Monday market update: more of the same

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.

August 2011 (previous week's numbers)
Net Unconditional Sales: 354 [236] (116)
New Listings: 845 [595] (296)
Active Listings: 4,821 [4,843] (4,783)
Sales to new listings ratio: 42% [39%] (39%)

August 2010
Net Unconditional Sales: 425
New Listings: 956
Active Listings: 4,356
Sales to new listings ratio: 47%
Sales to active listings ratio: 9% or 10.25 MOI

Sales have been steady all month at roughly 16 units per day. It's the first time in a long time I can remember where this number hasn't bounced at all from one week to the next. Strange. That said, it's nothing to be happy about if you're trying to make a living charging people commissions to buy and sell real estate. No matter how you look at it, market volume is terrible right now.

Here's a head-scratcher: average reported prices are up, and significantly; single family home average right now is at a record high of $665,000. That's right, your home, if you own one, has increased in value by nearly  13% in just 3 short weeks!*

*No, it hasn't. But such is the misleading "truth" about using averages to report prices from one month to the next. 

Monday market update: invasion of the HAM

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.

August 2011 (last week's numbers)
Net Unconditional Sales: 236 (116)
New Listings: 595 (296)
Active Listings: 4,843 (4,783)
Sales to new listings ratio: 39% (39%)

August 2010
Net Unconditional Sales: 425
New Listings: 956
Active Listings: 4,356
Sales to new listings ratio: 47%
Sales to active listings ratio: 9% or 10.25 MOI

Sales pace neither picked up nor declined over the second full week of August. I will confidently suggest we'll see over 500 sales in August, a fair bit better than last year, though a far cry from what you'd actually suspect a healthy August should look like given the performance of the local market between 2001 and 2010.

What's that I hear? Average sales price is high, almost record setting even, nearing the $690K mark? A few notable high-end sales coupled with the lack of low-end sales volume is dragging that average number up with the hot August air. Look for the TC to follow up with a puff piece citing one example of a home sold on St. Charles street to a foreigner from the old mainland - China not Richmond - as "a new wave of foreign buyers drive prices to record highs; Chinese discover Victoria gems!"

Just once, I'd love to see them write a story about how average reported prices are a waste of time in market conditions like this.

Strange, but true*

I got a phone call from a number I didn't recognize the other day. I answered it anyway. When I said hello, I expected to hear a response, but I didn't get one. Strange. But then I realized two people were talking. I should have hung-up, but something I sensed led me not to. Instead I grabbed a paper and pen and jotted down a couple of notes. I figured I had meant to be in on that call and I was meant to share it's contents with you readers.

It's not word for word, but I'll do my best to transcribe it for you:

Market owner: I've got a great story for you.

Reporter: We usually don't let business people pitch stories directly to us. Let me put you through to our advertising department.

Market owner: No. Wait. Please. This isn't advertising. It's a true story. It's a great story too. It's about Victoria and how we're insulated from the economic terrorism taking place in the rest of the world.

Reporter: Did you really just say economic terrorism? OK. You've got a great angle. Pitch me. Let's do this thing.

Market owner: Awesome. Well, you see, I sell things in my store and business has been pretty stable these last few months. Typically, I order in about 100 oranges a week. I usually sell 80 of them in the first 5 days. But by the sixth and seventh day, the remaining oranges start to look a little stale in my market.

Reporter: Makes sense. So I guess you throw them out then right?

Market owner: Heck no. If I did that I'd be out of business. Here's my secret. For the first five days of the week, I price the oranges a little higher because they're fresh and most people want fresh oranges. But there's also a small group of people out there who look for a good deal. I call these folks my weekend shoppers. So I discount the stale-looking oranges on days six and seven. I run an ad in your paper on Friday to let all those deal hunters know what I've got for them.

Reporter: I can see why you have the most successful market in town. That's brilliant.

Market owner: I'll say. And here's the best part: I still make a great profit on those stale oranges. So much so that I've decided to stock more of them.

Reporter: You can order stale oranges? What will they think of next? Marketing is amazing!

Market owner: Well, I guess you could order stale oranges if you really wanted to. But I don't need to. I know I'll consistently sell 80 oranges over the first 5 days I have them on the market. So instead of ordering 100 oranges next week, I'm going to order 120. That way I'll have 40 stale oranges instead of 20 with which to increase my profits.

