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Home prices in the US slumped almost 13% year over year, according to this story on the Standard & Poor's/Case-Shiller index of prices in 20 major cities, which also showed a 14th consecutive month of declines.

What would a slump like that look like in Victoria? Bidding $425,000 on $500,000 properties, and the seller is grateful for the bid?

Something like that, maybe?

Housing and the British economy - interlinked.

Another "Months Of Inventory" (MOI) snapshot, based on MLS searches done April 27, 2008.

More inventory, that's simple, the general tendency of more expensive houses to appear on the market continues - the disproportionate growth of listings occurs at the top of the market.

The total number of condos for sale on the MLS (1021) has increased a bit since April 22, 2008.

More townhouses are also available.

Million dollar plus inventory is growing - there were 301 such properties for sale in the VREB area on April 27, 2008.  A full 15 months of inventory. Doesn't that number alone guarantee price cuts at the top of the market?

It seems some of these expensive properties haven't sold yet, I wonder why?

"Months Of Inventory" (MOI) for the VREB area, based on MLS searches of listings April 22, 2008.

Was the previous inventory jump an anomaly, or do the drops we see this time reflect a change of the trend?

The above median single family home listings have dropped from 913 to 824, since the last time I checked on April 16, 2008. The overall number is still up from where it was on April 10, 2008.

The total number of condos for sale on the MLS (1006) has also declined quite a bit since April 16, 2008.

Townhouses were the only segment with a minor increase in inventory.

Million dollar plus inventory is still growing. As of April 22, 2008 there were 286 million dollar plus properties for sale in the VREB area.

We're on the verge of an economic collapse, not just a recession.

This means the economic foundations of America need to be rebuilt, which is going to cause a lot of tough problems in the short term.

This is the beginning of the end for the US. Consumption is not a god-given right of americans, it can go elsewhere.

These are some of the ideas tossed around by Peter Schiff. 

As usual, other panel members try to talk over Peter Schiff, interrupt him and label him as hysterical.

But as Peter, overly smug but accurately replies, his recent track record on these things is a lot better than his detractors.

Before being completely discredited by the subsequent turn of events, many industry experts, economists and commentators floated the idea that US housing prices would moderate a bit, eventually bringing prices back into line with other economic fundamentals over time. This was the widely quoted "soft landing" theory of the US Housing Market.

At wikipedia, the following definition for a soft landing is provided:

A soft landing in the business cycle is the process of an economy shifting from growth to slow-growth to potentially flat, as it approaches but avoids a recession. It is usually caused by government attempts to slow down inflation.

Around the same time that people began talking about a real estate bubble in the US, these soft landing theorists came to the conclusion there would not be a burst of the bubble, prices would decline a bit, or more likely, remain steady over time, allowing the housing excesses to unwind in an orderly fashion.

Some of the common themes of this widely hoped for outcome were the tendency of interested parties to repeatedly make sunny predictions and the calling of housing bottoms multiple times, at the point where the housing markets in the US were only beginning to slide.

Unfortunately, these theorists proved to be oh so wrong.

Now in Canada we begin to hear something similar. The wording isn't quite the same, because the use of a soft landing theory to predict the unwinding of Canadian prices would have the unfortunate associative effect of suggesting a link to the same sort of disaster as in the US.

Can the outcome here really be any different?

Let's look at the run up in house prices compared to US prices since 2000.

This is courtesy a very timely article published at Contrary Investor in August 2006 - right around the time the US housing market started to go to the dogs. Titled The Landing Pad, the article presents a great many of the factors that led to the implosion of the US housing market, in detail and in advance of it happening. For instance, look at the chart below. The value of US residential property had clearly jumped outside the usual long term pattern of appreciation in a big way. Was this a new paradigm?

A commonly discussed bastion against a severe housing downturn was a consistently strong employment performance of the US economy in recent years. However, these statistics have come under some attack. As well, they were linked in a very direct way to the construction and financing of housing - so any deterioration in the performance of the housing market was bound to impact these employment numbers directly.

