Monday market update: October data

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.

October 2011 (last week's numbers) Final October numbers in bold
Net Unconditional Sales: 483 457 {358} [231] (131)
New Listings: 1,086 1,015 {799} [556] (340)
Active Listings: 4,687 4,504 {4,538} [4,569] (4,562)
Sales to new listings ratio: 44%
Sales to total active listings: 10.3% or 9.7 months of inventory

October 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI

Month is almost over. Expect The numbers to rise rose slightly in time for tomorrow's today's end of the month report.

I'll update this post with price data as soon as it's available. I'm guessing here, but we should see an average + or - $10K nearing $600K for SFH. Average prices are: $595,836 SFH, $307,329 Condos and $428,040 Townhouses. 

Prices are falling, inventory remains excessive for this time of year and sales volumes are low when compared against the decade average for October. Sitting on the sidelines has little downside these days (and arguably much upside).  

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.

October 2011 (last week's numbers)
Net Unconditional Sales: 358 [231] (131)
New Listings: 799 [556] (340)
Active Listings: 4,538 [4,569] (4,562)
Sales to new listings ratio: 45%

September 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI

Average SFH price is currently $595K while condo average sits at $314K. These averages suggest there hasn't been a ton of buying action in the upscale market this month. I guess the 1% is nervous and doesn't want to be showing off their big earnings by buying Victoria luxury properties. Though the property transfer tax they'd pay would go a long way to addressing issues of economic inequality no? Anyway, digression over. 

Sales activity is higher than I'd expect for this time of year. It's still at near decade-lows, but that said, 15 unit sales per day on average is close to the summer-time numbers we saw in 2011. There's no upward price pressure though: look at the 4,538 active listings. Most of the 2000s spring selling seasons didn't offer buyers such copious quantities of mainly crap-quality listings! 

What are you seeing out there this month? 

More Animal Spirit analysis

You may recall this post from a couple weeks ago where Animal Spirit gave us some insight into what's happening in the low end SFH market. He's given us some more great analysis demonstrating how, despite average reported pricing being relatively flat, the median, and in reality, resale home prices are dropping, and in some cases significantly.

The graph below shows you the listing prices over the past couple of years, plus a few months. Most of the analysis below is Animal Spirit's word for word.

Quite striking is the run up at the higher end of the market in fall/winter of 2010, followed by an equal decline. The same decline to pre-January 2009 numbers hasn’t occurred yet for the median, 25 or 10 percentile listing prices, but there is a clear downward trend since the beginning of June. Also interesting is how the median sales price tracked the 25th percentile for a year, and then diverged upwards (indicating that sales distribution became more high-end than low-end at that time). Expect the median to revert back to the 25th percentile bar at some point in the next while (bringing with it substantive, but not actual, reported drops in median sales prices). Data is not inflation adjusted.

Here's the data in another form:

The table shows the decrease in percentile listing prices over the last year, 6 and 3 months, all annualized.  Basically it shows that a person will have saved $24K by not having bought the median listed house last year. Add to this another 4K for inflation on a 20% down payment and the buyer has saved $28K by now – a pretty tidy sum.

If the current trend on lower end houses continues for a year, then the 25th percentile house that list for $515,000 in July would be listing for $58,000 less (or $457,000) in a year’s time (wiping out a fair sized down payment). There is no solid proof the downward listing price trend will continue at the same pace, however with the entire distribution shifting lower, there is virtually no basis to say the price for the same house will increase.

That the rolling median sales price (not inflation adjusted) is up 1% over the year while the median list price is down 5.4% shows that the relative quality of houses sold has increased rather than the actual price of the same house. In other words, people are buying a better house for the same coin.

A quality Case Shiller metric in Victoria would be miles better than having to analyze percentiles from manually searched data, but this is one way to try to replicate the results.

All analysis above is based on what shows up as ‘Victoria’ for a MLS search, mostly excluding the outlying areas, in particular places like Sooke where prices have likely been going down for longer.

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.

October 2011 (last week's numbers)
Net Unconditional Sales: 231 (131)
New Listings: 556 (340)
Active Listings: 4,569 (4,562)
Sales to new listings ratio: 41.5%

September 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI


Sales and listings volumes both dropped, which is expected at this time of year. SFH average sits at $594,000 right now. We're entering the winter doldrums in an already dreary Victoria real estate market. I suspect the gift-focus this holiday season to be a little less consumerist and a little more focused on 'gifts from the heart' primarily out of necessity rather than desire. 

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.

October 2011
Net Unconditional Sales: 131
New Listings: 340
Active Listings: 4,562
Sales to new listings ratio: 38.5%

September 2010
Net Unconditional Sales: 467
New Listings: 976
Active Listings: 4,046
Sales to new listings ratio: 47%
Sales to active listings ratio: 11% or 8.7 MOI

We're averaging 13 unit sales per day, including a three day weekend in there. Low, high or about right for this time of year?