Reporter: What happened to the economic terrorism angle? I thought I was getting a juicy story here? Sounds more like a business-as-usual, the-market-is-stable piece to me.

Market owner: Here's the thing. We live in a Navy town right? So people are in-tune with all things military and seaman right? They know what nautical terms mean. We can weave some into the story and people will go "Ahah! I know what they're getting at here..." We're also in a time where people are fighting mad... see the connection? There's likely a new tax on the horizon, or even a regression to an old tax that's going to cost us all a lot of money over the years... so people may be feeling uncertain, like they're having a hard time keeping their heads above water, but they're looking for certainty. All we need to do is conjure up some images to connect with their natural emotions: fight, floating, stability... They will then come to my market and buy my 40 extra oranges because they'll believe they're getting a great buying opportunity and they'll know my market is stable.

Reporter: I'm not sure I follow. How does the Navy and boats equal economic terrorism?

Market owner: Our submarines, if they weren't stuck in dry dock, would be out using things like bouys to signal and look for terrorists wouldn't they? All Victorians know this. They'll make the connection. It's a great metaphor and you can tag your story on your website with words like economic and terrorism and all those people, and more than just the local readers, will use Google to search those terms and find your story. You may even attract some foreigners, maybe even mainland Chinese... think of the possibilities!

Reporter: F'n brilliant! Do you have this story written down? Do me a favour, I want to make sure I get your quotes right, so send it to me electronically and I'll get it online as soon as possible. We may even do a follow-up in tomorrow's print run. Now I'll transfer you over to the advertising folks and they'll get you set up for Friday's ad to sell those 40 stale oranges.    

H/T to the TC-Parrot for the link to the inspiration for this post in the previous comments section.

*not really true, but almost believable eh?

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.

August 2011
Net Unconditional Sales: 116
New Listings: 296
Active Listings: 4,783
Sales to new listings ratio: 39%

August 2010 totals
Net Unconditional Sales: 425
New Listings: 956
Active Listings: 4,356
Sales to new listings ratio: 47%
Sales to active listings ratio: 9% or 10.25 MOI

18 sales on the week, my A$$. Even if you narrow the sales area down to only the "City of Victoria," which is not our local market, I doubt the data offered was even close to the truth. Cherry picking stats to serve a meme that doesn't exist to the degree he desires only serves to fuel the arguments of those who seek to discredit the writings of the so-called bears on Canadian real estate. As the writer with the highest profile in Canada, Garth Turner should hold himself to a higher standard.

With that little rant out of the way, August 2011 got off to a rough start. Will it be a repeat of 2010? Likely not. We're looking at a daily average of about 16.5 unit sales. If that continues, we'll hit over 500 sales. If that happens, the spin will be unbearable as the VREB and TC parrots trumpet "Sales increase 15%!!!!!" No matter how you choose to spin it, the truth of the matter is this: even with sales volume in the 500 range, we're experiencing sales volumes in the decade-low range as evidenced by this graph from Double-Agent last year (H/T Just Watching):

And with inventory as high as it stands, we're not in "balanced market" territory no matter what industry tries to tell us. Sellers: sharpen your pencils. Buyers: demand discounts. 

July sales data

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.

July 2011 (last week's numbers) [previous week's numbers]
Net Unconditional Sales: 523 (380) [270] [140]
New Listings: 1,374 (1,062) [763] [407]
Active Listings: 5,094 (4,902) [4,856] [4,756]
Sales to active listings ratio: 10% or 9.7 MOI

July 2010 totals
Net Unconditional Sales: 527
New Listings: 1,119
Active Listings: 4,477
Sales to active listings ratio: 12% or 8.5 MOI

There's no way to spin these numbers positive. But look for the VREB and parrots over at the TC to try regardless. Active listings are at all-time highs while sales volumes are at decade lows. It's a game of supply and demand, and clearly the supply side is lopsided.

So why aren't prices falling? There's a whole bunch of things going on here, but the first thing you should know is that prices ARE falling. Anyone who tells you they aren't is either using a micro-segment of the market to prove they're not, or is, well, telling you what they think you want to hear to get you to act in the market in some manner--in other words, they're blowing smoke up your kiester.

Your money buys more house in the Victoria market today than it did just a few short months ago.  Average reported prices are misleading, because the average depends more on the type and make-up of unit sales from one month to the next... they're easily miss-representative of the market, both on the way up and the way down. They should be viewed with a grain of salt.

