Thursday, September 1, 2011

August sales, a modest bounce

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.

August 2011 (weekly in brackets)
Net Unconditional Sales: 542 <469> {354} [236] (116)
New Listings: 1,200 <1,056> {845} [595] (296)
Active Listings: 4,944 <4,811> {4,821} [4,843] (4,783)
Sales to new listings ratio: 45% <44%> {42%} [39%] (39%)
Sales to active listings ratio: 11% or 9.1 MOI

August 2010 
Net Unconditional Sales: 425
New Listings: 956
Active Listings: 4,356
Sales to new listings ratio: 47%
Sales to active listings ratio: 9% or 10.25 MOI

If you compare the year-over-year numbers, we're looking at a sales volume gain of nearly 22%. Month-over-month, we're looking at a modest gain of only 2.8%, or basically a flat market. It's interesting that over the first 28 days of the month, daily sales volume was about 16.5 units; then suddenly in 3 days, we see a "spike" to 24.3 units per day. Strange.

The SFH average reported price will be in the $650,000 range. I think happy hour will start around 11:30AM for the communications team, along with their friends at the TC, today. These are the kind of days they live for: press releases like the one you'll see in about 3 hours time write themselves and require no editing. Just cut, paste and hit Upload! Badaboom badabing, now we're drinking pints on the patio in the summer sun. And it's only Thursday before the long weekend.

Truths. Much needed but rarely told in the Victoria real estate market.  

38 comments:

omc said...

I think we need an index for our housing market to accurrately show price changes. The alternative is what we are getting; wild swings in average prices based upon what sells. We haven't had sales in this area for a while and the averages dropped. I whole heartedly agree that you get more for your money than in 2008, but this isn't necessarily connected.

Saying that homes over $1M in this market shouldn't count is just plain wrong. Most of my friends live in houses worth over $1M. This is just based upon profession and social group. If you have been in the market for a while and live in Oak Bay, chances are your house is worth around $1M. Livable family houses in Oak Bay pretty much start at $1M.

HHV, your statement that the over $1M sales only effects the market in one way is incorrect.

jesse said...

All this with tightened CMHC lending requirements.

HouseHuntVictoria said...

@OMC, if I said only, it would have been incorrect. I said it entirely benefits the upside. There's a big difference between the two IMO.

The effect of dragging the average price upwards is a win/win for the industry. The effect of low volume in the upper segments of the market on average reported price (when it drops) can't be described as bad... unless it's a prolonged experience, which it never is.

DavidL said...

@jesse wrote: All this with tightened CMHC lending requirements.

I think that sliding prices has much more to do with consumer sentiment.

In years past, new buyers were rushing into the housing market, thinking that they can make big $$$ by just owning real estate (RE). However, with a year or more of warnings from major banks, the Bank of Canada, and various pundits - combined with a stagnant RE resale market and a questionable new condo market, volatile markets and general economic malaise ... many new buyers are "thinking twice" about jumping in to RE. These first-time buyers have been "propping up" RE growth for years, and without them the whole pyramid begins to crumble.

Dan said...

Noticing the hood sliding, we sat down recently whether to stay or sell. We bought two years ago for 640. Our mortgage is now about 571. What got us wondering, in addition to our monthly finances was a niehgbour who has been trying to sell said he would rent to us for 1750. I think he might even go 1500. Once we again went through loan interest, property taxes, an amount for some upcoming repairs, insurance and hopefully getting most downpayment back for our RSPs, I am now itching to sell. We would be at least twice as far ahead each month. Our salaries can still afford owning, mostly because our loan luckily floats at around 2 and a half percent. Our concern is, what happens if prices keep sliding and our monthly principle paid down keeps vanishing each month. If this continues, staying could cost us 3 to 4 times as much. Am I missing something?..besides that I was most likely an idiot to buy. I need more ammunition for the wifey, I think it is sinking in.

Leo S said...

