October Update

Every month I try to get a jump on the VREB by pulling the data for sales and new listings and prices from the VREB database before the official numbers are released.  And every month I’m frustrated by the fact that it is impossible to match the numbers that VREB produces.

The problem of course is all of your insatiable thirsts for immediate information.   Monthly stats are compiled the morning of the 1st of the following month, and the problem is that quite a lot of sales for the month have not been entered into the system yet.   So what do they report for the month’s sales?  Well all the sales that were reported during the month, minus the sales that were reported in previous months but collapsed.   Problem is that means what gets reported as sales in a certain month are actually missing quite a few sales at the end of the month, and include several sales from the previous month.   For example, as I write this, of the 280 single family sales that the database says were reported in October, 15 actually happened in September, and the total reported by the VREB is 294.

You’d think counting sales wouldn’t be so difficult.

Maybe it doesn’t matter, but fundamentally data that depends on how prompt agents are at entering their sales isn’t very reliable.   Much better to just throw the whole reporting dates out the window and move to a model where everything goes by the date a sale actually happened.   Collapsed sales are an insignificant number and can be tracked separately.   As of now I can actually do that since I gained access to the raw data feed from the VREB and am using it to build out some better reporting tools for the market.  Along with that I will at some point transition to statistics based on sales dates rather than reporting dates and thus will diverge from the published VREB stats somewhat.   Stay tuned for that.

For now, we’ve got the stats as they come from the VREB.  And this month is much the same as September.   Overall sales down some 10% from last October with detached declining the most, and condos maintaining the feverish pace from last year.

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September Numbers

As mentioned earlier today, the MLS HPI index is down again for detached homes.   This has made the VREB press release somewhat more somber than we have been used to recently.  The market is confusing, and of course that means there is a need (more than ever apparently), to engage a local REALTOR®.   Which raises the question: what kind of market would allow one to buy without an agent?  I suspect we may not live to see that recommendation in a press release.

No matter, back to the numbers.   With inventory and new listings essentially unchanged from a year ago, sales are down 18%.  Inventory is still desperately low (lowest on record for September), but it’s about 4% higher than it was in June.   An increase in inventory in that period is very unusual, having not happened since 2008.   However just like we saw the HPI index take a similar breather in 2006, we saw the same increase in inventory going into that fall too, so it is certainly not a surefire indicator of impending doom.

While the index languished, median prices for both detached homes and condos hit a new record this month.   The core detached market is languishing still, essentially flat from August and down $50,000 from the record high in January, but it seems the rest of the market is still rising enough to drag everything up.

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September Monthly Preview

Last month we saw the HPI index take a surprising dip after an extended period of increases.   Well early numbers show that this has continued this month, with a small decrease in the detached index while condos continue to increase.

Looking back at the short history of the HPI (only goes back to 2005), we can search for precedent of price declines in a market that is supposedly “hot”.   Back in 2006, we did have a similar period of several months of declines in the index despite market conditions still indicating a sellers market.

At that time it turned out that prices were still 18 months away from the peak which was 20% higher.   We’ll see what happens this time around, but I want to see much more broad based weakness in the market indicators before I would be confident calling a top or correction.   Sales are down 18% from last year with otherwise essentially identical inventory and new listings, so it is clear that demand has dropped significantly but we still need more properties available before price gains can be halted for good.

Full report on the month coming tonight.

August Numbers – The Benchmark Hits a Snag

August numbers are out and one thing that jumped out to me is that the MLS Home Price Index benchmark for detached homes is down, which dragged the overall index to a small decline as well.

It’s just one month, but the overall HPI index is generally pretty stable, and the last time we had a decline like this one in the index was mid 2014 when the market was in a balanced state.  Generally you don’t expect price declines in a market that from a months of inventory standpoint, is still hot.

Looking closer at the detached market, it is definitely the core that is dragging it down.    The westshore is flat month to month, and the peninsula is still up.

Again, one month is no trend, but this bit of evidence of flat core prices gets added to the flat or declining detached medians and average prices this year and flat sales/assessment ratios as well.

But a price decline still doesn’t make sense to me.   All the indicators for the core SFH market are still pointing to a pretty active seller’s market:

  • Average sale price to original list price is at 99.4% (versus 95% in a slow August, and just short of the record 100.4% last August).   43% selling at or over ask.
  • Active detached inventory in the core in August was relatively low at 460 compared to double that 5 years ago.
  • Months of inventory is up from the spring but at 3 is still solidly in sellers market territory.   Same with sales to new listings at 64%.
  • Properties are still selling relatively quickly with the median at 16 days to sell.

So I’ll continue to hold the line on this one and see what happens in the fall.  Last year we had a few months of declining prices in this segment as well but it was all wiped out by a $140,000 jump in the median from December to January.

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July Numbers – Condos lead the way

Are we done breaking records yet?  I’m tired of it anyway, so it’s a good thing that we are slowly returning to a more normal state of affairs in Victoria.

