipping badly everywhere, real estate is flat and or slipping, and the best GIC rate around is 3.15% for a 5 yr term.

omc said...

I don't think you can tell an awful lot about a house from just the listing. I personally didn't see that house on Howe st, but I had a friend describe it as "really bad, like a leaky condo". I didn't ask for any more info as I am not interested in Fairfield.

There was another strange sale I noticed last week; 2660 MacDonald in Queenswood. This one has been on the market forever, before selling at $210k below assesment.

JustWaiting said...

Here are the stats for the period June 6 - June 13:

- 270 Price changes
- 128 Pending sales
- 63 Canceled listings
- 57 Expired listings
- 322 New listings
- 12 Back on Market
- 4,742 Active Listings

For the period May 29 - June 5:

- 259 Price changes
- 128 Pending sales
- 73 Canceled listings
- 163 Expired listings
- 362 New listings
- 17 Back on Market
- 4,651 Active Listings

This is not looking good for sellers for the following reasons:

- Active listings are still climbing
- For every sale there are 2.8 new listings (S/NL = 35%)
- There are 2 sellers dropping their price for every pending sale

Just Jack said...

Another interesting sale this month was on Avebury which sold for $737,500. We looked at this house back in May 2005 when it was bought for $600,000. An increase of 23 percent from the original purchase price.

I couldn't bring myself to pay that kind of cash for a home in Fernwood back then and I thought it was overpriced by close to a hundred thousand back then when median prices for homes in the city was $420,000. Since then homes have increased 43 percent, so I guess I was right in not buying at an over inflated price back then.

By overpaying in 2005, the sellers left close to $85,000 on the table in lost opportunity.

My desire for old character homes has lessened in the last few years, so I would probably pass this one by today.

dave said...

Alexandrahere,

If stocks & real estate fall in half next 5 years, your 5yr GIC at 3.15% is really returning you 103.15%. You should enjoy doubling your money compared to a neighbour who's buying negative cash flow properties that will soon be worth half.

Fiduciary said...

Not to get too off-topic, but for investments I'm staying with my Couch Potato Portfolio. Mix of index funds covering domestic and international stocks and bonds. Rebalancing once a year means I'm forced to buy low and sell high, and when something goes down I just buy more of it to take advantage of dollar cost averaging.

Sweetrealtor said...

Been quite busy lately so haven't been visiting the blog lately. Hope I haven't missed much.

I've sold 5 properties in the last month. 4 buyer deals, 1 listing sold, and other offers that didn't gel.

One buyer purchased a 1913 home for 465k. Original listing price 539k, assessed at 511k. Amazing potential for this house. Interior was tired and dated but this wasn't your typical run down fixer upper. It is in great shape.

Another buyer purchased a 2 BR/1 BA condo in Fairfield for 250k. Original listing price 285k.

Another buyer purchased an old house in Esquimalt, stone's throw from the ocean with amazing views. Great piece of land and lots of potential for the house. 515k sale, 505k assessed. House needs 60k in improvements but this still rates as a good buy for someone holding onto an almost waterfront property for 10 years or more.

Now I'm working on a sale of a 2005 built, 5 BR, 3 BA home, for 18k below assessed value.

Buyers can get some good deals. Still lots of crap to sort through but this just makes the gems stand out like diamonds in the rough.

Robert Reynolds - HMR Insurance said...

@alexandrahere

Boring investment advice.

#1 Dollar Cost Average, drip money in regularly, when markets fall, you buy more for less. When markets come back up, you are way ahead.
http://imgur.com/Fi8qH.png
Even though most of the year the market was way down, after 12 months it was up only 10%, you have actually made 21% ROI over that period.

Furthermore, if you just look at the point where the unit price comes back to the starting point of $10. You are actually up 13% even though the market is at exactly the same point.


#2 Dividend paying funds, again, if markets fall you are still getting paid, and once the fund comes back up to even you are ahead of the game.

Do both, you will be fine.

Shameless plug
www.hmrinsurance.ca

Fiduciary said...

Great advice Robert. It's not what everyone wants to hear, but it's good advice. If the long term goal is to get rich slowly, this is the way to do it.

dave said...

I wouldn't be dripping money into stocks near a cyclical top. I have a good friend who sold all his real estate in 2007 and dripped his proceeds into quality dividend payers over the following year. He told me last month he finally recouped his losses thanks to the high dividends of some of his holdings. He said he would have been better off in GIC's over the 4 years. I'm sure he's now negative after the market's performance last month. Something to think about.