I am now itching to sell. We would be at least twice as far ahead each month.

I would only sell if you expect your monthly lost money (ie, interest on mortgage + property taxes + maintenance + anything that isn't equity) to be at minimum the same but ideally significantly higher than rent. If you're paying more in rent than you would have dropped on that, then you're gambling on a correction.

Yes, all signs point down, but then again, maybe it'll just be flat for a long time. No one knows. If you're spending less on rent than the lost costs on owning, then you're ahead regardless (unless Victoria becomes the new Richmond). If you're spending more you're gambling on a decline, and that strategy has been wrong for over a decade now.

Just Jack said...

I wouldn't be getting ammunition for the wifey - you might end up in divorce court. Nothing can destroy a marriage faster than money issues.

Best to drive around and look at prices, put the thought in her mind until she brings it up. Then agree with her that this would be the best for the families needs.

A friend of mind is having the same issues. He bought at the end of the school year and now he is seeing better homes than his listed for less than he bought. Plus he's stuck with his original home rented with a one year lease.
That's called being caught between a rock and a hard place. He's stuck watching his properties go down in price.

He's still hanging on to the belief that prices will go up again, but he hates seeing all the real estate signs with reduced stickers on them. At some point he'll accept that the greatest price run up in the history of mankind - is over. Probably at the time when his mortgage is more than the house is worth. Then he's just dot, dot, dot.

DavidL said...

During most of the 1990's house prices in Victoria were stagnant (see some nice charts). A house purchased in 1993 sold for about the same amount in 2000 - not keeping up with inflation, as essentially devaluing each year.

DavidL said...

@Dan

Your neighbours' situation is similar to what I've seen in my Saanich West neighbourhood. I've seen a few houses put on the market in the late spring or early summer, and after many showings and numerous prices reductions - have been pulled off the market. These houses (usually a main house with an additional suite) are now rented out.

Whether the owners had to move away or was obliged to downsize (rent somewhere cheaper is order to make ends meet), I suspect that these owners are hoping to put the houses back on the market when prices "recover".

omc said...

I don't think there is an easy answer for Dan. If he sells and rents he will lose the CMHC premium paid (a staggering 3.5%) realtor fees and remember the property transfer tax. So if you managed to sell for the same as you bought, you lose over $50k. I will guess given the price that you live in a Gordon head box. Those boxes aren't worth as much as they were 2 years ago.....

TC-Parrot said...

Carla presses Ctl-C then Ctl-V

Capital region real estate sales climb in August

TC-Parrot said...

New press release dictionary released to real estate boards. Balanced is out - stability is in.

VIREB President Jim Stewart says; “We continue to see stability in the real estate market, with mortgage rates remaining low.”

Victoria Real Estate Board President, Dennis Fimrite, noted that the increase in market activity is positive news: "The increase in sales reflects ongoing stability in the market.

Which one is the parrot?

VREB press release

VIREB press release (pdf)

Leo S said...

Thoughts?

DavidL said...

@Leo S

Yeah... I would suggest that the RE market may be following some of the wild swings recently witnessed in the stock market. Looking at the daily fluctuations in the stock market is akin to the monthly trend in RE. The trend over time is what really matters, with larger fluctuations indicating uncertainty.

omc said...

If you take the average time for a sale to show, I wonder if that blip lines up with the Feds announcing free money for 2 more years?

Taigaa said...

@Leo - I think you need to buy now before you are priced out forever based on your graph - it's going to the moon!

Leo S said...

@Taigaa And we're going on vacation for 2 weeks. My god we have 12 hours to buy a house before they're all gone!

It should be noted that this seems to be contained to the under $550k segment. The higher end houses are trundling along at about 102%

omc said...

Hey Leo,

There is a great little place on st ann with your name on it! simpleman will be so jealous.

Just Jack said...

A little more meaningfull look at last month's sales broken into areas and months of inventory.

