cheaprealty net

Let's go back to the watercooler for an exploration of the arguments for and against Victoria reaching a pricing peak this year. This poll at Cheaprelty was convincingly in favour of the top being in; another poll on a more developer friendly web-site is not so one-sided, but still also shows some uncertainty about future real estate appreciation.

To summarize some of the arguments that are being heard against imminent price declines or collapses, consider the following:

Since the previous topic got some conversation flowing, let's go back to the watercooler.

Today, I want to discuss what the benefit is to calling the top*, if you want to buy. Specifically, is there any point in waiting for housing to peak before buying? What if this is an escalator, and it just keeps going up?

Housing bulls sometimes like to point out that if one intends to live in a house for a number of years, the affordability of your payments and your satisfaction with your purchase are more important than the price - after all, whether up or down, while you are using and enjoying your home, the price paid was just your ticket into the game. Trying to time a market could leave you out of the housing game for years - and in the long run, housing always goes up.

I'm hoping some readers will take the time to make a comment or two on this post, I get lonely writing this blog sometimes, and it's hard to tell if the blog is having any impact, good or bad, with a lack of commentary.

Okay, shameless begging for commentary will end there. The reason I am begging for commentary is due to some comments made over at Vibrant Victoria. I am wondering whether the blogosphere accepts and agrees with these comments, or not?

The gist of it is, I posted a question about whether or not a housing bubble currently exists in Victoria. Several different responses were made, but the one that interested me most was posted by Derf, who said:

I was interested in graphing the total sales per month versus the inventory per month, to see whether the number of sales is increasing proportionally with the inventory of resale and new housing stock available in the Victoria Real Estate Board area.

US Real Estate Preditions for 2007, in this piece some stock market bulls hector and try to shout over Peter Schiff, they come across as clowns.  One guy actually says there's no inflation right now, expect 10% housing price appreciation this year.

Too bad they were talking about the US and not Victoria.  Here in Victoria, the 10% has been delivered.

But as Peter said, it's a fantasy, like the dot coms - those paper gains will soon disappear here, I am sure. 

Stephen Colbert has some fun.

Review of some listings with visuals of the beautiful properties for the big dollars.

With a nice sound-track by Strunz and Farah.

A few items to consider, as prices in Victoria swim ever higher.

Courtesy of the BBC - Are global markets set to blow?

On the lighter side, an unknown Canadian is credited with fronting Casey Serin some money ($1000), which he used to dump his wife and flee to Australia - or, alternatively, Casey is focused on finishing a foreclosure book and has gone on a business trip.

I promise it wasn't me.

As some readers may notice, the links to Casey Serin's blog are working again, as he has returned to blog about - nothing at all.

^{[editor's note - none of the Casey links are working anymore - sorry - August 31, 2007]}

What's the difference between Casey and so many bloggers on the internet? CS has developed a community on his blog, an ill-humoured community, perhaps, but one that couldn't wait to get back and start ripping into him.

Here you can see the general trend in house prices in the Victoria area over the years. It is interesting to note that prices have gone down previously, usually during times of decreasing unit sales.

The increase in prices in the last 5 years is quite stratospheric, compared to the general trend of the chart. As the local median family income in the area is only around $64,000, the current average housing price is now over 8 X earnings - not as high as in some other bubblicious locales, but higher than ever locally.

Here is a little chart based on some searches I have been doing on the MLS in the local market area. Over the past 10 months or so I have been checking the MLS for total listings available and writing down the results based on property type.

This is a sort of snapshot of inventory available at any particular time - the data does not show sales, but rather property that has not sold yet, or which may never sell. The higher these numbers get relative to actual monthly sales for the various types of residential property, the more likely we will see price drops in the future - because a divergence between increased listing and decreased sales activity cannot continue indefinitely.

Not surprisingly, inventory has not increased greatly in this period, just steadily - probably a reason why property prices have skirted with all-time highs recently, while a housing crash is already underway elsewhere.

