What would you conclude if I showed you this chart?
With 4 months of declining medians it seems like prices are declining in the core, right? Are people maxed out on price? Are the Vancouver buyers not coming? Are people scared of the green party winning a landslide? Is it those Chinese capital controls beginning to bite?
Let’s zoom out a bit.
Hmm.. Looks a bit different but perhaps a market top? Doesn’t this stupid website say the market is “ludicrously hot” on the right side?? Hardly seems like strong appreciation in the last year with prices in April 2017 and May 2016 close to $800,000.
Let’s zoom out a bit more.
Now the graph gives a totally different impression. The big decline from the first graph is lost in the noise and the actual trend of about +$100,000/year reveals itself. Monthly medians are notoriously variable. Sometimes that variability manifests itself in large changes (like the increase of $140,000 from December to January) and sometimes it results in a stretch of steadily declining prices.
Could it be some sort of top? Sure. If we get another 4 months of price declines then there is something going on, but so far it’s just that much noise. It’s human nature to spot patterns in noise, and so we glom onto these things when we see them. This is why I think that while data is interesting, it doesn’t really help people form an accurate opinion of the market without interpretation. For example Zolo has a great page of stats for Vancouver but what they are actually highlighting in many cases is the noise, and in other cases they have the signal but it’s not obvious to someone not familiar with the details of real estate markets.
Regarding our market, I still believe that before we see prices slow down we would need to see a matching pullback in market conditions. This would be something to watch out for and I’ll look into what a market top actually has looked like in Victoria in the past. When the current runup is over, will we get any warning, and if so, what should we be looking for as an early warning of the market rolling over?