What's with the numbers...

What are we to make of the current market?

Lets look at the facts:

1) Sales are down. Most Agents I speak to are NOT happy. less sales = smaller commission cheques.

2) Listings are down too. There was no expected big boost in the listings in August.

3) MOI is up, but prices are still holding up.

(Note the above is for Vancouver mostly. I still expect places like the OK where listings are very high and MOI is stratospheric to show weakening.)

So what do we make of this..what explanations are there.. and remember these are all supposition..no-one knows for sure:

1) Sales demand was truly drawn forward by HST and CMHC changes, and is this is the lull afterwards. Meanwhile there just aren't that many owners that need to sell.

2) Mortgage rates are heading down and so the buyers left in the market can afford higher prices and are caving in and paying up the sellers' asking prices, who are discounting very little.

3) We are at the start of the market shift and this is always a choppy time. My views lean to this let me give you my opinion on how we got here..

People are Pavlovian, they learn from previous experiences. The most recent drop in RE that we had led to an almost instant and violent bounce back thanks to the Government's efforts. So that sends the message that any drop in demand is temporary and will quickly return.

This keeps sellers fairly firm in the prices and keeps those-who-dont-really-need-to-sell out of the market. Hence we get firm prices and lower listings. But then why are folks still buying?

I spoke to a realtor who specializes in the North Shore. Sales are down, but there are still people buying. Mostly local move-ups and buyers coming from out east..Toronto mostly. They have been transferred or moved for other reasons..have themslves sold into a bubbly market and so have brought a good chunk of equity and want to buy before the kids start school.

If that is the case, we should see sales weakening even more once school starts, and then those that didn't sell and need to, may start leading the market down.

Frustrating for the bears, for sure. the correction to sane levels seem to have been delayed yet again. However we can console ourselves in the thought that this is a national event. All major Canadian cities are bubbly and have become the talk of the Wall Street Journal and numerous US economic blogs.

I guess we will have to wait another month to see if my theory is correct or not.

Why is housing so sticky on the way down??

Why didn't US home owners sell, but hold on until negative equity and foreclosure hit them like an inevitable Tsunami.

Why, on the Gulf Islands or Whistler, where some properties have been listed for well over a year and sit unsold, are the owners dropping the price 1-2% at a time.

Here's why...

We are hard-wired by evolution NOT to take a loss, even if that is the logical thing to do. Take a small loss now or a bigger loss later.

How often have you bought a stock and watched it dip down past your stop loss, watched it bounce up reinforcing the thought that you were right to reject the loss, and then the thing dives down under the sea taking your hard earned money with it.

We have all done it. We cannot help it.

Nortel was one of those which took thousands of Canadian RRSPs into the abyss.

Don't leave home (to put on offer in) without it

No it isn't your American Express card. It is a good property analysis.

The minimum I would want is the following:

Assessed value

Sales history for the property

Comparables

Is the market for these properties moving up or down.

The agent you use to buy, could give you this. Could. Some probably do it all the time (like Larry). Some just want you to get down and write the offer.

However you can get the information yourself for peanuts.

HERE at Landcor.

Two types of reports, both cheap, and no one should even consider writing an offer without at least having this information.

You MAY think you have studied the market, but you NEED to know the sales history of the property.

Maybe they bought a year ago, and are just trying to flip with a 20% premium - having spent nothing on the property- even though the 'stated reason' is a job transfer.

Maybe there are comparables out there you didn't see which have been selling for less. Why? Is it the gold-plated toilet fixtures?

This isn't the whole story, but I would want a simple analysis like this from SOMEONE else too before I put hundreds of thousands of dollars on the line. If you can get something like this from your agent- great. If not get it yourself.

OK back to RE...

I am not sure how many of you know about Landcor. It is a RE Data service Co, that produces an HPI for many areas separated into Attached, Detached and Condos.

Here's what there say on their HPI page:

The Housing Price Index

This product presents a constantly updated view of real estate market activity in British Columbia over the past two years. You can view trends in the real estate market for BC and areas or jurisdictions within BC that you select.

The Housing Price Index is a new product developed by Landcor Data Corporation. The purpose of the Housing Price Index is to track trends in the general level of residential property prices throughout British Columbia.

