MOI - VREB search - 16/06/08
By Greg - Posted on June 16th, 2008
This "Months Of Inventory" (MOI) snapshot was based on MLS searches done for the VREB area on June 16, 2008.
As usual, there are more single family homes and condos listed since the last time I did a search on June 6, 2008. In fact, there are more of everything, including an incredible 14 months of million $ plus inventory.
We can thank CREA for announcing today that inventory is increasing, while dollar volume and unit sales are dropping throughout BC.
Of course, average prices are still somehow maintained. For how much longer?
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The growth in listings in Victoria is slower than in other markets and not too much product has been added in the last 10 days. It looks like the listings growth is starting to drop off suggesting a peak in yearly listings sometime soon.
The sales to active listings ratio is also strong in Victoria relative to other BC markets and is at the upper end of a balanced market. For that reason, I don’t think we are in for a price correction in the near term, but perhaps a small upside or stagnant prices.
In contrast, I would expect prices to drop in the Okanagan due to the low sales to listings ratio, the greater run-up their market experienced and the high percentage of out of town buyers that drove the market who are now pulling back.
Dave,
disagree that any slowdown in listings growth is happening in a way that would result in a stagnant or balanced market. There are already 8 months plus of condo inventory and million dollar plus inventory is now at 14 plus months. These are not conditions conducive to a balanced market.
This was the big sales period in the last few years (April-May-June), and even in the good times listings piled on during the summer. Can't see how some of those people trying to unload condos as hundreds of units near completion could feel good about no price correction in the near term - price reductions are already happening.
Of course, condos are connected to starter homes, and average prices are now insane.
Meanwhile, the public have now observed more than a year of bad news out of US housing, while the stock portfolios of investors all over north america have been hammered unless you were lucky/smart enough to be heavy into commodities and gold.
I think this is the crest of a wave which is about to crash and start ebbing out. Why things would happen differently here than Kelowna (aside from timing) is beyond me.
I'd agree with you Greg, and would like to add a thought on the economy. I was down on Fisherman's Wharf yesterday and overheard the guy running the ice cream stand talking about how terrible tourism was this year. Victoria is the best employment market in Canada right now, but all the signs are on the table for much worse times ahead. There will be construction layoffs, tourism layoffs and consulting firm layoffs (for the forestry industry) and we don't have an oil industry to keep us going while our RE market falls. Regardless of the reason of blame du jour is, fundamentals are so bogglingly bad that there is no way Victoria will be the one spot in the world that doesn't see it's RE market retract.
Downtown, fisherman's wharf, inner harbour, beacon hill park etc those are in my neighbourhood. What the ice cream vendor was saying is no surprise. The drop in American visitors, especially if you take away those cruise ship tourists who only spend a few hours in town, is quite noticeable.
Meanwhile, they are planning on building more condos on the site of the Admirals motel. All I can say is build baby build!
After having lived in the US downturn, I can tell you that reported price declines are significantly delayed (1+years) after we see a rising inventory. That is because the incentives that are added (closing costs, allowances, appliances, etc.) are not reported in the sales price. These unreported incentives are now being added in many areas of bc in order to continue selling homes. Price declines will probably occur soon if the inventory remains high.
Hey Greg, just wanted to toss in that I've been tracking the "spread" between mls.ca and the overall inventory on PCS, and I averaged it out tonight and it looks like it's trending towards 1.53 for the time being. So in my thinking, all your MOI numbers could be roughly multiplied by 1.53 to give an MOI that might be closer to actual MOI (although still a very rough estimate).
So looking at your latest snapshot, that's 4.77 moi for SFH, a whopping 11.44 moi for condos, and 9.00 moi for townhouses.
I'm guessing MOI for houses is going to spike in July - my PCS has been pretty dead on the sales for the past two weeks.
Hey Womp,
I just tally up the search numbers from the MLS, which of course can be out of date with pending sales compared to actual numbers on PCS, and may not even show some stuff already on PCS. My numbers of course don't include anything removed from the regular MLS by way of sale - typically those still show up on PCS for awhile unless you are removing them from your count somehow. I did another search today and got slightly higher inventory numbers; pinning down the spread between the two is probably more guesswork than math exercise.
I'm trying to work out some web queries to broaden and regularize my searches, so I haven't been doing much posting lately. If I could access a few other sources for this data, hopefully it would get a bit more interesting and compelling. Thanks for the comment.
I'd be curious to see how other military base towns act during real estate boom/bust periods. There is a fair chunk of forced selling and buying yearly just from postings in and out of CFB Esquimalt. While it's sort of a non event, people coming in are just replacing those leaving. It must provide some permanent liquidity to the market as these members are generally buying/selling regardless of market conditions. Unfortunately, I don't think the 1 or 2 week house hunting trip the receive is enough time to figure out the market to make informed decisions and they rely realtors.
I doubt its enough to move the whole market. Also, a lot of them here now could sell but some moving here probably can't afford to buy.
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