There's a few "deals" out there if you only compare today's prices to what some people got for these places four and five years ago, especially if you look out in the Westshore and Bear Mountain. But there's no deals to be found when it comes to looking at the standard fundamentals of price versus rent and price to income ratios over history; we're still trending well above the historical ratio of Victoria.

The core tells a different story; but mostly in the single family home category. Demand is isolated in the CRD to the east and the south for the most part. There is little demand for the crap that used to sell in bidding wars; I'm talking specifically of tear-downs and ex-rentals in the depressed neighbourhoods to the west of the city core. And there is a lot of crap on the market, which is evidenced in the difference between sales to new listings and sales to active listings.

Yes, there's plenty of evidence suggesting well-priced quality offerings are selling quickly. But there's far more evidence of a bunch of low-quality offerings having to lower their "shoot-for-moon" original prices just to drive people to an open house.

UPDATE: VREB spin is out (H/T a simple man). And the standardized TC cut and paste job is up already too... (I won't link there). Forgive me for having a little fun, but hey, it's my blog and all that:

Victoria Real Estate Board President... noted that despite the drop in the number of sales last month compared to June, market activity is now very close to what we saw at this time last year. "In the coming months, we anticipate that market activity will remain relatively stable and similar to what we saw during the summer and early fall months of last year."

I get such a kick out of these baseless statements. So July sales volume nearly matched one of the worst July sales volumes in over a decade? And because sales numbers didn't sink lower (even though inventory is substantially higher), readers and market watchers should be happy that the "bottom" has been found; except that we don't know that, nor can we, because we can't predict the future.... but he who shall not be named apparently can.

...added that the increasing inventory means sellers need to be realistic in pricing their homes in order to attract qualified buyers. "A REALTOR’S® expertise can be invaluable in today’s market to help sellers price their homes to best advantage"

Or you could simply scan your neighbourhood and surrounding areas for homes on lots just like yours and price your property in and amongst the lowest priced offerings. That's the best advice you're likely to receive anyway if you truly want to sell.

Remember this little ditty I wrote in July: Victoria home prices to fall $79,900? Guess what? We've shaved off  $48,175* in just a few short weeks since that post was written. Can we get another $31,725** off over the next 4 weeks? Better suit up, cuz that will be awesome!

*That's what those damned average numbers say anyway

**If you're making offers on properties these days you can help achieve this dream by starting all offers at 8% below asking price, which is what the average dropped last month!

The rental hunt

Vacancies are up in Victoria lately. Searching for a half-way decent rental should be a bit easier these days than in years past. And a cool new tool is on the scene to help you isolate listings by neighbourhood and move beyond the terrible list format of Craigslist.

PadMapper is making rental hunting easier and map-based:

It's pulling in rental listings from a variety of sources, though Craigslist seems to be dominant... which is fine since it's one of, if not, the biggest rental listings source in Victoria these days.

If you're in the rental market looking to move up, down, sideways or just want to find some cheap student apartment options for the upcoming school year, check it out here: PadMapper.com
  

Monday market update: into July's home stretch

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.

July 2011 (last week's numbers) [previous week's numbers]
Net Unconditional Sales: 380 (270) [140]
New Listings: 1,062 (763) [407]
Active Listings: 4,902 (4,856) [4,756]
Sales to new listings ratio: 35% (35%) [34%]

July 2010 totals 
Net Unconditional Sales: 527
New Listings: 1,119
Active Listings: 4,477
Sales to new listings ratio: 47%Sales to active listings ratio: 12% or 8.5 MOI

July is shaping up, just like the so-called summer weather, to be disappointing in the local real estate market. We're averaging just under 16 unit sales per day while inventory continues to rise at almost 3 times that pace. Sellers are thinking twice about listing, most likely because there isn't too much buying activity going on right now. The shine is off the market. Even the few people I know who have been, well perma-bull isn't an apt term, let's say firmly embedded in the it's always a good time to buy real estate camp, are starting to talk about other ways to make money.  

With six days to go in the month, can we hit 496 sales? Will some high-end home sales drag the average price back up or will we see a considerable decline? If we do see a decline, I think we'll witness a repeat of last August, and quite possibly into September too; two selling month's the local industry would love to never repeat.