Generally, a balanced market will have between 4 to 6 months of inventory. And typically a balanced market has stable prices. Under 4 months of inventory indicates a seller or bull market with rising prices. Inventory over 6 months is generally thought to be a sellers or bear market with declining prices.

The Core municipalities have some 688 homes for sale. During August there were 166 detached home sales for 4.14 Months of Inventory.

Core Municipalities
688/166 for 4.14

Western Communities
617/61 for 10.1 MOI

Peninsula
250/32 for 7.8 MOI

A closer look into the Core market.

Victoria City
120/38 for 3.16

Saanich
381/91 for 4.19

Oak Bay
77/19 for 4.05


Bifurcation?

I think so, we have at least two different markets in Greater Victoria.

patriotz said...

Your neighbours' situation is similar to what I've seen in my Saanich West neighbourhood.

This phenomenon (unplanned landlords) was very common in the US in 2006 and is one of the surest signs of impending bust. Pent-up supply which is going to hit the market one way or another - either the owner will get real or be forced to.

Just Jack said...

Interesting that so many of the million plus sales went to out-of-towners. How much do they really know of the marketplace? Or are they making their purchases based solely on price.

Are they telling their agent that they want the best house on the best street in the hopes of protecting their money? A variation of the theme, location, location, location?

Out-of-towners always pay more than the locals and because Victoria is so small of a town, the actions of dozen or so will affect average prices. But that doesn't translate into the locals paying more for the garden variety home. Bifurcation?

The out-of-towners are also making their purchases based on the economics of the city they are leaving - not that of Victoria. So now, as a generalization, we see Vancouverites, Calgarians, Edmontonians and Chonquin(ians)
paying relatively reasonable prices for homes in Victoria in relation to where they left. Which elevates home prices temporarily. But, real estate is a local market, and its the locals that set the long term prices.

Most of these, well endowed, purchasers of today will feel the pain on re-sale tomorrow.

omc said...

I think JJs break down of the market is pretty much what is out there. I would add one thing though; the Oak Bay #s are a bit skewed as there is an unusually high # of flipper cr@p houses on the market right now. If we negate these, I am pretty sure we would have #s about the same as Victoria. Flipper cr@p houses tend to stay on the market much loner, as they wait for "that one buyer".

I think the out of town buyers are what is fueling this craze for Oak Bay. They just have to live in Oak Bay, as they don't know any better.

Marko said...

I have a client looking for a pre-sale condo in Langford/View Royal so I spent a bit of time out there today...lots of construction. We went to Westhills and certainly a lot of activity. New condo building, townhouses, houses...

I am surprised how many developers are going head with condo developments. Inventory will be huge once all is finished.

EagerBuyer(Not) said...

Marko said ... "I am surprised how many developers are going head with condo developments. Inventory will be huge once all is finished."

Victoria industries call for quick transition back to PST

Homebuilder Bill Patterson, president of Citta Construction, said would-be buyers were scared off buying expensive homes because of the new tax. While the HST is charged only on new homes costing more than $525,000, all new homes had been exempt from provincial sales tax under the old regime.

"The luxury part of the housing market was affected and that took away a lot of jobs," he said. "A lot of my workforce works on higher-end stuff."

Patterson and other builders argue the long wind-down period will keep buyers out of the market, and workers on the sidelines.


HST dismantling delay costing jobs in Victoria

Ron Bickford, president of Rob-Ron Construction, said unless the government acts quickly the housing market could continue to lag during the proposed 18-month period. "Why would anyone buy now before that tax goes away?" he said.

Just Jack said...

Shouldn't the homes be less costly with the HST?

Me thinks the builders were not passing on the savings to their clients.

But, I think that was true of most industries. I would have preferred the HST to have been buried in the price. So when the price tag said $1.99 you paid $1.99.

The problem with new housing and any tax, is the confusion of what you are paying. And that is used by some sellers to their own advantage.