The Housing Price Index (HPI for short) covers price trends for detached houses, attached houses and apartment units. Detached houses include single-family detached buildings on lots of up to one acre. Attached houses include duplex, triplex, four-plex, row house and townhouse properties, mostly condominiums and other single unit ownership dwellings. Apartment units, including lofts and artist studios, are also mostly condominiums.

Choose a Jurisdiction and a Property Type and Click the Refresh button to see the graph

.................

I cannot comment on the accuracy of their HPI, but I must admit they provide a lot more information than you would get from the RE boards. They also produce a quarterly up-date which I make sure to read. Their up-date just came out and is worth reading. Of course many of the comparisons are quarter to quarter.

They have noted what we see too, a major drop in sales but price stability so far, except for certain areas like the Okanagan, where some segments have taken major hits to the price.

Condos in particular have been 'savaged' in some areas, whereas SFH have held up. The start of a trend? We will have to wait and see. Here is a segment form their report:

In Q2 versus Q1 2010, condos in retiree-friendly Okanagan shed almost a fifth of value, off 18.55 percent or from $310,815 to $253,166. In the smaller BC North/Northwest region, the year-over-year drop in average price was 42.51 percent, from $127,339 to $73,206. In the Kootenay, the year-over-year condo plunge was almost 30 percent or from $279,767 to $198,489.

Conversely, SFD and Attached in the Okanagan, Kootenay and BC North/ NW regions have held their ground. Values in both product categories for all three regions posted good year-over-year and quarterly gains.

Condos have been savaged; the more traditional, homey residential product has not. Whether or not this changes depends on the regional economies and, good, bad or both, changes are coming

This link will take you to their HPI graphs. And you can flip through the different areas and segments. The graphs of Kelowna, especially condos, is worth looking at, Vernon doesn't look too hot either. Some areas have not been up-dated, so check the dates when you open the charts.

This is a site well worth book-marking. The more info we have the better.

.

SHAME...SHAME...SHAME.. On YOU VANOUVER

Normal RE blog posts will return but I am so disgusted by the Pickton affair that I cannot let this slide by.

You all know my low opinion of the local papers- however the front page of the Vancouver Sun made me sick and needs to be read.. This SOB animal ran an abattoir on his farm, killing, butchering and eating the women!

And our bungling police force ignored evidence, didn't execute a voluntary search and turned away tips.

WHAT THE FUCK!!

13 more women died than needed to due to their bungling. Heads should fly. Senior police officers- who refused to accept there was a serial killer at loose and then did a shlip-shlop investigation need to lose their PENSIONS.

We will pay dearly for this from the justifiable law suits that the victims families will file. The idiots that allowed this sick fuck, who should be electrocuted asap, get away with this need to pay too.

And there is NO WAY he did this without anyone else's knowledge. They should be bringing in all the fuckers friends and relatives for questioning. Search their homes, mail, talk to their friends too. Any sign of the slightest knowledge>> Arrest them, and put them on trial!!

If we didn't have a thousand fractured, ego-driven police forces, but a single force and an FBI-like structure (which deals with serial killers in the US) we would have had some arrests. The Royal Mounted are good for ceremonial shows, but we need a highly efficient, high tech national force.

Instead, we have nothing...nothing...

This is typical of our Province. We talk equality but when it comes to marginalized women- the poor, sex trade workers or Aboriginals- who gives a fuck if a few die?

There is another serial killer loose hunting women in the Highway of Tears and the cops only recently agreed to classify it as a serial killer/s.

The truth is we are a sick Province when it comes to crime. We are a drug infested, gang laden, pot growing hole where Judges refuse to convict biker gang members and grow ops are a major revenue provider.

Sick!

We have newspapers full of the Tamil migrants- like they will destroy our perfect society, when gangs kill whoever they want with no legal retribution, when tens of thousands of BC'ers are involved in the drug industry in some way and where we let in wealthy 'investors' regardless of who they stole the money from.

I am disgusted. Sorry for the language but there is no other way to describe what has happened in this case. I'll get back to RE once I have calmed down.

Bit and bobs..

To muddy this housing market even more, we have two pieces of news pulling things in the opposite direction.

First banks are cutting their mortgages rates a tiny bit . This is due to the huge rally in bonds which is unprecedented. No one is quite sure why this is happening. It could be due to the imminent resurgence of that whole recession-debt-default-thang which makes government bonds look more attractive, especially if we starts getting a little deflation in the air too.

Here is the US thirty bond yield- ours follows the US pretty closely.

