December 2012 month to date
Net Unconditional Sales: 186 (112)
New Listings: 294 (179)
Active Listings: 4118 (4215)
Sales to new listings ratio: 63% (63%)
December 2011
Net Unconditional Sales: 339
New Listings: 505
Active Listings: 3780
Sales to new listings ratio: 67%
Sales to active listings ratio: 9% or 11.2 MOI
Sales dropped off rapidly as predicted. At the current rate we're going to end up in about the same situation as previous months, significantly slower than last year while listings stay higher. Not much else to say about that!
Sale price / assessed value for the higher end has taken a bit of a dip lately. This ratio was always significantly higher for the more expensive properties, hovering around 100% this year while the lower end has been below 95% for months (currently 91.5%). As the good stuff is sold, the remaining crap is picked up in the slow months for lower relative to assessed.
Sales dropped off rapidly as predicted. At the current rate we're going to end up in about the same situation as previous months, significantly slower than last year while listings stay higher. Not much else to say about that!
Sale price / assessed value for the higher end has taken a bit of a dip lately. This ratio was always significantly higher for the more expensive properties, hovering around 100% this year while the lower end has been below 95% for months (currently 91.5%). As the good stuff is sold, the remaining crap is picked up in the slow months for lower relative to assessed.
237 comments:
«Oldest ‹Older 201 – 237 of 237When I visited BCAssessment 7 or 8 years ago, they explained to me that they only physically visited 1 out of every 10 homes, and the other 9 were appraised by extrapolation & comparison (but manually by a human).
Before JJ jumps on you, I'll point out that assessment and appraisal are two different things. The former is simply a rough guess of what a property would sell for for property taxation only.
Oh Patriotz, I don't jump on people.
Ask my wife!
Unlike the Mayans - you're correct.
There is a difference between an assessment and an appraisal. Assessments are done on a mass scale while appraisals are property specific.
I have been very busy the past couple of weeks. Here are my stats for the week of 10-16 Dec.
SFH, in Vic,OB,Esq,SE&SW, min 2 beds and 2 baths, priced between $375K and $775K.
Sold: 14
Avg Price: $527K
Med Price: $514K
Available inventory within this criteria is down to 325. This number is the 3rd lowest week of inventory this year.
In the Saanich East areas of Gordon Head, Mount Doug and Lambrick Park there have been 14 sales in the past 11 weeks with a high avg sale price at $693K and low avg sale price (last week) at $472. The avg sale price for the past 11 weeks was $592K.
On University degrees - I could never do my job without mine. It has allowed me an unbelievable quality of life with tremendous flexibility. Sure there were some duds in my graduate classes, but the ones that were there that had ambition and some real-world smarts have set the world on fire.
University doesn't give one expertise. It gives one a foundation to work with and shows an employer you are willing and able to learn... It's certainly not the most important thing but for some positions it gets you in the door. With what I do, you don't get through the door without a degree. That said, passion, confidence, skill and work ethic can get you far in this world...
Passion, confidence, skill, and work ethic will get you far. Passion, confidence, skill, work ethic, and a non-useless degree will get you further.
We need less HR and marketing majors and more computer science majors.
It is a fact that you can't work in certain sectors without a degree, and that's a good thing. Would you want to be under the care of a doctor that didn't have one, or how about hiring an architect to build a bridge who didn't take the necessary schooling ? I consider myself very lucky that I don't have one, and work along side various collegues with bachelors and masters, and I have 10 years less experience than the fellow with the masters, yet make 15% more than he does. This is possible in very few sectors. I work in IT. I didn't plan this, just lucked out. I also never had any student debt and have 4-7 years of earned wages more than my co-workers (of the same age) that went to university. The thing is, 80% if not more of what they learned is completely obsolete. So, I think the value of degrees is very sector specific.
There are lots of people in the software lab that I work in that never finished their degrees. They got recruited into the industry while they were going to school in the 90s and didn't look back. Once you have good skills and experience, the degree becomes a lot less necessary. And a lot of the people who have degrees aren't working in their fields - one of our managers was a biochem major, for example. We've got other managers who majored in English or even Creative Writing, for that matter.
I will grant, however, that today's hiring environment is not what it was in the 90's or even early 2000's (which is when I got hired without having completed my degree). Through the sheer good luck of our little startup getting bought out by a mega corp, I now make more than I ever imagined I might. (Not rich, but certainly above the median, and as a poor farm girl, I never dreamed I'd be making (barely) 6 figures.)