Alright, but that's America, we learned from their mistakes and never had loose and dangerous lending patterns to inflate a bubble here! Hmm, okay, look at this chart of Victoria Residential dollar volume.

Do you notice any similarities? What about this chart below showing gains in internet stocks vs gains in US housing? The mimicry of housing gains with internet stock gains must either prove a) that housing is in a bubble, because everyone knows there was an internet stock bubble, or b) there must not have been an internet stock bubble, after all. Hmm, which is it?

Next is a famous chart by Mish that illustrates changes in attitude that accompany changes in market conditions, and how those changes almost always lag the actual conditions.

So after looking at all these charts, is it reasonable to assume Canada is in a different situation, and the soft landing theorists are going to get it right this time? Not according to Garth Turner, the maverick member of parliament whose self-promoting, controversial and compelling arguments are aimed as much at the Canadian gut as the Canadian brain. And where are Victoria prices going Garth?

However, on the other hand, some realtor and industry groups continue calling for the perfect outcome to the impending housing mess.

....the deterioration in housing affordability from the past outsized price gains combined with additional supply from new listings and continued elevated housing starts amid a weaker domestic economy should gradually let the heat out of the real estate markets.

Do you think a soft landing is possible? Gradually letting the heat out, cooling, bringing the bubble back to earth, rather than letting the bubble pop? We're about to find out.

Professor Roubini. A wide ranging interview covering global conditions, not just american financial conditions.

"Months Of Inventory" (MOI) for the VREB area, based on MLS searches of listings April 16, 2008.

The biggest jump has been the above median single family home market, going from 791 to 913 listings in just under a week.

According to at least one realtor source, there are now 4000+ listings in the VREB area.

Interestingly, the total number of condos for sale on the MLS (1080) has declined a little bit since April 10, 2008, at the same time the percentage of above median listings has decreased while sub median listings have jumped - from 304 to 329. So condos appear to be getting cheaper.

Townhouses? This is a market segment where the inventory just keeps growing.

Are people buying somewhere else? Are people trying to sell quickly to get out of the market?

The jump in single family home inventory was pretty sudden, and represents almost a 10% increase in the available inventory in less than a week.

April sales numbers aren't going to look very good if this trend continues.

Subprime is only one part of the problem leading to recession , but it is just beginning, and it is a social problem as well as an economic problem.  The credit system is at the heart of the economy, which is going to cause the entire economy to slow down.

Not only that, but banks have holes in their balance sheets, and don't know how secure they are. 

Interestingly, he points out the best bang for the buck for a stimulus package would simply be to increase employment insurance.

The other major damage is going to be to local and state tax rolls as property values fall. 

The idea of encouraging more spending versus more savings is probably the wrong approach. 

Well, here is an open thread for your comments on the real estate scene lately. As of today, a search of the MLS in the VREB area found 1083 condos. The breakdown shows 312 were listed below the March median price of $300,000, while the other 771 were listed higher. Grand total on MLS is now 1083. So this inventory is still growing every day.

A search of Craigslist found 136 condos listed for sale. As usual, by the time you click this link the number could go up or down a bit. But probably up.

Some other interesting stories to consider and maybe comment on:

An Ex-Chancellor from the British tory governments of Margaret Thatcher and John Major says that a crash was predictable, as Britons have been living on crazy credit. Why, if a top economic official expected this, didn't the British avoid all this trouble?

Greed? Isn't Victoria more English than the English? Do tell.

Over at the Guardian, a columnist argues that high house prices are a bad thing. To sum up, "high prices are socially divisive and act as a brake on aspiration." Maybe cheaper IS better?

The Victoria Times Colonist, while still positive about the local market in general, is now publishing stories such as this one which describes how posh American neighbourhoods are not immune to foreclosures in this colossal real estate bust.

History of the Housing Market provides a nice overview of US toubles from ABC News, including some comments from Robert Shiller. Hat tip to anonymous at 10:40 at House Hunt Victoria for mentioning the video.

