Monday, June 25, 2012

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.

June 2012 month to date (previous weeks in brackets)
Net Unconditional Sales: 485 (336, 193, 45)
New Listings:  1137 (799, 441, 112)
Active Listings:  4927 (4862, 4765, 4696)
Sales to new listings ratio: 43% (42%, 44%, 40%)

June 2011
Net Unconditional Sales: 618
New Listings: 1465
Active Listings: 5050
Sales to new listings ratio: 42%
Sales to active listings ratio: 12.2% or 8.17 MOI

20 unit sales per day... not much else to say. Are people still taking the real estate course thinking a realtor license is a fast track to riches? 


Anonymous said...

Leo S posted a link to Canadian Mortgage Trends in the last topic.

It is a summary of all the recent changes to the mortgage rules and their potential impact.

It is worthwhile reading....

20 Observations on the New Mortgage Rules

The comments at the end are interesting too.

Anonymous said...

This observation ^^^ could affect quite a few people and is not being reported in the media from what I have read.
18. Mortgage-renewal

If you have a high-ratio insured mortgage with an amortization over 25 years, you shouldn’t have a problem renewing with your existing lender. You’ll also still be able to switch lenders and keep an existing amortization over 25 years, assuming:

- You don’t increase your loan amount.
- Your loan-to-value doesn’t increase (which could happen if home prices dive), and
- You have a regular mortgage (i.e., it’s not a collateral charge mortgage).

Of course, if you need to increase your mortgage in the future and have less than 20 per cent equity, you’d be limited to a 25-year amortization. People should keep that in mind if they’re buying with a 30-year amortization today and thinking of upgrading their property down the road.

Phil said...

I am suprised to see listings down slightly from last year. There are a massive amount of "For Sale" signs out there, like 2 or 3 every block.

Anonymous said...

More mortgage change news. This time from David Dodge, former governor of the Bank of Canada

David Dodge interview on BNN

“What we saw was that Canadian housing prices fell sharply but then fully recovered and then overshot. So house price to income, house price to rent at the moment is at historic highs. And so we do risk, in the housing market, we risk a bubble forming, which is not helpful to anything/anybody… so I think the government took exactly the appropriate action… I might have wished they’d taken it a little sooner, but they took exactly the appropriate action, and they deserve full marks for that.”

Add David Dodge to a growing list of respected economists and money managers who have voiced their concerns over a Canadian housing bubble:

Dean Baker- “It looks me like you have some real problems…Canada could see house prices collapse by 25 to 30 per cent if interest rates rise by about two percentage points”

Robert Shiller- “The Canadian housing market could face a similar housing bust to the United States, particularly in more bubbly markets as Vancouver and Calgary”

Paul Krugman- “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.”

David Rosenberg- “…Housing values are anywhere between 15 per cent and 35 per cent above levels we would label as being consistent with the fundamentals. If being 15 per cent to 35 per cent overvalued isn’t a bubble, then it’s the next closest thing. We are talking about two to three standard deviation events here in terms of the parabolic move in Canadian home prices from their lows. So, if it walks like a duck …”

Mike Shedlock- “A Canadian housing crash is a given. The only thing that remains to be seen is how deep the crash is.”

Don Coxe- “Canada continues to experience a real estate bubble”

Stephen Jarislowsky- “In Canada the hardship still lies ahead. Our houses are still 20 to 30 per cent above normal levels…I think things are going to get a hell of a lot worse….I hope I’m wrong but I think Canada is on the edge of a lot of trouble.”

Marko said...

Lots of sub 400k SFH sales so far this month pulling the MTD average down to 577k!

Animal Spirit said...

Marko - any idea of median sales price? Feel free to send me the data and I can crunch it.

Just Jack said...

The sales activity since the new CMHC changes were announced doesn't seem to have significantly changed. Neither does there seem to be a rush of new listings.

Much ado about nothing?

or maybe its too early to tell?

Roger said...

Just Jack,

VREB uses pending sales in their weekly/monthly stats. A pending sale is a purchase and sales agreement that is unconditional. (all the "subject to" clauses have been removed.). Most conditional offers take about 2 weeks to become unconditional - financing, house inspection and title check completed.

Therefore, the sales we are seeing now are mainly based on offers made a couple of weeks ago. A few might be naive buyers that made unconditional offers in order to get in under the July 9 deadline.

There may be a slight bump in sales this week but the first 3 weeks of July will tell the tale. After that sales will probably slump because demand was brought forward and some first-time buyers are shut out of the market by the new rules.

dasmo said...

I don't think there will be a huge effect. They are all good changes that reasonable adults would adhere to anyway. They are being imposed to stop the potential of predatory lending that happened down south. Interest rates are also low enough to cushion any blow. They might even drop further. I saw a sign for promontory offering 1.9%. More flat line ahead folks...

Anonymous said...

dasmo said More flat line ahead folks...

BTW - Why do you think prices have been flatlining? Leo S posted a graph showing median prices have been falling for over a year.

Median SFH Price Graph

I track prices in Saanich (East, West &Central) from 400K to 620K. The ratio of listings with one or more price changes to total listings last year was 35%. Today when I I checked it was close to 50%.

Leo S said...

I don't think there will be a huge effect. They are all good changes that reasonable adults would adhere to anyway.

I think you will be surprised at the impact. It's hard to imagine, because most people here likely would have no problem affording 25 years. But there is a significant portion of buyers out there that are just scraping in with 30 years.

We will see very soon how much of an impact that will have on sales.

Agreed on the rates though. They are not going up any time soon, and possibly even dropping a bit more.

Leo S said...

I posted an update of the affordability picture on VV taking into account the mortgage changes and adding some more data of projected prices. More or less summarizes my current thinking on the matter.

