Friday, March 02, 2007

Fraser Valley Real Estate Board Statisitics

Well, I got a few minutes to look at the FVREB stats for February and here are the results.

Sales are up from January but down from 2006. Listings are up from January and down from 2006. The inventory is continuing to build and more newly completed construction is coming into the supply every month. Approximately 500 - 600 dwelling units per month of new construction are coming into the Fraser Valley supply side for the next 24 months, which is not directly reflected in these statistics.



Months of inventory are down significantly from 6.1 months in January to 4.5 months in February because of higher sales volume. Looks like a fairly normal seasonal variation in a fairly busy sales market. Demand seems remarkably resilient. I am still amazed at the continually high inverse correlation exhibited by relationship between the months of inventory and the quarterly price changes.



Median prices are up across all housing types.
Detached - MOM +3.3% YOY +18.3%
Townhouses - MOM +3.3% YOY +19.3%
Apartments - MOM +4.2% YOY +24.1%

Looks like further price compression between housing types.



The quality adjusted house price index is also up significantly.



It looks to me that there is still lots of demand out there even at these prices. I get anecdotal stories of more people using unconventional financing such as 40 year mortgages and 0% down to make the purchase. At this point of the real estate cycle only the most financially illiterate are buying with these financial vehicles and I get the feeling this is currently where the marginal demand that sets prices is coming from.

19 comments:

Clarke said...

The graphs are great. After VHB's departure I was going through withdrawal.

The price variations I see look pretty seasonal, and while sales are down and listings are up, it does not look like we are seeing any big downward pressure on prices at the moment. The amount of construction in Vancouver, the tri-city area, and the Fraser Valley suggests a huge glut of supply coming on to the market will eventually start to provide all the necessary impetus for slow but steady price decreases.

I am more than a little apprehensive about how many people are going to get burned by this.

Dave said...

Zow, that is just amazing to see prices climbing again. Many thanks for the charts.

realtor88888888 said...

At this point of the real estate cycle only the most financially illiterate are buying with these financial vehicles and I get the feeling this is currently where the marginal demand that sets prices is coming from.

easy,cheap money

Freako said...

Mother of pearl. That has gotta be a rate of appreciation in the 50% range on an annualized basis.

Geographic price compression must be going into overdrive, because there is not way that GV can match those gains due to affordability constraints (me thinks, the GV stats aren't out yet). Holy macro, the FV area has unlimited supply IMHO, and these price levels will send builders into overdrive.

It looks like the early demand is strong. Perhaps those who have been shut out in previous buying rounds have decided to go all out this spring (before it is too late blah blah). If so, the pace should cool soon. If not, then I presume another another season of double digit appreciation. Nuts I tell ya.

casual observer said...

I think that a major reason for continued strength in the Fraser Valley is that sellers from the Vancouver area are taking their proceeds of $800,000 and buying a house in the valley for $500,000 and pocketing the difference. If a person is not significantly impacted by the increased distance to the city, why not.

The unfortunate thing is that it distorts the prices in the valley. People who used to live and work in Abbotsford for example, can no longer afford to buy a home and raise a family in their home town, so they are forced to either buy a condo, or move further east to Chilliwack, etc.

van-realestate-crash said...

We don’t know what Feb’s numbers are. But we know:

-for months sales have been decreasing
-we are not running out of land
-the immigrations bs is bs
-the funny financing if blowing up in the American’s face
-affordability is worse than it was just before the last crash
-income gains do not match the price gains
-And although California is not as beautiful as BC, it’s hurting

duck said...

And although California is not as beautiful as BC, it’s hurting

tongue in cheek, i hope? 'cuz California is way more beautiful than BC.

van-realestate-crash said...

tongue in cheek, i hope?
Of course, but I don't believe I am the only one who knows people who actually believe it.

“It's the most beautiful city in the world; everyone wants to come to live here, that is one of the reasons why we got the Olympics"

bc_cele said...

@Casual Observer,
I agree that it is people from GV that are causing the surge, but I'm wondering how many of the buyers are those crystalizing their equity vs. those who just gave up trying to find something under 500K in the city that wasn't either a condo, dog house, or crack-shack. I think that many Vancouverites are starting to realize that they are going to have to commute further if they want to find something in their price range.

When I lived in the GTA, anything under an hour commute was considered an amazing feat. I would say that most people I knew were driving 1.5 hours on average. Some even had to drive 3+ hours each way, if traffic was bad. In fact, there were people that would get together with friends and rent an appartment so they could stay there during the week and then return home on the weekends. I understand that here the commute is about 1/2 hour on average, but that seems to be about to change.

Freako said...

"Geographic price compression must be going into overdrive, because there is not way that GV can match those gains due to affordability constraints (me thinks, the GV stats aren't out yet)."