Single family homes are gradually slowing down, although I wouldn’t go so far as saying that we can tell whether that slowdown is part of a longer term trend or just a pullback to a more sustainable level.   As SFH prices moved out of reach, activity has concentrated on condos, which are more active than this time last year, with a full third of condos going over ask.

In single family homes, I have to backpedal from my somewhat alarmist post mid month that Gordon Head sales had ground to a halt.   They recovered somewhat from 3 to 13 sales, which is still off significantly from previous years, but not “off a cliff” as previously described.

The entire core is definitely cooling for single family homes.   July months of inventory up from 1.9 last year to 2.8 now, and median days to sell increasing from 10 to 16 days.    The westshore is also turning around, with months of inventory up from last year.  The VREB says there is a “strong focus on the lower priced end of the market” which is to say “pay no attention to the fact that average prices for detached properties are not increasing”.

In fact finally we can see that the whole market is carving out a bottom in terms of activity and is slowing down by all measures even on the rolling 12 month which tends to lag a bit.

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June Update: A not-so mixed bag

June numbers are out and I’d say they turned out surprisingly strong.   Let’s take a look at what happened last month starting with the bullish news and working our way down.   First of all, prices for the market as a whole continue to trend up across all detached, condos, and townhouses.

The months of inventory at 1.6 still falls into what the market summary considers “ludicrously hot” (MOI under 2).   Despite several individual signs of cooling (we’ll get to that), the overall market shows no particularly convincing signs of slowing down.   If we look at the trend, in a cooling market we should see a gradual deceleration of price gains.   Instead of that we are seeing steady increases or even continued acceleration.  For example, in the last two quarters we saw the 12 month rolling price medians increase as follows.

 Q1 2017Q2 2017
Median Single Family House+$9712 / month+$12,237 / month
Median Condo+$5170 / month+$5076 / month

How many people here are able to save $100,000/year?   Not me.   That’s why this silly price appreciation has to moderate if we think that local house prices should be supportable by local buyers in the long term.   Even if we accept that as the city grows, detached houses in the core will be affordable to an ever shrinking segment of the population, at this rate of appreciation that segment will tend towards zero rather quickly.   Right now only the top 25% of local households could qualify for a mortgage on the median detached house with minimum down (it takes a household income of about $150,000 and some $68,000 at closing).    Continue reading

Increasing prices on declining volume

Another month another stats update and it’s a mixed bag out there.   Despite the persistent notion that prices have stalled, I still don’t see it even if you squint at the data many different ways.

Yes, months of inventory for detached houses in the core is up.  The overall market months of inventory is no longer decreasing and on an annual basis it has flatlined since February.  The VREB is calling it a “gradual return to a balanced market” but I think that’s getting a little ahead of the game.   Months of inventory have flatlined at record low levels, and we haven’t seen any broad based cooling yet.

Meanwhile prices if anything have been picked up again similar to last year, and especially condos and townhouses are no longer lagging detached houses in price appreciation.

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First hints of a deceleration

Roses are red,
cherry blossoms are pink.
Sales are down,
because real estate is like a squash.

Or so you may believe if you looked at the VREB’s press release which says “Local agricultural production has been delayed due to the late spring, and so has the local real estate market”.  

I’d say the lowest inventory on record may have more to do with the market than soil temperatures but this is not a science.   So where are we at?   Continue reading

March Update

March numbers are out and things aren’t getting any better out there.  Let’s look at the headline numbers for sales, inventory, and new listings.

In short:

  1. Inventory is at a record low.  We’ve never seen a March with this few listings available for sale.  Nevermind the dregs.
  2. New listings are about average.   A bit below average perhaps for this time of year but not catastrophically low.  With all the stories about how people are afraid to list their houses, it’s good to keep some perspective.  New listings were significantly lower every March from 1996 to 2005.
  3. Sales are down 17% from last year, but still abnormally high.  We are off the huge sales pace from last March, but it’s the second highest on record.  Last seen at this level in March, 2005.

It all adds up to months of inventory at record lows and the resulting predictable effect on prices. Continue reading

February numbers: another leap upwards

After a brief period of time where the market-o-meter merely said the market was hot, we are now back to an assessment of ludicrously hot (which is triggered at residential months of inventory under 2).   The market predictor uses Victoria’s history of market conditions and associated price movements in single family homes to come up with a prediction of how fast prices are likely to change.  It is based on the data we have from 1996 onward so keep in mind it doesn’t represent all possible market conditions (the crash of the early 80s for example).

With a residential MOI of around 2 we have seen anywhere from 10% to 20% annual rate of appreciation in the past with a median of 15.5%.  Last year in February this model predicted increases of 13% which was a bit less than the actual value.   That’s because the market continued to heat up in the following months and the predictor looks at the market conditions as they are in the current month. Continue reading