- I think Victoria and Seattle share some important similarities and think that Seattle's decline might be a decent model for Victoria's and
- almost everyone else seems to think that Victoria is nothing like Seattle so the discussion should be interesting.
Last time I looked at the long term price history, with the conclusion that even those cities that think they are immune to crashes and have a long history of soft landings can come down pretty hard.
This time let's take a glance at what happened after the peak. Seattle seems to have bounced off their bottom (at a median price/income of 5.8) and currently have an extreme sellers market with an MOI of 1.82. Expect further price increases there in the spring.
Seattle hit absolute bottom at 33% down from peak after a decline of 4.5 years, however this didn't last long and the stable bottom seemed to be more like 25-27% down. As we know Victoria's monthly medians are quite variable because of low sales. King County generally has about 10 times our monthly sales, so their monthly medians don't vary nearly as much but to reduce volatility for both I've smoothed all values with a centered 3 month averaging window.
So how does Victoria stack up? Well we are 2 years 8 months into our decline and down 10% from peak median prices.
The chart below compares the two with both prices and residential months of inventory compared to the values at market peak for each respective area. You can see that for both markets the conditions continued to deteriorate after the market peak for several years, with peak MOI coming in year 2 of Seattle's correction, while we are still exploring new heights well into our third year.
So if one were inclined to use Seattle as a model, you might conclude that we have another ~15% drop ahead of us. Certainly the market conditions are pointing to an accelerated drop in the next few months compared to what we've seen in the last two years.
However let's look at the absolute values as well. It is interesting to note how much higher our prices started (despite having lower household incomes) and how much higher our current MOI is than anything Seattle experienced in their downturn.
Update: Patriotz points out that King County doesn't include outlying areas. Here is the normalized chart using Case Shiller (which includes King, Pierce, and Snohomish counties) and the Victoria Teranet index (greater Victoria). Using the Teranet data, Victoria's peak moves back to June 2010.
On an unrelated note, the video below has been posted on multiple sites but deserves another link. Rick Mercer hits the nail on the head with respect to government interference in the markets.