Monday, August 27, 2012

Should I buy now?

If one can pick just one graph to answer that question, I would suggest this one (From Ben's blog):

Wednesday, August 15, 2012

Is it time to start sniffing around?

I see some comments wondering about whether it could be time to start looking for 'deals'

There is no doubt that there are deals surfacing. Look at Vancouver Price Drop to get some idea about where things are going. Of course there are good deals in the Sunshine Coast, OK and Whistler.

But what about Vancouver? Have we just started the correction or are we just having another dip, followed by a plateau and then up we go again.

Well it may help us to see just how high we went. Here's Larry's Average Price chart:

A technical analyst might say that there is good support at the $1 million level.  What then? Up from there or down further?

It all depends whether we start getting a negative loop. Lower prices and less sales leading to less construction, mortgage and Realtor employment  (10% of employment) leading to a drop in personal net worth and less spending on retail (another 7-8%) 

So you can see how quickly a drop can reinforce itself with negative feed-back. Any further weakness in commodities and it will multiplied.

San Diego which we are often compared to, took a while to roll over, but when it did it went south fast.

So before we dive into the market, we may want to see if this is the beginning of a bigger correction. Looking, however is good.

Wednesday, August 8, 2012

The President calling like it is...a buyer's market

Nothing to add really. I think he says it all. Where to from here?

Will we get a sudden rush of demand? Driven by what? The CMHC has been (belatedly) hog-tied, rates are low (and the 5 year Canadian bond rates have been drifting up), the Government has come to it's sense and is not as speculator-friendly as it was- so we could have more weakness and a stand-off between buyers who are not as panicked and sellers who remember the good-old-days.

As to the discussion below on HPI v Median v Average v Benchmark, it is all academic. The market sets the price. I saw a  home on the sunshine coast sell for 20% under list,  at the same price it was bought for 5 years ago, after being renovated . How will that show up in the HPI??

Tuesday, August 7, 2012

Fraser Valley Numbers


SFH Average is DOWN 2.3% YOY. Median is up a tiny 1.2% and yet benchmark is UP a huge 3.4%! 

That combination must lay at the outer reaches of statistical likelihood.

Apartments are DOWN for BOTH median and average and yet UP for benchmark YOY.

It really does not make sense to me. I think I am going to ignore the Real estate board generated HPIs and Benchmarks and concentrate on medians and averages from now on to gauge the market.

Okanagan Numbers

More sales than last year but median and average prices took a beating. However the sample is small and can't read too much into it. MOI running around 15. Actually higher volume with lower prices would be better for everyone except speculators.

Sunday, August 5, 2012

Life is about Timing...Carl Lewis

Sitting in my local Waves Coffee house sipping my latte and surfing the net when an interesting conversation sprung up next to me. Of course being Vancouver it was about Real Estate.

30's lady sitting with male (?out of town friend/brother) talking about her RE investment. Seems like she bought an expensive condo 4 years ago,  and rented it out cash-flow negative while renting a cheaper condo herself. Rationale was that the expensive condo would eventually be paid off and she would be left with an income stream or could sell and use the money to buy a house or...

A very good strategy in fact, and the negative cash flow is actually another form of saving if it goes to paying down the debt. For the last four years it worked well. Now not so well.

She was complaining that the price, if she wanted to sell was the same as 4 years ago, so no capital gains. 

Also she was just hit with a significant assessment for repairs (why do we build such shoddy condos AND houses here?) which was going to be tough to come up with. 

On top of that the lease was coming to an end and the tenant has said ANY increase and he is walking and she cannot afford to leave it empty for a month or two and eat the whole cost. 

Finally the five year mortgage renewal is coming up next year and she hopes that the rates won't have gone up and that the bank won't make problems as her cash-flow is much more compromised.

She has started managing the rental herself to save some money but that brings the stress of hearing all the tenant whining and complaints.

She looked very stressed and I felt sorry for her. What looked like a good idea for a number of years has suddenly gone awry and we have only had a mild correction so far. In the past, the investor in this situation would just sell, pocket some nice capital gains and thank their lucky stars. That's not an option anymore.