Meanwhile, a fevered frenzy of blog insults, slappy put downs and annoyed retorts has burst out at house hunt victoria and right here.

Ah real estate, doesn't it just give you a warm and fuzzy feeling!

I did a search for condos in the VREB area of the MLS. For April 10, 2008, there were 1074 condos for sale!

Another 138 condo listings were found at Craigslist - the number of condos offered there continues to grow and grow. Mind you, by the time you click the link, the number could go higher!

The attached graph shows results of an inventory overview search of the MLS, for the Victoria Real Estate Board area (10/04/08).

Inventory is up quite a bit since the last time I did this about six weeks ago, but even so, inventory may not be growing quite as much as was expected by the bears.

Will local listings get over the threshold of 4000 units this spring or summer? That would be a sign buyers are disappearing, and inventory is not going to be absorbed this year. At this point, even though sales are definitely off, it's too early to say the buyers are on strike.

Do you know anyone who surprised you by either selling to get out of the market, or by waiting because they believe house prices will be lower in the near future? Is this general feeling out there among your friends or family yet?

Here's a link to the previous snapshot, in case you want to make a comparison.

Here is another "months of inventory" (MOI) snapshot of the VREB area
of the MLS, based on searches of the listings April 10, 2008. Inventory has jumped since a couple days ago in the single family home segment. but in the other two segments it has actually dropped a little bit.

The trend with expensive (million dollar plus) properties not being
absorbed continues, with another 12 or so added in the last few days. There are now more than 14 months of expensive property to be absorbed on the market, which is becoming more top heavy daily.

Based on the standard 3 months of supply being the point where the market starts to shift from a seller's to a buyer's market, it is clear there is already a balanced market for single family homes, with it leaning towards a buyers market above the median. What would it take to really push things over the edge? Well, around 1600 listings would represent 4+ months of single family home supply. There have never been so many homes listed in VREB in the last few years, 1200 or so is a high water mark the last few summers, and it would take some radical developments in the short term for that to occur in the next few months - but if it does, that could be the trigger for substantial price drops.

Does it seem like that's going to happen this year? I keep thinking affordability has got to eventually squeeze out the buyers. Is that happening now? I went to a couple open houses on the weekend and there did not seem to be much happening.

Otherwise, unlike condos and townhouses, which are already oversupplied based on the months of inventory metric, the single family home market continues to stutter along. Sales in March versus listings are going to tell the tale. On PCS I see a mixed bag of price reductions and increases. $20,000 drops are not uncommon, but it seems a few places are going over by a similar amount. This is anecdotal, and not a statistical observation, of course. If another 500 unabsorbed listings come on the market in the next few months, things could get interesting.

Courtesy Angy Renter. From the site introduction:

All we hear these days is whining from reckless home borrowers and their banks.

But did you know that renters are 32 percent of American households? And that homes in foreclosure are less than 2 percent?

So why is Congress rushing to bailout high-flying borrowers and their lenders with our tax dollars?

Unfortunately, renters aren't as good at politics as the small
minority of homeowners (and their bankers) who are in trouble. We don't
have lobbyists in Washington, DC. We don't get a tax deduction for our
rent and we don't get sweetheart government loans.

Quite simply, we are just Angry Renters. And now it is our time to be heard: no government bailouts!

"A Horrible Housing 'Fix'"

Property values were artificially bid up to these crazy valuations - and yes he says that the US is falling into an economic collapse created by the easy money policies of the Fed.

Those policies don't have anything to do with house valuations in Victoria, do they? 

Here is another "months of inventory" (MOI) snapshot of the VREB area of the MLS, based on searches of the listings April 7, 2008; as you can see, inventory continues to grow, but not at a very fast pace. Will this trend accelerate or slow down in the next few months? I am of the opinion that this will determine the trend for the remainder of the year. Price pressure will not happen at the lower end of the market until more inventory arrives.

