Dec 16 Market Update

MLS numbers update 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.

	December 2013				December  2012
	Wk 1	Wk 2	Wk 3	Wk 4
Unconditional Sales	94	195			283
New Listings	148	282			405
Active Listings	3829	3709			3896
Sales to New Listings	64%	69%			70%
Sales Projection	---	330ish
Months of Inventory					12.3

Again no point in sales projections using days of the month.  It's Christmas time, only a handful have a presents budget of half a million dollars.

Dec 9 Market Update and a Note on New Condos

MLS numbers update 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.

	December 2013				December  2012
	Wk 1	Wk 2	Wk 3	Wk 4
Unconditional Sales	94				283
New Listings	148				405
Active Listings	3829				3896
Sales to New Listings	64%				70%
Sales Projection	---
Months of Inventory					12.3

No point in doing a sales projection when sales drop off so quickly in the later weeks of December.  Should be between 300 and 330 according to last year's performance.

A quick note on construction.   Here are the condo starts and completions over the last 23 years.

Some periods of note:

1. The condo boom in the early 90s, when we were building some 75 units a month.  That was when the term leaky condo still made you think of defective prophylactics rather than building envelopes.
2. The aftermath when completions dropped down to 25-30/month for almost a decade.
3. And the market recovery in the 2000s, leading to first a pickup in building, and then a period of over exuberance in 2007/08 when credit was flowing like water.
4. The current levels is what I found interesting.  The price of condos have flatlined and are significantly down from their peaks in 2008.  You can likely ignore the small rebound this year, the MLS HPI shows a dead flat market amongst condos.  And yet despite this miserable market, condo building is going strong.  Some 70 units a month are sprouting up and there is no sign that builders are getting tired of it.  We've seen some evidence of older condos being hit pretty hard by all the new construction, and I think at the current rate of building we will continue to see declines.   

Developers are building at boom-time levels in a declining market.  Interesting strategy...

November numbers and another comparative look

Last time I said that the Victoria market was almost the weakest in Canada since 2008.  Of course it could be that the market here has just been weak to compensate for above average performance in the decade before.   Well since we have Teranet back to the early 1990s we can take a look.

Since 2008 we are the second weakest market in the country.

If we look back 5 more years the picture changes a bit.

We can see that Victoria along with the rest of the west got a little overly exuberant in the years leading up to the financial crisis.  The relaxation of credit seemed to have no effect in the east, while over here it drove prices very quickly.   Back more until 1999 (the earliest year of data for many cities).

This shows the entirety of the boom for Canada.  After our extended flat period, we are on the middle to lower end.  Hamilton, Toronto, Halifax, and Ottawa have appreciated less in 14 years, while the rest appreciated (relatively) more.  Back to 1993, we are once again the weakest link.

In other news the November update is out.  The VREB is a sad panda because sales aren't quite as rip roaring as they have been.   What with last month's discovery that prices are actually down instead of flat, they are struggling to find something positive to say about November numbers.  Well at least prices are up since 2005! "This represents a 36.5 per cent increase since January 2005, when the index was 100".

Funny the headline still says prices are flat, when the article goes on to elaborate that SFHs in the core are down 1.65% from last year, in the peninsula they are down 2.57%, and SFHs in the west shore are down 5.94% in one year.   

IMF wakes up: Canadians shouldn't socialize mortgages

Is this a case of stupid housing policy begets stoopid housing valuations?

The IMF, big bureaucracy accountable to no one that it is, in its infinite wisdom points out that Canadian home prices *may* be out of whack with reality given that people who pay taxes to the government of Canada just also happen to be on the hook for a lot of the day to day mortgage lending decisions of the mortgage industry in Canada (give or take a lot here or a lot there depending on the government oversight of the day, or not).

The IMF, of course, says Canada's home prices are the most over-valued anywhere in the world.

Cheap mortgage rates and banks' tendency to give money to folks they otherwise wouldn't because Joe Public will bail them out regardless has a way to do that to a market.

Perhaps the most salient observation in the IMF's pontification: “We suspect the fact that banks may benefit from government-backed insurance on mortgages (…) it sort of makes it easier for banks to do mortgages than other kinds of lending which presumably, we think, is going to be more useful for the real economy.”

It's not like Canada wasn't warned before... like in 2008 by an anonymous schlep living in his parent's basement in Victoria because, despite an above average household income, he and his wife couldn't afford much more than a crack shack in a shady Vic West 'hood. 

Nov 18 Market Update

MLS numbers update 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.

	November 2013				November  2012
	Wk 1	Wk 2	Wk 3	Wk 4
Unconditional Sales	140	224			366
New Listings	276	408			706
Active Listings	4118	4077			4488
Sales to New Listings	51%	55%			52%
Sales Projection	490	428
Months of Inventory					12.3

It's interesting to keep on eye on the mortgage industry insiders, and they're getting nervous again.  According to Rob McLister at CMT, "We’d submit, however, that there is no need to wonder if we’ll get new mortgage restrictions. It’s a given that more regulations are coming. The only questions are what rules to expect and when."  These possible upcoming limitations might be more obtuse to the average consumer, but the effect is the same: reduced access to credit.

Nov 13 Market Update

MLS numbers update 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.

	November 2013				November  2012
	Wk 1	Wk 2	Wk 3	Wk 4
Unconditional Sales	140				366
New Listings	276				706
Active Listings	4118				4488
Sales to New Listings	51%				52%
Sales Projection	490
Months of Inventory					12.3

Teranet out and it is turning negative again.  With the strong growth in the Alberta housing market we are no longer just almost the weakest market in the country over the last 5 years.

Up in Rupert right now where you can buy this beauty for $39,500,  and the most expensive house currently for sale costs $459,000.  It sure rains a lot, but the place has it's charms, with a mix of Cowichan Bay, Victoria, and east coast..   Time to invest before they put in the pipeline?

The VREB discovers price skewing

You may have noticed that the VREB has a new trick up it's sleeve.  It's the MLS Home Price Index (it's a home silly, not a house like that heartless Teranet index says).

The MLS HPI is a repeat-sales index quite similar to the Teranet index.  However unlike the Teranet, they separate it out into "benchmark" single family homes, townhouses, and condos.  They also have separate data for the various regions, not just greater Victoria as a whole.

With this new information, the VREB has come to accept the skewing of medians and averages that we've talked about here for a few months already.  “Past reporting of averages and medians showed flat pricing across the Board’s trading area but MLS® HPI indicates a moderate decline in prices in many markets over the last year,” says VREB's Shelley Mann.   
So prices continue their slide at a rate of 3-5% a year depending on where you live.

Overall the HPI tells us nothing we don't already know.  Prices on a slow downward slide since 2010.  Victoria the weakest market in the country.  Over 5 years, prices are down 5.6%.

Update:   So how does the new MLS HPI compare to our existing measures of the market?   Pretty similar, but surprisingly the MLS HPI is the most pessimistic of the bunch.  Note that this is the SFH median, while the two indices are comprised of all properties.

Based on the SFH median we are down about 8% from peak.  According to the Teranet we are down 5%, and the MLS HPI says we are down 8% as well.