Here is a chart that nicely illustrates the increased sales activity in recent years, as sales of single family houses, condos and townhouses increased along with the prices. However, the possible beginning of a downtrend in sales activity can be seen, with the drop in activity from 2005 to 2006. The graph illustrates some year to year volatility, and in particular, correlations between down years in sales activity and the effect on total dollar volume and single family home prices is worth checking out. The increase in the local population and the general increase in the total housing stock over the years are a couple of explanations for the general uptrend in sales activity.

Here is a chart that shows the rise in total dollar volume in my local real estate market, the Greater Victoria area of British Columbia, Canada. In this case, the volumes are restricted to single family homes from 1978 to 1994.

Since that time, the unit numbers used to generate the chart include the records for condo, single family, and townhome sales reported by the local real estate board. The chart numbers do not include units sold in outlying areas defined by the Board, that are sometimes reported with other board statistics, such as the Gulf Islands or the Malahat.

It is clear a massive amount of dollars changed hands because of real estate in recent years. This would seem the likely cause for the similarly recent spike of real estate valuations. It remains to be seen how long this trend of increasing total dollar volume will continue in the local market.

If it doesn't, what will the fall-out be for local prices? Statistics are from the Victoria Real Estate Board, and were compiled in an Excel spreadsheet in order to produce the chart.

Excuse me, but real estate prices in Victoria just tripled in the past 6 years. If you factor in inflation, saying prices will double in the next 20 years does not show a lot of faith in residential real estate as an "investment". After all, 3.5% gains compounded for 20 years will lead to a doubling in value. The same study makes the very large assumption that inflation will only run at 2% over the next 20 years, due to the forces of globalization - I guess that makes 3.5% returns "good".

They actually build or attempt to recreate the house we know and love on TV.

Or maybe don't love, if you consider them the Simpletons, instead of the Simpsons. 

Here are the year over year sales numbers for the months of May 2006/2007. VREB includes the sale of out of area properties like the Malahat and Gulf Islands in the Board numbers. I prefer to take them out of the equation to get a better idea of what is happening in Greater Victoria itself, so that's what I use here.

Sales are now moving ahead faster than last year. Prices are up this year, but momentum did not carry over from April to May 2007 in the single family home market or in the condo market - prices have dropped back a little and seem to be taking a breather.

Average sale prices are seen in this table. The prices of single family homes and townhouses are both up substantially from a year ago, condos are a bit higher.

May 2006

Units Add new comment  •  Read more  •    •    •    •    •    •  359 reads  •   Maybe not.... the latest from Casey... By Greg - Posted on June 1st, 2007 Tagged: apology  •  blank canvas  •  casey  •  hmmmm  •  loyal readers [editor's note - none of the Casey links are working anymore - sorry - August 31, 2007] I'm sorry, Weirdly faded apology on an almost blank canvas today. Hmmmm, can't stay away. More to the point now, anyway... Apology is to: a) his wife b) his loyal readers c) his jilted bankers d) who knows, it's probably just a sweet scheme.... Add new comment  •    •    •    •    •    •  352 reads  •   Copyright © 2006–2008 by clickcampaign marketing. Some Rights Reserved. Copyright Policy and Terms. Designated trademarks and brands are the property of their respective owners. Who's online There are currently 0 users and 5 guests online. Blogroll etc... Charles Hugh Smith Condohype HouseHunt Victoria Housing Doom Mish Patrick.net Paul B Realtor Blog Restats.ca Roger's Stats Gallery Sacramento Area Flippers In Trouble Vancouver (Un)Real Estate Vancouver Condo Info Victoria's Truth VREB Other Links Image galleries M.O.I. Polls Archive December, 2008 (2) November, 2008 (14) October, 2008 (12) September, 2008 (12) August, 2008 (9) July, 2008 (15) June, 2008 (17) more User login Username: * Password: * Create new account Request new password Site Search ...cheaper property better society.