Predictions and more...

As per Roger's suggestion, it's time to make some predictions. First one, December 2007. Second one, what's in store for 2008? Add your predictions in comments.

December 2007: YOY increase in sales volume, YOY increase in average and median sales prices around 10%-11% from December 2006, but month-over-month decreases in average and median sales prices somewhere in the neighbourhood of 6%, bringing us back down to October 2007-type numbers of $495K-$500K median and $550Kish average.

2008: I'm starting to believe, the more I read about the sub-prime stuff and the extent to which the Canadian financial industry is trying to avoid any economic damage, that a recession is highly likely to begin in the US in the first and second quarters. January/February are typically bad months for consumer spending. This Christmas season was disappointing for retailers around North America. I expect 4th quarter 2007 numbers to reflect this. Our economies are 70% consumer driven.

That said, I don't see the economic engine that is development in BC to slow down soon. I'll go on record to say that, while I want a correction to start this spring, I expect that YOY numbers will be flat, the spring will show "usual" 5%-7% price gains over 2006 spring month numbers, but a slow fall will bring prices back to "zero-appreciation" YOY.

Other news: I came across this interesting story on a US blog. Check it out, it is a long read, but entertaining and informative. Here's the background. And here's a notable quote:

Jimmy was a banker and in spite of that he was a buddy of mine. One of the few that didn’t have his head in the sand and instead of just trying to push loans through to get the commission, he actually cared about the likelihood of repayment. He was a brand new banker, and in being such was crippled by his idealism and integrity. One day, obviously frustrated he pulled me into his office, closed the doors and asked me, “Look, I need your help. What the heck is going on here?”

I said, “What do you mean?”

“Well, this business, these loans. They’re all garbage. The other bankers are bringing deals to the table that are worthless. Condo deals, town homes, and I’m not the economist you are, but I read your reports and I at least understand the market’s oversupplied. There’s no way those developments are going to sell. But their loans get approved anyway, meanwhile I’m getting yelled at because I’m not meeting my quota. It’s almost like they want us to bring in bad loans. It just doesn’t make sense.”

And then I realized what was happening. Jimmy was new.

Update: doesn't everyone want to live in Victoria anymore?

RANKING OF HAPPIEST PLACES TO LIVE

1. Saint John, N.B.

2. Quebec City

3. Charlottetown

4. Moncton, N.B., Kitchener, Ont. (tie)

6. St. John's, N.L.

7. Saskatoon

8. Regina

9. Winnipeg

10. Halifax

11. Vancouver

12. Edmonton

13. Ottawa-Hull, Toronto (tie)

15. Hamilton

16. Montreal,

Calgary (tie)

18. Victoria

A new day: Y2ThisTimeIt'sDifferent

VREB numbers are out. I'm not going to do much analysis other than to repeat what VG has already said (with an edit): "sales are down considerably from August (25%) and prices are basically flat for the median SFH." Condo median prices jumped almost $15,000, though I don't give much weight to this number because the number of condos sold is so relatively small that blips like this are common.

Anyway, enough about that, you'll get far superior analysis from PB at VT. So go there, then come back and buy some books from Amazon through this site so I can quit my day job and live the dot.com dream ;-)

On with the real show now...

I peruse statistics at work in my own research fairly often. I came across this dandy gem today:

CMHC is forecasting that housing starts in BC will total 14,100 this year, down 13.5% from the 1999 level. A surge in demand for high-end homes (those costing $500,000 or more) is not expected to be strong enough to offset the effect that higher interest rates and construction and land costs have had on the market for entry-level home buyers.

The cost of new housing in BC’s two biggest urban centres continued to fall in August. The new housing price index (NHPI) in Victoria was down 4.4% from a year earlier, while Vancouver’s NHPI slipped 1.0%. Elsewhere in Canada, only two urban areas–Saint John-Moncton-Fredericton (-0.4%) and Sudbury/Thunder Bay (-1.3%)–saw the cost of new housing decline. Prices are rising in other cities, at rates ranging from +0.9% in Windsor to +7.2% in Ottawa/Hull. Overall, new housing prices were up 2.4% from August 1999.

Since 1992, the cost of new housing in Victoria has fallen 28%, while average prices for new housing in the Vancouver area have dropped 17%. Prices for new housing in the province have been declining steadily since the mid-1990s. In Vancouver, the rate of decline is slowing but this has not yet occurred in Victoria. Land prices are beginning to stabilize, but the cost of homes built in the city has continued to drop. New housing prices are affected by a combination of factors, including the state of the housing market, the availability of land on which to build, and the type and size of housing that is being constructed. The long-run decline in the NHPI is a reflection of falling prices for both the land and housing components of the index. (emphasis mine)

When was this from? October 13, 2000. And they say Victoria is different. What was happening back then? Stock market was uber-bullish, the NDP government of BC was on the way out, and developers were ready for a pro-business change. Even then they claimed no one could afford the product on offer. So what does this mean? Just more confusion for yours truly unfortunately. My best guess: the markets change, but the rhetoric doesn't. Man, do times ever change fast in the RE market. That was 7 years ago, almost to the day. Someone. Please. Help. Us.