Thursday, August 2, 2012

REBGV Release

Greater Vancouver housing market hits summer lull

Residential property sales in Greater Vancouver remained at a 10-year low in July, while the number of properties being listed for sale continued to edge down and prices remained relatively stable.

The Real Estate Board of Greater Vancouver (REBGV) reports that there were 2,098 residential property sales of detached, attached and apartment properties in July. That’s an 18.4 per cent decline compared to the 2,571 sales in July 2011 and an 11.2 per cent decline compared to the previous month’s 2,362 sales.

July sales were the lowest total for that month in the region since 2000. They were 31.2 per cent below the 10-year July sales average of 3,051.

“People appear to be cautious about making significant financial decisions right now. While our local economy appears to be quite robust, there may be some concern about the impact of international markets and the federal government’s tightening of mortgage regulations,” says Eugen Klein, REBGV president.

New listings for detached, attached and apartment properties in Greater Vancouver totalled 4,802 in July, the lowest number of new listings for any month this year. This represents a 5.8 per cent decline compared to July 2011 when 5,097 properties were newly listed for sale on the Multiple Listing Service® (MLS®) and a 14.5 per cent decline compared to the 5,617 new listings reported in June 2012.

At 18,081, the total number of active residential property listings on the MLS® increased 18.8 per cent from this time last year and decreased 2.2 per cent compared to the previous month.

“With a sales-to-actives-listing ratio of 11.6 per cent, conditions have favoured buyers in our marketplace in recent months,” Klein said. “That means buyers have more selection to choose from and more time to make a decision. For sellers, it’s important to price properties competitively. For information on local market prices, contact your REALTOR®.”

The MLS® Home Price Index (MLS® HPI) composite benchmark price for all residential properties in Greater Vancouver over the last 12 months has increased 0.6% to $616,000 and declined 0.7% compared to last month.

Sales of detached properties on the MLS® in July 2012 reached 787, a decrease of 28.4 per cent from the 1,099 detached sales recorded in July 2011, and a 13.3 per cent decrease from the 908 units sold in July 2010. The benchmark price for detached properties increased 1.4 per cent from July 2011 to $950,200 and declined 1.2 per cent compared to last month.

Sales of apartment properties reached 927 in July 2012, a 10.9 per cent decrease compared to the 1,040 sales in July 2011, and a decrease of 5.3 per cent compared to the 979 sales in July 2010. The benchmark price of an apartment property remains unchanged compared to July 2011 at $374,300 and declined 0.5 per cent compared to last month.

Attached property sales in July 2012 totalled 384, an 11.1 per cent decrease compared to the 432 sales in July 2011, and a 4.3 per cent increase from the 368 attached properties sold in July 2010. The benchmark price of an attached unit decreased 0.5 per cent between July 2011 and 2012 to $468,700 and is relatively unchanged compared to last month.

18% decline is sales and 18% rise in inventory compared to last year. No good way to spin that one.

Their HPI finally takes a tiny dip. About 1%.

Some of the HPI calculations don't make sense to me. Eg Whistler. 5 year HPI over-all up 29%. SFH down 1.4% but apartments up 76%. That is not what I see when I look at the numbers.

Lots of other places have negative 5 year HPI numbers. No gain for 5 years just higher expenses, and the early July bump is behind us. The average price graph is quite something to behold. A double top and then a rapid plop down.

The problem is soo much of our local economy is in the FIRE industries (throw in healthcare too) that a significant slowdown will be very unpleasant. If China falters further, it will turn nasty.

Wednesday, August 1, 2012

SFH Average DOWN $200K from high, back to November 2010 prices.

Thanks as usual to Larry for being so quick with the numbers

SFH down to just over a Million. Down $200 K from the all time high.

Condos and Apartments took a big dive too, with Apartment average prices back to 2008 prices.

This all happened with mortgage rates at almost zero (3% fixed and variable 5 year) and with the panicky buying of early July as the last bunch of highly leveraged buyers were loaded on board the creaking ship HMS CMHC.

August will be very interesting indeed. 

PS sorry about the cliche picture. Had to put something up quick :)