Just Jack said...

If there is no impact, then I would expect OSFI to toughen things up further.

High real estate prices are stifling our economy. Too much disposable income is going to servicing debt rather than spending on goods and services. The government is now trying to defuse the bubble bomb. Tricky problem when places like Vancouver and Victoria are at the extreme end of affordability. A real estate correction in Toronto might be similar to a mild cold, but in BC it will be influenza.

As in the past it is the Golden Horseshoe in Central Canada that has to be protected. That's the voting block that decides who will form a government.

BC is just collateral damage, acceptable losses and cannon fodder.

For all of those who have come to BC from Ontario, you are about to get the first taste of why the west distrusts Central Canada.

dasmo said...

I think prices are flat lining because a 10% correction has already happened, you just need to ask for it. Stats have way to much tolerance to illustrate this. Add in to the mix some people asking way too much for their property, some people pay it, assessments can be over valued or under valued etc. Long story short I saw the market soften in 2007 and I think we are down 10% from peak (which eventually might make it into VREB stats) but from there we will flatline +- 5% over an extended period of time as interest rates remain low and the powers at be in Europe and the States go about inflating their debt away thereby bringing the real price of housing down while nominal prices will remain flat...

totoro victoria said...

Leo - your graphs makes a lot of sense to me.

CS said...

"and the powers [th]at be in Europe and the States go about inflating their debt away"

Don't know about Europe, but according to Mish, in the States there has been a $6 trillion contraction in shadow banking sector credit since 2008, which has nullified the effect of all Fed money printing.

Animal Spirit said...

median (for all VREB areas, not just Victoria) at 524.5.

PCS has changed from a beehive of activity to almost no sales and almost no listings. weird.

a simple man said...

New listing on Woodhouse - bought in March 2009 for $560K and now for sale at $740K. Will be interesting to watch this one.

Just Jack said...

Oak Bay is an odd duck. The property that just recently sold on St. Ann was purchased back in 2009 for $560,000. Re-sold for $760,000 last year and just sold for $700,000 again.

Will lightning strike twice and the home on Woodhouse sell for close to asking?

Yet, a water view home on Cresent Road that was bought in 2010 for $1,100,000 has now re-sold for $915,000.

One of the issues with Oak Bay is that the number of listings in the past has fallen to miniscule levels (at times less than 45 homes for sale) and people over paid because there was very little to choose from.

That is a lame excuse for overpaying on a property, it has nothing to do with value and everything to do with impatience and a gullible nature.

Now the number of house listings in Oak Bay is around 114. And past decision made in haste are having an impact on the pocket book.

Overpaying for a property like the ones in Oak Bay may cost a buyer $300 or $400 extra a month in mortgage payments, but it will also cost hundreds of thousands of dollars in lost opportunity and hard cash in the future.

When prices are rising, everyone is an expert in real estate. It seems that the only wrong answer is not to buy. Well a lot of people are now realizing that was a fool's argument. And indeed there is a time not to buy.

Just Jack said...

And it wasn't just Oak Bay that had issues with few listings.

Back in 2008, there were a lot of condominiums being built but by only a handful of developers in Langford. That oligopoly meant Monday morning meetings to keep prices elevated and stable among the developers. In this case there was lots to choose from but only a small group of sellers, so you ended up paying close to downtown prices for a condo in Langford.

That meant you paid $265,000 for a one bedroom on Brock Avenue in 2008. That today sells for $220,000.

Anonymous said...

animal spirit said PCS has changed from a beehive of activity to almost no sales and almost no listings. weird.

But PCS is getting lots of price changes....

Sooke & Malahat


Just Jack said...

Then there are some small lot subdivisions out in Langford that get high prices in relation to surrounding neighborhoods. But again, these new subdivisions are strictly controlled by a few agents. Only now with a tiny amount of re-sales occurring can you get a sense of how much extra people were paying for the sizzle rather than the steak.

Of course the developer has to have a shtick, like a golf course, community heating system, congregate care, platinum green complex, etc. Because you have to give a reason (no matter how completely implausible that it is) for a buyer to pay more than the neighboring developments.

Of course all of this falls apart in the re-sale market because the numerous individual sellers don't have control over prices like a single developer has.

Just Jack said...

Where are all those ka-zillionaires? Price reduction in the Ardmore area of North Saanich of a waterfront mansion finished to the highest standards of a New Orleans whore house. Perfect for that Albertan Stetson wearing blue eyed oil sheik.

Assessed at over Ten million dollars!!

Asking price 7.2 million or the cost of 1/16th of a new blue bridge.

Anonymous said...

Today's RE news...

The housing market is teetering. Happy now?

Vancouver tanking?

Sales in May for all forms of housing across the Multiple Listing Service were down over 15.5 per cent from last year, and the lowest for the month of May since 2001.

The news for detached homes sales was even worse: They were down 25 per cent for the same period last year.

Does this apply to VREB?

(Commenting on these numbers, the resolutely sunny Real Estate Board of Greater Vancouver decided this was “indicative of balanced market conditions.” But then the board would have viewed the crash of the Hindenburg as the result of “normal deflationary conditions.”)

Canadian average home prices forecast to contract over next two years

The report said that while new lending rules announced recently are not intended to severely impede household spending and housing demand, their impact will be substantial.

“In particular, the previous rule changes had a significant impact on home sales, particularly in the six months following implementation. The policy changes, combined with modestly higher interest rates and a gradual deterioration in affordability, are expected to trigger a welcomed unwinding of excesses in the Canadian housing market,” said the report.

“In our view, average home prices will likely contract 10-15 per cent over the next two years, with markets that are generally viewed as more overvalued, such as Toronto and Vancouver, experiencing the largest adjustments.

Would they consider Victoria overvalued?