Spoke too soon, GV detached up 3.96% to $666,983. In other words, the now defunct VHB time machine which had rolled back to June 2006 shot back to the present in a jiffy, as this is a new high. The monthly payments with 25% down would be $2,978.12 (or $35737.44 year) before taxes and other expenses.

rentah said...

casual I think that a major reason for continued strength in the Fraser Valley is that sellers from the Vancouver area are taking their proceeds of $800,000 and buying a house in the valley for $500,000 and pocketing the difference.

And where are the buyers in Vancouver coming from?

Pondering said...

$2,978.12...

Wow that is a stunningly large amount of money every month. Not including taxes, maintenance, etc. The average family brings in about $4500 per month after taxes leaving $1500 dollars to pay for insurance, cars, day care, food, etc.

We are going to attract lots of workers to vancouver with this "life style". Not much money for lift passes and mountain bikes left after that.

ceejay said...

Incredible inverse relationship between monthly inventory and price changes. Econometric relationships are rarely so (apparently) robust. So robust, it looks like it might be being used as a pricing model by developers/realtors, eh?

Freako said...

"Incredible inverse relationship between monthly inventory and price changes. "

Mohican's great work graphing this is telling. However, I don't think the relationship is causative, but merely co-correlated to seasonal factors.

The numerator in the months of inventory equation (inventory) is cumulative but the denominator is independent. That means that the number will shoot up every winter as sales slow and will fall every spring as sales pick up. And that just happens to be when prices tend to shoot up (especially in a hot market). Thus it is just a manifestation of seasonality. Look at the 12 month recurrance in the graphs.

In other words, don't get excited when months of inventory drops in the winter (it is expected and meaningless once adjusted for seasonality). Get excited when months of inventory climbs during the selling season (as it has dramatically in the U.S.).

Freako said...

"The average family brings in about $4500 per month after taxes leaving $1500 dollars to pay for insurance, cars, day care, food, etc."

We have to adjust that a little bit, as the average GV family does not own an SFH. However, affordability stinks even for townhomes, and is getting tight even for apartments. That is the compression Mohican has talked about. Can you say downside?

mohican said...

"Get excited when months of inventory climbs during the selling season (as it has dramatically in the U.S.). "

This is exactly what I am looking for in the next few months. 7 - 8 months of inventory during the busy selling season is what will tell me the crash / correction has begun. Witness Pheonix / Boston / San Diego / etc for what I am talking about. We may still yet see a strong selling season since stranger things have happened and we seem to be witnessing this demand strength despite high price levels and high supply.

Freako said...

"We may still yet see a strong selling season since stranger things have happened and we seem to be witnessing this demand strength despite high price levels and high supply. "

Well if our immigration and inmigration stats (care of VHB/Statscam) are accurate, there HAS to be empty places somewhere. Why that is not reflected in increased vacancies and flat/lower rents, I don't know. There simply has to be offshore "Olympic" extrapolators who leave their units unoccupied.

If we are "borrowing demand" from the future, we ought to running out soon. Could it be that this is demand desperation out of the gate. I mean those still in the market must be those who refused to get into bidding wars and got left out in the cold. Year after year after year. Perhaps this cohort decided to shoot out of the gate this time.

There should be completions all around. Every newspaper I pick up has advertising for new towers in odd places such as Whalley, Maple Ridge and Port Moody. If trend continues, supply in the GV and FV is truly LIMITLESS.

We will just have to see what March brings. In either case, the price/rent multiple just worsened a notch.

As for the U.S., keep an eye on the forecloses. Apparently the process takes about 8 months from NOD to REO/auction. The number of NOD is growing exponentially, and the percentage of NOD which end up in forecosure is rising. Add these objective and motivated sellers and prices will get hammered.

van-realestate-crash said...

speaking of USA places with nice weather

The Puna area is seeing big price reductions. In most areas. Inventory is increasing, offering buyers more choices. Visit our website RealEstateHawaii.com for an up to the minute, MLS search of all listings on the Big Island of Hawaii

Freako said...

Also, given how most U.S. metro markets are cooling or reversing, we are climbing on the list of North America's most expensive cities. At current exchange rates, we would be the 7th most expensive metro area after:

San Jose-Sunnyvale-Santa Clara, CA
San Francisco-Oakland-Fremont, CA
Anaheim-Santa Ana, CA (Orange Co.)
Honolulu, HI
Los Angeles-Long Beach-Santa Ana, CA
San Diego-Carlsbad-San Marcos, CA

We are twice as expensive as Portland. We are 52 percent pricier than Seattle. Or how about 153 percent above that other Olympic venue, Salt Lake City. But we are 23% cheaper than San Francisco.


Of course, I don't know how well the Metro areas match up. Second, the NAR uses average prices, not sure how the match up against GV benchmarks. Finally, most U.S. cities dropped in January and February, so we could have climbed further up the list, as we were only 2.5% behind San Diego.

That is in absolute prices. From an affordability point of view, I am fairly certain that we are at the top (or bottom, depending on how one views it).