Resilient seems to be the word best to describe this market these days--if you focus on average reported prices only. The truth is anything but. With abnormally high inventory for October, and sales volumes at decade-lows, there is significant pressure towards lower prices, and zero pronouncements from industry players calling for higher prices.

Bear Mountain: single family homes built on speculation

Currently there are 51 SFH homes for sale on Bear Mountain (BM). In the month of September two homes sold so we have about two years of inventory up there. Why are there so many homes for sale? Pretty simple really: people built or bought on speculation to make a quick buck. You don’t see homes for sale very often in a development like Gordon Point (much smaller). Why? Because people built homes to live there. 

The SFH market peaked on BM in early 2008 with homes like 2192 Nicklaus Drive selling for $1,200,000 and 1289 Rockhampton for $1,000,000. Both are likely worth south of $900,000 now.

2009 brought a dire market throughout Greater Victoria including BM; however, while most of the market has come off the 2009 lows, BM continues to set new lows.

So where will prices on BM head? In the case of a flat market, probably down. Remember the hype around Broadmead 15 years ago? No one talks about Broadmead anymore but it does have a decent location; whereas, BM does not. As the homes on BM age they will depreciate and as heating costs increase, which they will, owning a 4,000 sq/ft home on top of a mountain all of a sudden becomes a lot less desirable. 

How bad is the situation? You be the judge...

Currently listed

1293 Rockhampton - $998,888 (Purchased $1,028,000 April 2009)
1291 Rockhamtpon - $919,000 (Purchased $985,000 July 2007)

2317 Copper Rock Crt - $799,000 (Purchased $801,000 March 2010)

987 Ironwood Crt - $784,900 (Purchased $804,000 February 2010)

2150 Nicklaus - $775,900 (This particular property was built in 2006 and was placed on sale in 2008 with an asking price of $1,650,000)

Recent successful sales

2196 Nicklaus – Feb 2011 - $854,250 (Purchased for $883,000 September 2007)

1173 Deerview – July 2011 - $763,000 (Purchased for $780,000 Jan 2007)

1295 Eston – September 2010 - $740,000 (Purchased for $869,000 May 2006)

Where do you see Bear Mountain in 15 years from now?

This is part two in our Bear Mountain series from an anonymous contributor; once again sales data was fact-checked for accuracy. 

September stats, listings spike in the low-end

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.

September 2011 (last week's)
Net Unconditional Sales: 458 (352)
New Listings: 1,303 (1,065)
Active Listings: 4,940 (4,745)
Sales to new listings ratio: (35%) 33% or 10.8 MOI

September 2010
Net Unconditional Sales: 395
New Listings: 1,211
Active Listings: 4,323
Sales to new listings ratio: 32%
Sales to active listings ratio: 9% or 10.9 MOI

Single Family Home average price: $622,393 (median $535,000)
Townhouse average price: $436,039
Condo average price: $332,490

Animal Spirit has been watching the SFH market intensely for several years and provides us with this unique snapshot of listings volume over the past 3 years:

The chart shows the distribution of listings by price bracket on the dates indicated at right. It's not a complete listing snapshot, rather it's isolated to what most of us would call Victoria--that is, it excludes the penninsula, Sooke, Malahat and Langford etc. The chart clearly demonstrates that there has been a significant year-over-year listings spike in the so-called low-end of the SFH market.

Two things could be happening here: there's simply more low-end listings on the market or, and I'm more inclined to lean this way, those houses that used to sell between $500K and $600K are coming on the market for under $500K these days.

We've seen incredible "discounts" in the high-end market for over a year now, the weight is getting heavier and I'd say it's starting to push on the "median and average" properties of Victoria. It'll be interesting to see how the foundation holds up...

Rents matter, big time

Ben Rabidoux, the economist author over at The Economic Analyst, has been filling the interwebs with quality analysis of the Canadian housing market for a while now. And today he hits another one out of the park with his post titled House prices and rents: Why they should track each other and why it should concern us that they haven't.

Here are a few choice quotes:

All of the usual factors that people tend to associate with rising house prices, namely rising population, income growth, limited supply, and the general desirability of a particular city or area, should affect the price of renting a home as well as buying a comparable home. 

There are two main factors that can cause the value of a house to rise faster than the rents that a comparable dwelling would command... cheap and readily available credit... [and] ...what economists call the ‘ownership premium’.

The main point to understand is that a house is ‘worth’ either the sum of its future rents (for the investor) or the sum of the rents saved by the owner of the house, discounted for future inflation and an expected return.

So rents do matter. What does the gap between current rents and house prices look like in Victoria today?