Most university degrees don't teach extremely topical stuff so I'm not sure how they would go out of date. Learning to learn, think, write, compose, organize, calculate etc doesn't really go out of date. If you are in IT I'm sure you are constantly getting trained. Of all professions, IT is one where the skills go obsolete very fast. If you are not constantly learning you are past your due date pretty quick. Even still, depending on where you are working it will be later in your career that the degree might benefit you as you are passed over for that management position or the high paying network architect position...
Two interesting MLS listings:
1786 Howroyd listed at $486,000 with many nice looking updates. On the same street earlier this year the un-updated and smaller places were selling for about that price.
Then we have 1696 Cedarwood. It was an ok price at $569,000, before they raised it by $40,000. What to do when your place doesn't sell for 3 months? Raise the price!
Nevermind that the price change (assessed at $603k) makes their description a blatant lie: NEW PRICE .. GORDON HEAD .. 'Below Assessed Value' ..
I guess if you put it in quotes it doesn't have to be true.
Garth Turner posted the chart in this article on his blog. It has to be the single most valuable piece of information there is in terms of making it obvious that Canada is currently in a housing bubble. It also tells us where the market is headed.
This chart shows us that, once the price-to-income ratio of any housing market in any country gets to be too high, it corrects back to where it was. It uses 48 different countries over 40 years to prove this point.
We can note that each and every one of these 48 countries was in a housing bubble that corrected back to where it started in terms of price-to-income ratio. The US housing crash of 2005 reached a peak of about 20% before it fell back 20%. The same for Norway in 1978 and Great Britain in 1989. As well, 45 other housing busts are shown to do the exact same thing.
We don't need to know the details about the lax lending standards that were in place that caused the bubbles in any of the 48 countries. All we need to know is that something caused the housing markets in these countries to reach bubble prices.
This is an important observation to say the least. We have now established beyond any doubt that 48 countries experienced housing bubbles that crashed, yet the exact mechanism that caused the bubbles does not need to be known. No doubt the exact mechanism for each country was different, as it is when comparing the lax lending standards that existed in the US to those that existed, until recently, in Canada.
Another important observation is that Canada peaked at 30% above its price/income ratio. In comparison, the US peaked at only 20%. This means that Canada's price/income ratio will correct 30% compared to the 20% that the US corrected.
What does a 30% price/income ratio correction mean in terms of actual prices? Well, we have the advantage of being able to look at what happened in the US with their 20% price/income ratio correction.
Miami, Los Angeles and Phoenix were 3 of the most bubbalicious cities in the US at the height of their bubble. They saw the biggest gains in price/income ratio as well. Victoria and Vancouver are Canada's top two most bubbalicous cities with the highest price/income ratios in the country.
Let's compare current house prices in Miami, Los Angeles and Phoenix with their peak prices.
This Miami house peaked at close to $500,000 and is now pending at $180,000.
This Phoenix house peaked at about $500,000 and is currently listed at $280,000.
This house in a northern suburb of Los Angeles is listed at $229,950 and peaked at about $550,000.
You can believe the bullish reports and opinions of Canadian banks, real estate boards, etc. if you want. The same reports and opinions were fed to the US public before their market started to crash in 2006. David Lereah, the chief economist at the NAR, has many famouse quotes about the US housing market that misled hundreds of thousands of US families into thinking that there was no housing bubble and that there would be no crash.
"We are really on track for a soft landing. There are no balloons popping.” - David Lereah, NAR’s chief economist, December 2005
From the same article "Importantly, if rents and incomes continue to go up, prices may not need to drop that much. In fact, annual growth in income and rents of 3% would deflate half of the valuation bubble over seven years"
1786 Howroyd listed at $486,000 with many nice looking updates. On the same street earlier this year the un-updated and smaller places were selling for about that price.
There were going to be multiple offers on this one last I heard to be presented today. Very nice under 500k home. Best deal on Howroyd this year.
Garth Turner posted the chart in this article on his blog. It has to be the single most valuable piece of information there is in terms of making it obvious that Canada is currently in a housing bubble. It also tells us where the market is headed.
Have to love Garth; I particularly enjoy his videos from 4-5 years ago - right on the money (sarcasm).
Please watch this video dated April 2nd, 2009 featuring Garth making a number of completely wrong predictions, I mean his time was off.
http://www.youtube.com/watch?v=1S7OumrfatY
The SFH median Jan to March 2009 in Victoria was approximately 485k and the average approxmatiely 534k.
Let me know when we reach 485k median and 534k average on a three month rolling basis. At the point, if we ever get there, Garth will be at baseline.
