MOI - VREB sfh inventory increased - 13/05/08
This "Months Of Inventory" (MOI) snapshot was based on MLS searches done for the VREB area on May 13, 2008.
There were 1237 single family homes listed at the moment.
The sub-median single family homes inventory increased a bit more. The "most affordable" sector of the single family market continues building inventory instead of shedding it.
Million dollar plus property inventory increased again. Today there were 301 such properties listed.
Blogs are talking about recessions and inflation and popping bubbles. Is the global economic slowdown starting to take effect yet in the Victoria real estate market? Have the last of the first time buyers and hardiest of the foreign investors finally been knocked out of the picture?
What's next?
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It does look like the party is winding down. It's hard to predict exactly the outcome. Looking at the US as a model. It looks like we'll have falling prices while still in a slower, but decent economy. We do have our own version of 0 down/40yr mortgages as subprime. The only redeeming factor is 'I think' they were qualifying people on there incomes. At least, they are with me. The real question to me is, can the economy survive? I don't think it can, and if we are seeing sizable price cuts in a decent economy. What will we see in a recession?
I did read that study from BoC(IIRC) that showed 75% of the time we are in the same overall real estate market as the US. It also said that our corrections are more extreme, faster but last about 1 year shorter. Another study out of some university in US that I wish I could find again. But generally, it supported what we all think. Outlying area's, Sooke, Shawnigan Lake etcetera will all suffer first and fall farthest and longest gradually working it's way into the city center. Core areas of the city will fall least, shortest time period and recover first.
For info purpases, from my PCS SFH w/ Suite under $500k has average DOM of 34 and $238 sqft. That's for sold properties in the greater Victoria region. I've only just started tracking so It'll be interesting to see how it changes over the summer.
I took a look at that same BOC study. If I remember correctly, the last two corrections lagged but ultimately accompanied downturns elsewhere (the US). About the only difference of opinion I've got is that when it comes to a correction, another wave will start in the centre and work outwards - condos. But for sfh I think what you are expecting seems pretty likely. Thanks for the comment.
That could happen with condos. I don't know, most units are built as close to town(s) as possible. With all the new units and buildings going up it should provide plenty of in building competition to drive prices down quickly in the core areas. Condos in my view are the worst speculative investment. There is virtually no limit on supply, at the mercy of associations, they are the last to realize gains and the first to lose them. Majority of people I know don't desire a condo, but are forced into them as the last affordable option.
For the future, I think the best judge of value will be watching $/sqft average. Sure, the median will drop. But those remaining buyers, if they can afford a $500k house. They are still going to buy a $500k house, just it'll be more house for their money. I'll need to do some research on the historical average for that to figure in my own price target.
According to your figures, the number of condos offered below the median jumped over 13% in just twelve days. I would classify that as a genuine "wow!"
I posted this at a couple of other blogs also. Sorry, but it just pisses me off too much:
Don't believe what you read when you see “new listings.” I’ve seen an increasing number of properties pulled off the market and relisted at lower prices, apparently in an attempt to hide the fact that the property sells well below the original asking price. For example:
202-2710 Grosvenor (2BR in Hillside):
Feb 12 2008 listed at $315,000
Mar 12 2008 re-listed at $299,900
Apr 1 2008 re-listed at $289,900
On April 14 the property sold for $282,000. Looks like it sold for 2.7% under the asking price, after 11 days on the market, right? Well, no, actually it sold for 10.5% below the original asking price after two months on the market.
One word comes to mind: “slippery”
Awum,
this brings up a related point of annoyance for me, which is: why, on PCS, do you get to see original price and listing changes and final sale prices, along with the dates these happened, but the same information is held off the general MLS so all you ever see there is the current listing price.
For this reason, PCS seems to be one of the only accessible ways to get a flavour of what the market is actually doing in the recent past.
Maybe CREA had a meeting where they decided to go that route?
The biggest price drops are being hidden.
For example, 1-1120 Richardson recently sold for $335,000 after being listed at $349,900. However, it was originally listed a few weeks earlier for $383,000. That's a 12.5% haircut dressed up to look like a modest 4.3% trim!
Well, it's not exactly a loss when they are forced to lower there price to sell and still make money. Yes, their initial price isn't being fetched. I can't say I'd care to much if I was able to walk away with 50% gain in two years by giving up on my wishing price. I think most sellers at this point still have enough equity that they can lower their price and get the sale.
Granted, I'm short on life experience. Only remember two financial frenzies, tech stocks and now housing. What it has taught me is psycology matters first, fundamentals be damned. Can 2010 Olympics stem the tide of the increasing negative realestate news now coming from within Canada? Don't know the answer to that.