Big drop in Housing sales and the average price across Canada. Just shows how correlated the country is and this is not just a local event. We are in a national housing bubble.

BTW- found a good source of info for current selling price per square foot for condos for Vancouver areas, broken down by size, area etc.

I'm back

Went for a nice trip around recreational property land. The Gulf Islands and Sunshine Coast..looking for deals. Well we are a long way from getting deals as of yet.

Met a few Real Estate Brokers and saw some properties. Even stuff that has been on the market for a year or more without a sniff from a buyer are stubbornly over-priced.

On Saltspring Island, they are sitting on (7 x 4 months) 0f supply = 28 Months. Total inventory/YTD sales. They had a front page article on how the market had changed and sellers need to wake up to this. Despite this prices are inching down v-e-r-y slowly.

The same in the Sunshine coast.

The Real Estate Brokers all admitted things were slow. ('Dead' one of them said)

However they were all certain there would be no significant drop and one suggested that I not bid any less than 10% under listing to be sure I get the property.

Huh!?

No one else is interested but I should still pay 90% of the asking price, on something that the listing agent and seller have probably over-priced by 20% expecting the market to keep going up..

I mention to some that I was looking as assessed as a starting price. This drew some laughs..surely I must know that assessed and market are two separate things...

I then mentioned that:

1) The assessed value is decided by a fairly uninterested party. In fact they will likely err to the up-side, since the higher the assessed the more taxes that are assessed.

2) I had done my home-work and showed up with info on several recent sales which went at the assessed value.

Everyone can have an opinion..but when you back up your opinion with facts it is harder to refute it.

Recreational property has not rebounded as much as Vancouver. The further from the centre, the weaker the bounce back. I think we are in a full-out buyer's market. That is the only way you can describe any market that has over TWO YEARS of inventory. However there is a LOT of denial out there and buyers may find sellers need some more time to come to terms with the new realities.

In fact there are now some listings UNDER assessed on the Sunshine Coast.

................................

As many of you know, I have a special distaste for Conrad Black. He basically threw his Canadian citizenship away. Then he gets convicted for multiple cases of fraud and one of obstruction of justice, and is being sued for unpaid taxes by the IRS.

He then pays enough lawyers to get him out of jail on bail pending an appeal and now he is suing his former Hollinger colleagues in Canada who accused him of looting the company. He is suing in Canada because we have stricter libel laws. Nice to see Canada has something he wants.

Ah will the machinations of the naughty rich never end..

What did Bob Rae say about Black.."that most symbolic representative of bloated capitalism at its worst"

HEY CONRAD if you ever read this post surfing google for mentions of your name..make sure you listen to Todd Butler's song, which is just about you:

Words

Music - click on 'Conrad' if it takes you to another song first.

OK last post for a while, and it is on the OK

I am heading out of town for a week in a couple of days. So unless anything remarkable comes up, this will be it until the following week-end.

Got the Okanagan numbers, and the MOI are reaching eye-popping levels.

I knew I was in for interesting numbers when the titles of the three press releases were:

Summer Heat Cools Buyers’ Market in the North Okanagan

Summer Slows Buyers’ Market in the Central Okanagan

Home Buyers Take Summer Off in the Shuswap

29.6 MOI in the Shuswap/Revelstoke Area

23 MOI in the Central OK area (Kelowna etc)

26.8 MOI in the North Okanagan area

No real price comparisons I can find in the reports. They just report total dollar sales, which are of course down.

In any case we are deep into bear country here. I don't think I have ever seen MOIs that high in recent history in BC.

F_V_R_E_B

Ok a quick peek at the Fraser Valley numbers

Some pretty graphs in there

We are down 1% or so from June 2009.

However the Fraser Valley didn't rebound as high as VREB in 2009. In fact HPI and Average look to have just matched the previous high with a steep valley in between in 2008.

We are now sitting at 9.8 MOI in the Fraser Valley.

BTW- I have noticed how visits to this blog pick up when there is price falters. In April I was down to under 150 visits a day - now we are back over 250/day and rising. Guess I wont shut her down just yet :)

Numbers are out

Here

Lots of stats for the numbers nerds to play around with.

HPI down 2.8% from peak. (Hey the peak is behind us)

Sales down almost 50% from 2009- we already knew that.

MOI for JULY was 7.2

Some HPI comparisons Between June 2010 and July 2010.