Miami, Los Angeles and Phoenix were 3 of the most bubbalicious cities in the US at the height of their bubble. They saw the biggest gains in price/income ratio as well. Victoria and Vancouver are Canada's top two most bubbalicous cities with the highest price/income ratios in the country.
Let's compare current house prices in Miami, Los Angeles and Phoenix with their peak prices.
This Miami house peaked at close to $500,000 and is now pending at $180,000.
This Phoenix house peaked at about $500,000 and is currently listed at $280,000.
This house in a northern suburb of Los Angeles is listed at $229,950 and peaked at about $550,000.
So a $500,000 Fernwood home with a basement suite will drop to $280,000 using a best case scenario? So let's say $250,000 mortgage and ignoring suite income completely on a 25 year amortization at 2.99% you need $48,000 family income to qualify and your mortgage payment would be $1,181 or basically a few hundred more than what the suite rents for?
I could maybe see some merit if rates were to rise to 8.99% as the payment would then be $2,068.
A 2 bed, 2 bath home on Hampshire Rd in Oak Bay sold recently for $517,000. The same home was purchased in May of 1997 for $272,000.
The conventional five-year mortgage rate at the time was 7.35%
Source: http://www.cbc.ca/news/interactives/mortgage-rates-fixed/
In 1997, let's say you had 10% ($27,200) down and had to borrow $244,800 at 7.35%, 25 years. Your payment would be $1,768.
Fast forward to 2012, let's say you have 10% (51,700) down and have to borrow $465,300, at 4.15% (as per source above), 25 years. Your payment would be $2,485.
Add inflation and you aren't too far off on a monthly payment basis.
Ninth floor, one-bedroom condominium in the Wave. Bought October 2007 for $289,900 after 18 days on the market.
Re-sold this week for $245,000. After 246 days on the market.
To be fair, the Wave was over priced from the beginning, but there were enough over zealous buyers acting in an irrational manner to buy out this complex.
Think of this as an example of a micro bubble.
To be fair, back in the first quarter of 2009 the median priced home was typically 1,688 finished square feet located on a 5,532 square foot lot.
In the last quarter people are paying more for the typical home, but they are also getting an 1,862 square foot house on a 6,298 square foot lot.
A 13.6 percent increase in the house prices in Victoria City. But you're also getting 10.3 percent more house and 13.8 percent more land than you did in 2009 too.
There were going to be multiple offers on this one last I heard to be presented today. Very nice under 500k home. Best deal on Howroyd this year.
Not surprising about the multiple offers. Just goes to show you can always sell your place quickly no matter the market. Just price it right. If it sells for about $500k then it will still be a good deal compared to the recents.
From the same article "Importantly, if rents and incomes continue to go up, prices may not need to drop that much. In fact, annual growth in income and rents of 3% would deflate half of the valuation bubble over seven years"
You've been listening to Canadian banks, realtors and real estate boards too much Dasmo, that is what they call a soft landing.
Hundreds of thousands of US families were told by their banks, realtors and real estate boards that their housing market wouldn't crash and that it would experience a soft landing. How did that work out for them?
Housing bubbles do not deflate slowly as inflation catches up. They crash.
As our housing bubble continues to deflate and gets further along in that process, the economy will slow down even more (the wealth effect will diminish) and that will create more downward pressure on prices. As well, the banks will tighten their own lending standards to protect against the effects of the deflating housing market. This will result in less mortgages and less money per mortgage and lower house prices.
"I could maybe see some merit if rates were to rise to 8.99% as the payment would then be $2,068."
A sharp rise in interest rates will not be necessary for our housing market to crash Marko. It will crash anyway. It has already started. Remember that the crash of 08-09 did not require rising interest rates. It did, however, require emergency interest rates to help stop it.
Actually, Canada is at a huge disadvantage when considering interest rates compared to the US with their housing crash.
By 2009, the US housing market had been crashing for about 3 years. At this time, interest rates were dropped down to emergency levels in the US and Canada.
The US dropped interest rates down to emergency levels to help slow the US housing crash. It was no small drop. This will be impossible to do in Canada. We are already at emergency levels.
Marko
What has Garth's predictions got to do with what I wrote? Please read it again.
On the topic of Garth's predictions. In 2008 he accurately predicted the Canadian housing crash that was in full swing by 2009. Nobody could have predicted the massive, unprecedented, emergency intervention (via CMHC) that took place to stop the crash.
It is easy to see that he is right again with his prediction about the current housing market correction/crash taking place in Canada. Victoria and Vancovuer are leading the way. He predicted that as well.