Alexandrahere said...

Thanks Robert Reynolds for the advice. I have been very fortunate and I sold my principle residence (in Esquimalt (Jack) ) for $700K early in 2008. Later I sold my last income property at a very good profit. Ended up getting an older condo (1300 sq ft) with fantastic floor plan in Fairfield for well under 300K. I spent about $38K on a total reno. I got out of the stock market (stocks, bonds, and mutuals) in late 2007. So now I have most of my investments in GICs earning an average of 3.75%. Although did buy some bank dividend paying funds last November. Needless to say, on these I am considerably down. But, as you say, I still buy a certain amount regularly each month and so this month on the 15th, I will be paying at a more reasonable rate.

Fiduciary said...

Dave,

There are definitely periods where the strategies Robert & I are talking about don't work as well as if you'd put all your money into the one sector that will do well, but it skirts around that nasty problem of predicting the future. The studies I've seen show that the majority of people, especially professionals, that try to "time the market" end up doing worse than if they'd just done the same thing over a long period and let the gains of the market over time do their thing. The idea is to invest in as wide a swath as you can, simply (index funds are great for this), and then the only way you really lose over the long haul is if we enter a lost decade or two, and even then it's not all lost because you have some bonds and/or dividend paying stocks.

So I agree, dropping money into stocks at a cyclical top is a bad idea, however I'd rather do that than make a big gamble trying to predict that top and getting it wrong.

Just Jack said...

I think anyone who has sold their real estate in the last three years and invested the money elsewhere is doing better than having remained in the housing market.

The older condo's are nice and big and can be upgraded to a very nice standard, the problem is age and pet restrictions.

And, I was cruising around Esquimalt a couple weeks back and the prices are incredible. The poor people's homes along Lyall are going for around $400,000 now.

I remember my Esquimalt neighbors having difficulty making their monthly payments when they owed a hundred fifty grand, back when interest rates were 9 and 10 percent.

Happy as hell to be a renter these days.

patriotz said...

alexandrahere,

Where you should invest your money depends on what time frame you are going to need it in.

For my RRSP I follow the same approach as Fiduciary, index funds and bonds which I rebalance when appropriate. Long term that's going to get me a lot more than GIC's.

If you are saving for a house that's another story. Problem is that both stock and bond prices are correlated with house prices. Which means that when it's a good time to buy a house, it's likely to be a bad time to sell stocks or bonds.

So I wouldn't recommend anything other than GIC's or equivalent for such savings.

Fiduciary said...

You know I'm actually in the same spot about what to do with the savings I have put aside for a down payment. I want the liquidity to cash it out in less than two years in order to buy a home (assuming the market turns in the next two years), but a two year GIC rate is pitifully low. Right now I'm leaning towards an ING account and just having it build interest, although that's really low too.

The strategies I spoke about above are really for the long term. Anyone have good advice for the short term, low risk investments other than GIC's or high interest savings/RRSP accounts?

At least this ties back into real estate a bit. =)

JustWaiting said...

Here are a few recent haircut sales...

Original list price followed by sale price

2083 Windsor in Oak Bay - 1.175M for 1.005M. - 175K drop

821 Rogers Way in Saanich East - 847.9K for 785K - 62.9K drop

57 Howe in Fairfield - 839K for 740K - 99K drop

1535 Richardson in Fairfield - 929K for 850K - 79K drop

11-3281 Maplewood TH in Saanich E - 559K for 510K - 49K drop

5360 SAYWARD HILL in Saanich - 1.15M for 1.0325 - 117K drop

reasonfirst said...

I'm doing ING for my down payment. I look at like "dave" does - real return when compared against house prices.

nan said...

1. Dollar cost averaging has been demonstrated to be no more effective than random investing. I believe the study was published in Jason segals book" stocks for the long run. The key is putting more in, timing amounts in not effective.

2. The only suitable short term investing strategy at the momentin my opinion is to either hold cash or short term bonds or a combination of both. Remember- the further out a bond matures, the harder it gets hit if interest rates go up. Real estate and stock market are both due for corrections. Don't listen to Garth.

Alexandrahere said...

fiduciary: if you are going to "park" your money, I would suggest using Ally. They are paying 2% on daily interest savings visa ING paying 1.5%. Just a thought.

Just Janice said...

160 Beach makes me go hmmmm.....
My general thoughts are that a million bucks will get you more in November than in June.