Single family homes below median are still in short supply. On the positive side, even with a lower median than a month ago, it looks like more single family homes are being priced "realistically". The situation with condos continues to get worse.

Are you aware of any projects being cancelled or prices being slashed by developers? If so, post the info here. Thanks.

Also, you can check out what is being said about some of these projects over at Vibrant Victoria here. 

Apparently this is a boring site, according to Sitting Pretty anyway. Maybe it is kind of boring, well, I can only do so much.

Some stuff to think about:

- Housing market to sink after Games: Wait until 2011, Pomeroy advises first-time buyers.

- Vancouver sales slow to 2001 levels (hat tip to Vancouver Condo Info).

- Overdue Consumer Debt in the US is highest since 1992.

- TD Warning about Vancouver/Victoria Bubble ...from 2005!

- Huge Job Losses Set Off Recession Alarms. It's no longer a question of recession or not. Now it's how deep and how long. How reassuring!

- Should you buy when the price is high? On solid gound, courtesy Garth Turner, media darling/vilified scaremonger.

Thought for today? I wonder if declining condo prices are the mechanism that will kick a leg out from under the clown holding up this bubble. If condos drop, a lot of people who bought to "get into the market" to begin "building equity" will be unable to make that move up in the housing market.

Post your news, links, and anecdotes here. Okay, even insults, thank you Sitting Pretty for noticing and spending thirty seconds at my blog. You were the only visitor today.

Well, some interesting tid-bits from the March VREB numbers. For one thing, if you subtract 12 million dollar waterfront listings from the monthly sales totals, what would the average price in Victoria be for a single family home? Around $566,000. An astronomical sum, to be sure, if not playing with paper equity and two mortgage helpers as "money" -- but less than the official average of $597,176, which represented a modest rebound from the February average of $587,295, and stemmed a 3 month decline in the average price of single family homes.

The single family home median was much lower than the average, and lower than the previous month's median - clocking in at $529,625, compared to $543,500 the month before. This is essentially unchanged from January 2008, when it was $530,200, and December 2007, when it was $536,000.

What does all this mean? Take a look at the table showing months of inventory based on a search of the VREB area of the MLS done April 2, 2008.

There has been a big jump in townhouse inventory since the last time I did a comparable search. Interestingly, the sub median inventory has also jumped quite a bit. Also, while below the median price, the market for single family homes is a definite seller's market, it is important to note that this comprises only a quarter of the single family home inventory listed for sale at this point in time. Above the median, it is a far more balanced market. Put another way, 1 in 4 sellers can expect a quick deal. For the other 3 (above median), expect to wait at least 3-4 months.

In the monthly summary of the March 2008 stats, VREB President Tony Joe said: "...sellers can anticipate strong interest in properties that are realistically priced." Translation: your home is probably not worth quite as much as you think. Realtors can't sell unrealistically priced properties quickly, can they?

In the case of townhomes and condos, the situation is not as good for sellers - there are just too many properties on the market to absorb quickly, relative to recent and/or projected sales - and this does not even take into account multi unit properties that will soon be completed and added to the pool of inventory.

Just a note about the months of inventory (MOI) table: it seems that projected sales used to compute a 3 month average in part based on 2007 numbers may turn out to be overly optimistic.

In the first quarter of 2008 approximately 1544 combined units (condos, townhouses and single family homes) have sold so far.  In 2007 and 2006 the numbers were 1734 and 1716, respectively, so there appears to be a weakening of demand.

How will the MSM spin these numbers? Should we care? Is this a touchdown for the bears? Let me know what you think about the current situation.

Oh by the way, due to the 100% increase in million dollar + property listings from the previous month (from 10 to 20 sold, what a difference a month makes), there are now only 13.15 months of mega priced inventory on the market. However, the total number of such listings continues to grow, proving not all sellers are prepared to listen to the advice of Tony Joe:

"...sellers can anticipate strong interest in properties that are realistically priced."

This is great!  Can't go wrong remixing anything with a Brian May guitar solo.