In 2008 he accurately predicted the Canadian housing crash that was in full swing by 2009.
Actually the crash had already been underway for a year in Alberta and was only partially reversed by intervention.
Garth is a convenient whipping boy for the bubble deniers. He makes a lot of bombastic predictions which often turn out to be wrong, so the deniers draw the ad hominem conclusion that all bubble arguments are wrong.
The Okanagan and up-Island have been crashing since 2008, could anyone explain how this could happen since they were in Canada the last time I looked and the "soft landing" arguments should apply to them?
Actually the crash had already been underway for a year in Alberta and was only partially reversed by intervention.
Did he predict that Calgary would be 15% up in terms of sales year over year? Or that prices for November 2012 are 8.5% higher than November 2011? Or is his timing just off?
In 2009 videos he is calling for an interest rate hike, hasn't happened. He said prices would drop in Vancouver because of the Olympics; prices actually went up, etc., etc. too lazy to watch all the videos to sum up all the things he has completely been wrong about.
Info,
When you get a chance, can you put in your two cents on my example I posted earlier, I am curious to hear your thoughts.
A 2 bed, 2 bath home on Hampshire Rd in Oak Bay sold recently for $517,000. The same home was purchased in May of 1997 for $272,000.
The conventional five-year mortgage rate at the time was 7.35%
Source: http://www.cbc.ca/news/interactives/mortgage-rates-fixed/
In 1997, let's say you had 10% ($27,200) down and had to borrow $244,800 at 7.35%, 25 years. Your payment would be $1,768.
Fast forward to 2012, let's say you have 10% (51,700) down and have to borrow $465,300, at 4.15% (as per source above), 25 years. Your payment would be $2,485.
Add inflation and you aren't too far off on a monthly payment basis.
Info, I'm not listening to anyone. The quote is form the article you were referencing "Importantly, if rents and incomes continue to go up, prices may not need to drop that much. In fact, annual growth in income and rents of 3% would deflate half of the valuation bubble over seven years" does happen to support MY halibut point of view...
Did he predict that Calgary would be 15% up in terms of sales year over year? Or that prices for November 2012 are 8.5% higher than November 2011? Or is his timing just off?
No he didn't...actually what he predicted;
Garth: "Real estate prices in Calgary, Edmonton, Fort Mac at 50% of 2006 levels"
My two cents on your example Marko - still way cheaper to rent than own.
Vic and Van now have two of the highest price-to-rent ratios in the entire OECD. Our ratios have us overvalued by at least 40%. Inflation-adjusted rents have actually fallen since your 1997 example. In addition, rents will continue falling as our economy weakens.
A 2 bed, 2 bath home on Hampshire Rd in Oak Bay sold recently for $517,000. The same home was purchased in May of 1997 for $272,000.
This particular home under performed the market. It increased by 90% while the overall market increased by 145%. So the affordability of this house doesn't necessarily extrapolate to the rest of the market.
In 1997, let's say you had 10% ($27,200) down and had to borrow $244,800 at 7.35%, 25 years. Your payment would be $1,768.
Fast forward to 2012, let's say you have 10% (51,700) down and have to borrow $465,300, at 4.15% (as per source above), 25 years. Your payment would be $2,485.
Add inflation and you aren't too far off on a monthly payment basis.
The BoC says $1768 in 1997 is worth $2381 today. So not far off as you say.
The main difference on this place is that current buyers need to save up an extra $14,000 for the down payment.
This shows quite well how most of the price increase is purely due to lower credit costs. So for those thinking that in the next 15 years we're going to see similar appreciation I'd like to hear how they figure that will happen. Interest rates certainly aren't dropping by 40% going forward.
By the way are there monday numbers today or is the VREB shut down over christmas?
Monday, December 24, 2012 9:25am
MTD December
2012 2011
Net Unconditional Sales: 254 339
New Listings: 374 505
Active Listings: 3,979 3,780
Please Note
Left Column: stats so far this month
Right Column: stats for the entire month from last year
"Interest rates certainly aren't dropping by 40% going forward."
Unlikely, but not impossible. Not if Canada and the US are turning Japanese.
Heck my interest rate (variable) was 32% less than current a few short years ago.
Could a 5 year fixed ever go for 1.8% (about 60% of current) in Canada? It seems preposterous, but not all that long ago the idea of a rate UNDER 5% would have seemed preposterous.
A very Merry Christmas to you all. May laughter and love fill your homes.
Merry Christmas! Excited to try a Christmas goose this year for a change (and turkey... and ham.... - hey it is Christmas!). Hope you all have a great morning tomorrow.
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