- 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.
223 comments:
«Oldest ‹Older 201 – 223 of 223From the CBC article above:
"“In this financial climate, people find themselves in positions where they have to sell,” said Henry’s husband, Terry, who moved his family to Alberta from B.C. several months ago, for better job opportunities."
I guess some people do need to sell. I don't understand why they didn't get renters. I heard it's super easy.
Yesterday saw the owner of a house that has been up for rent for the last three months here on my street in OB. She said it is extremely hard finding renters right now. Nice house, great OB street, fair rental price.
We have a very high vacancy rate in my apartment building right now. the GF called the leasing office to complain that a comparable apartment was being advertised for a lower amount than ours.
The office lady was being chatty and said that in the last couple of years they have had to lower rents to attract renters. She was also talking about the high vacancy rate. "I guess people are just buying houses because interest rates are so low".
Leo, your comments are normally fair. This last one isn't from my perspective. It reads more as a reaction to something than a reasoned response.
You draw from past statements and present my information in a distorted manner that discredits what I have said. As a moderator/operator of the blog you
set the tone for a lot of debate.
Ok my sarcasm was a little overboard. But the continued circular argument was starting to get annoying. May also have something to do with sleep deprivation from the new baby in which case sorry if you took offense.
However I stand by my comments. This is not at all about a difference in perspective, it is just simple facts. Suites are fine and if you want one that's great, but they are not free money.
The suite will cost you more up front, and it will be more work than having a house without a suite. That is not debatable it's just the way it is. Getting into the fact that suite income might mean you cut down on your regular job again has nothing to do with the work associated with a suite. If you're a good landlord and manage multiple properties without any problems that is because you are diligent and have put in the time, I can't imagine why you would want to claim it just magically worked out that way and in fact it was no work at all.
Whether or not the work is worth it is completely separate and I've never claimed that it isn't.
"new baby"
Congratulations!!
@Chris If that were true, you wouldn’t spend so much time cheerleading the market up on various blogs.
Since when does Marko cheerlead the market? Compared to any other realtor he's basically depressed about it :)
@koozdra Well these guys have been posting craigslist adds like crazy with no luck attracting renters.
How do you know they're not attracting renters? I think estimating vacancy from craigslist is pretty tough. Vacancy rates are rising, but still nothing catastrophic compared to many other cities.
The rental market has weakened, but because of rent controls we still see rents increasing overall. In boom times the rent controls restrict increases to below what they could be, and in slow periods rents catch up a bit. That said it will be interesting to track vacancy and see if it continues to increase.
href="http://www.newsday.com/classifieds/real-estate/fha-mortgage-premium-costs-set-to-rise-1.4582470>FHA mortgage insurance premiums rising
Oh dear. When I can't even manage to post a link I know I'm sleep deprived!
Pat Bell must be wrong. According to the bastions of misinformation on this blog only renters and their friends are losing their jobs. Since this segment of the population, commonly referred to as the middle class, has no bearing on local real estate, we have nothing to worry about.
I think the sarcasm only works if someone actually said those things. Otherwise it's just a strawman.
welcome to my world - wait until you have multiples and they stagger getting sick.
My friend recently bought a new BMW. I tried explaining to him that instead of paying $60k+ for a new car, he should have bought an old Honda for $2k and invested the rest in a balanced portfolio (he paid all cash).
On the other hand with that plan he wouldn't be driving a BMW. To each their own.
Regarding your post examining the Seattle market and comparing to what might happen in Victoria... I see them as two very different markets. Seattle has a lot of high tech, industry, import/export, and a larger financial centre. Victoria is a combination of middle class (government, health and tech) and a lot of lower paying service industry positions. Not only is it the land of the newly wed and nearly dead - but also the barely fed. Comparisons between Vancouver and Seattle make more sense in my opinion.
Good points. I think I initially looked at seattle because when people suggested a comparison to Phoenix they were laughed at by the more bullish here. So I thought let's look at a coastal city with a strong economy, land constraints, a similar real estate price history (no big crashes) and similar climate that did not suffer from overbuilding or any significant amount of NINJA loans.
However the economy is structured quite differently I agree. If Vancouver is similar to Seattle, then Vancouver is toast.
Marco: Do you have any weekly sales/listings numbers?
Thanks koozdra. Simple man, one is enough for now!
"Pat Bell must be wrong. According to the bastions of misinformation on this blog only renters and their friends are losing their jobs. Since this segment of the population, commonly referred to as the middle class, has no bearing on local real estate, we have nothing to worry about."
"I think the sarcasm only works if someone actually said those things. Otherwise it's just a strawman."
I was referring to Marko's comment:
"Then you have the bears who are predicting 20-50% drop in prices because all their friends are losing jobs, maxing out line of credits, every single store downtown is closing, etc. When you step back from this blog things are not crashing and burning. I've been reading this blog too much;therefore, I was shocked at how many people called me to rent my condo."
I'm trying to say that the friends of bears losing their jobs and going into debt is not something to ignored.
@Leo S
... sleep deprivation from the new baby ...
Congratulations! I remember those years not too long ago ...
And congrats to you as well, Leo. The greatest gift of all. The day your first child is born you look at the world in a whole new way. Things that didn't seem to matter much at all previously all of a sudden take on vital importance.
Enjoy every moment - I know I do, and I get back far more than I could ever give.
Very eloquent simple man, and I totally agree. My life has been so enriched and more worthwhile from having two children.
Marco: Do you have any weekly sales/listings numbers?
Family day, VREB is closed.
If Vancouver is similar to Seattle
It certainly isn't in the "strong economy" and "no big crashes" criteria.
Got it. Thanks, Marco.
Got it. Thanks, Marco.
How about we spell Marko's name correctly. Poor guy's been on this blog for years, and his name is still a mystery.
Oooh... You caught me making an error, Introvert! Now is that worth a silver star or any gold star next to your name? Oh, but if you did that - it would be rather extrovert of you...
I will be moving from Victoria to Montreal in March. This blog has been tremendously valuable in pointing me to specific information on real estate trends and statistics on the west coast, but there seems to be little information regarding Montreal. Is it as bad in Montreal (notably Westmount, Outremont, and the Plateau) as in Toronto and Vancouver/Victoria? Any web sites I should follow to keep track of the trend in Montreal?
Post a Comment