Bring back the HST and bury the tax into the price.

What you see - is what you pay.

JustWatching said...

If the BC government really wants to switch back to GST/PST with the minimum of damage to the BC economy they can start with the housing sector.

All it takes is a change in the 5% rebate level from the current 525K to 1M. This will lower most buyers' concerns about saving tax and prevent a slowdown in new home sales and construction.

Even if they do this they will still pocket 2% more tax than they will 18 months from now.

Just Jack said...

How about they just eliminate the property purchase tax and leave the HST alone.

Unknown said...

From Nanaimo Daily News:

http://tinyurl.com/3ctovtj


Although the market flourished in August compared to a year ago, homes are still moving off the Multiple Listing Service more slowly than they have previously.

Royal LePage real estate agent Dan Morris said people should be racing to buy with record-low mort-gage rates, but the demand for homes seems to have diminished. He points to six new listings he put up this week as an example. They are priced between $187,000 and $700,000 and have had two viewings. There is usually a flurry of people wanting to see what's new, he said.

"The statistics don't always tell you what the market is like . . . because it sounds good," he said. "But I haven't been seeing our inventory move as quickly as it did five years ago and interest in viewing seems to have dropped."



I'm really quite shocked that quote made it into the article.

patriotz said...

"How about they just eliminate the property purchase tax and leave the HST alone."

How about they keep the PPT and add the PST to all house purchases.

That would be at the expense of the seller, since the purchase price paid by the buyer net of taxes would not change.

Won't happen of course. What will happen is a return to the pre-HST status quo without any changes. You are not going to see any tax reductions as long as the government is in a deficit position. Not yet anyway - if Crusty gets desperate we may in 2013.

Taigaa said...

Does anyone know what the recent sale on St. Charles near Earle St. (Thrifty Foods by the water) went for as well as what the assessed was on it? Thanks very much!

Alexandrahere said...

Well, this is turning out to be a "bad news week" for the Victoria Realty world.....at least within my criteria.

So far this week i.e. from 29 Aug - 04 Sept in the areas of Vic,OB,ES,SE & SW, with a min. of 2 beds & 2 baths priced between $375K & $775K, I have only 17 homes sold. 65% of them went for below BC Assm"t. The Avg selling price was $508K!! and the median price was $529K. This is the lowest avg weekly price since I began tracking 13 months ago. This week last year, i.e. Aug 30 - Sept 5 was almost identical in that there were 17 homes sales as well at an avg selling price of $530K.

happy renter said...

Does anyone have an opinion on 2800 Thompson? Assessed at $622,000 but listed for $489,9000. Large lot for that area, but I'm guessing that the house isn't in great shape if it's listed for that much under assessment...

omc said...

Thompson is a busy road and Cadboro Bay road is very busy. That house is worth no where near assessment at that location, on the corner. Houses on Caddy bay road are worth quite a bit less than the surrounding area. I seem to remember quite a few sales in the 500k range, so a house in such rough shape fronting onto Thomson also...

a simple man said...

the house on estevan and caddy bay that sold for around $460K I think. A less busy location.

a simple man said...

Sales in the last week were _____?

happy renter said...

The very best thing about the house on Thompson is the first sentence of the description: "Welcome to Granny's house." Oh goody goody -- I've always dreamed of buying an old lady house! Excellent marketing.

Marko said...

Tuesday, September 6, 2011 8:30am:

MTD September
2011 2010
Net Unconditional Sales: 51 395
New Listings: 186 1,211
Active Listings: 4,590 4,323

Please Note

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

Alexandrahere said...

Hi all....so far this week I have 8 SFH sales. Seven out of the 8 went for below BC assessment. Some examples:
638 Victoria OB Sold $500K assessed at $591K

4583 Prospect Lk SW Sold $587K, assessed at $690K

2505 Arbutus SE Sold $$586K, assessed at $666K.