Marko said...

2%? Why just not buy a mix of a telecom, bank, TRP or another CND dividend paying combo?

Robert Reynolds - HMR Insurance said...

More crazy boring advice

safe as a gic
cashable any time
comparable or slightly better ROI than a gic

http://www.globefund.greatwestlife.com/gishome/plsql/gwlpsf.fund_pro?fundname=GWL+Government+Bond+(G)+NL&pi_universe=GWL_GWLIFE&product_id=

there are options with lower fees but I can't sell/recommend them for licencing reasons :/

Canadian govt bond funds are what I recommend as one step more agressive than a GIC

ROI is "slow and steady" if that's what your after.


I am personally invested very agressively. Canadian equity (resources), Asian equity, Health Care.

I also use Seg funds which have capital guarentees which make the risk a little lower (and I am licensed to sell, I don't have a mutual fund or securities licence)

nan said...

@ Marko: because systemative risk is just that : systematic.

Check out the schiller PE 10 - @ somewhere near 23 times inflation adjusted earnings. Stocks have been as expensive as they are today(http://www.multpl.com/) 4 times: leading up to Black Tuesday in the 20's, the mid 60's before almost 20 years of reversion to the mean, the dot.com bubble & the real estate bubble.

If your saving for anything other than retirement, a stock based investing strategy is a suckers bet today, the same way as is investing in Canadian real estate - the fundamentals are pointing to disaster.

The greatest increases and decreases in stock valuation come in times of PE multiple compression or expansion i.e. changes in what people are willing to pay for earnings- rather than expansion or compression of actual earnings. For the most part, it is the expectation of profits, not actual profits that drive capital growth. (sort of like real estate)

If the expectation about future profitability tanks, which many feel is expected at these valuations, (especially with China on the brink of disaster and given the emerging trend for Western consumers to not consume) it doesn't matter how good a deal you think your buy is compared to evertything else. When expectations about future profitability revert to the mean, so will the PE multiple. It will take a while to recover a 40% capital loss with a 4% dividend...

I guess there is always the argument that inflation could eventually justify stock prices, but given the high level of debt in the western economies, this is highly unlikely.

Rhino said...

http://www.theglobeandmail.com/globe-investor/markets/markets-blog/interest-rate-increases-delayed-again/article2060038/

interest rate hikes: NOT coming soon to a theater near you

Robert Reynolds - HMR Insurance said...

@nan

I expected this dip, and expect a bit more yet to come. But I don't try to time the market. I am going to keep chucking money from each paycheck into my savings regularly.

As far as a "systematic top" I would say that was 2007. After the crash in 2008, and the subsequent phenomenal recovery in the stock market, I am betting with the Feds. No matter how bad the crash, they will inflate their way out of it no questions about it. Just look at all the bailouts, QE1, QE2 talk of QE3, low interest rates etc.

Dollar Cost Averaging, dividend paying funds, occasional re-balancing, Segregated Fund guarantees.

I'm not worried.

nan said...

@ Rob:

It's not about timing the market, it's just about buying something when it's a good deal versus not buying when it isn't.

The chances for long term capital appreciation are far reduced when you buy when valuations are as high as they are now.

That being said, the Fed couldn't inflate their way out of the mess even if they wanted to. 95% of the money supply in the western world (and hence, demand) is based on credit, not cash. What effect will doubling or tripling the supply of cash flowing around have? It will increase cash to 15% of the total "money". Big deal.

Besides, the US Debt ceiling is already maxed - they're already broke and they have to borrow from the Fed before they can buy anything, so I wouldn't count on more "money printing" - Bernanke doesn't know what he's doing and Congress is beginning to see the light.

A 50% credit contraction on the other hand will reduce demand by half, and the government can't control this. If individuals and banks feel that lending is risky when compared to reward, they will either command higher interest rates or not do it. Look at US Real estate. Rates are Zero, and people still won't buy. Why? because all of a sudden there is a real risk of loss.

A decrease in the willingness of banks to lend will have a far more profound impact on demand (and hence profits) that printing money ever could.

DavidL said...

There's lots of debt in the world, and you can bank on governments and consumers continuing to spend more than they can afford. Back in February, I moved a lot of money from low-MER index funds to low-MER bonds.

My favourite: Beutel Goodman Long Term Bond Class D (MUTF_CA:BTG871) Over the past few months, the dividend has dropped from 6.25% to about 5.50%, but the selling value has increased by 4%.