Detached July: $793,193 June: $795,025
Condo: July: $387,879 June: $391,528
Attached: July $490,995 June: $492,861.

All DOWN

The importance of timing in the housing market is demonstrated in the line below:

Residential Greater Vancouver $577,074

1 year change = 9.1% 3 YEAR CHANGE =9.1% 5 Year change = 46.0%

Buying a year ago gave you as much appreciation as buying three years ago. that's what a steep drop does for you.

And several areas like West Vancouver which saw nutty pricing a few years ago are still down in price from 3 years ago (with lots of price recent price reductions to still factor in)

We are down anything from 3-6% from the peak a few months ago depending on whether you follow average or HPI.

Neither are ground breaking. However a few points here:

1) It shows that hosuing falls , DESPITE all the pundits and experts.

2) This is exactly what we want...a slow decline.We want a market which allows buyers and sellers to transact based on supply and demand.

NOT for the Government to change the rules and pull the carpet from under the buyers, as soon as they have an upper hand (after years of being in the loser camp).

That is EXACTLY what they did in 2008.

If we had a falling-off-the-cliff event in housing - you can bet that Flaherty and Campbell and their gnomes would be hard at work trying to throw our money at sellers.

SLOW AND STEADY WINS THE RACE...

Most Responsible

The US is seriously underemployed.

Not blessed with the same level of programs we have (but better than say Botswana) the unemployed do not have an easy time. Hence employment levels have always been much higher than in Canada or Europe.

They usually run an unemployment rate of 4-5%. We are now at nearly 10%!

Why? Thanks to these two gentlemen.

Greenspan in pushing financial deregulation:

"The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions .... Derivatives have permitted the unbundling of financial risks." -- May 2005

Derivatives caused the biggest financial collapse and bail-out in US history-AIG.

On the threat of a housing blow-up:

"Even though some down payments are borrowed, it would take a large, and historically most unusual, fall in home prices to wipe out a significant part of home equity. Many of those who purchased their residence more than a year ago have equity buffers in their homes adequate to withstand any price decline other than a very deep one." -- October 2004

One year of ownership gave him comfort in the equity of someone who BORROWED their down-payment.

Improvements in lending practices driven by information technology have enabled lenders to reach out to households with previously unrecognized borrowing capacities." -- October 2004

Unrecognized Borrowing Capacity- huh! You mean folks who cannot and should be buying a house.

In Feb 2004 he told borrowers to borrow short and variable to save 'tens of thousands of dollars in interest payments' and then raised rates 16 X- in effect killing anyone who had followed his advice.

"I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically -- I should say, fully -- hedged." -- 2000

Within 7 short years. Three of the biggest had gone bankrupt- AIG, Lehman and Bear Stern. Citi, Merrill and many others were saved by tax-payer money.

As for Bernanke, listen to this and no more needs to be said

I was too charitable in calling them gentlemen. Fools would have been better. A perfect example of the 'emperor-has-no-clothes' syndrome. Elevate an imbecile to lofty heights and the damage they can do is extra-ordinary.

Tomorrow the US releases it's latest unemployment numbers.

We are not amused....!

That apparently was the way Grand old Queen Victoria used to indicate her displeasure with something.

Well, her namesake city seems to be in the same predicament (unless you are waiting to buy of course). The Victoria REB July numbers are out.

527 sales compared to 933 in July of last year.

Average prices down in all categories..here..especially town homes which look to be on a steady down-trend.

The blurb they put out out tries to put the best spin on it...16 sales over $1 Million, even mentions one over $1 M in the Gulf Islands. Since when is one sale over $1 Million newsworthy, used to be a common occurrence.

No mention of the fact that the Gulf Island SFH average tumbled 12% from the 6 month average.

527 sales, 4477 listings = 8.24 MOI at this rate.

Remember slow and steady is what we want to keep the politicians from using our money to prop things up again.

Down-dooby-doo-dum-down

Once again Kudos to Larry Yatter for getting those numbers out first and proving that lines do not go straight up forever.

I think we could all see this coming. Yes, new listings had slowed down, but sales have been sliced in half...despite the great-weather-low-interest-rates-rich-Chinese-no-land.

We are solidly over 6 MOI in almost every area.

Lets see what the HPI brings in a few days.

BTW- What is that terrible smell that has been blanketing Vancouver for the last week? It smells like a big stinky fart!

Down-dooby-do-dum-down