The Fraser Valley Real Estate Board released their monthly statistics package today for the month of December 2007. The numbers are in and here is the analysis.
Sales were seasonally slow as expected in December with 1001 units sold during the month. At the end of December there were 7168 residential units available for sale in the Fraser Valley. This puts the current months inventory at 7.2. This is the highest December level for as far back as online records are available.
Prices of all types of homes rose during the month of December in nearly every area in the Fraser Valley pulling a rabbit of the hat of sorts for the month. I did not expect prices to rise in a market so full of choices for buyers. It is possible that the smaller level of sales led to a different mix of sales being completed and December buyers could be more 'urgent' buyers than is typical for the rest of the year.
The year over year change in the quality adjusted house price index has been declining from the peak appreciation levels of mid-2006 and it is a trend I expect will continue through 2008. We may even see negative YOY price changes this year.
As I have already mentioned, Months of Inventory was quite high at 7.2 months during December. Quarterly price changes were muted although positive. If months of inventory stays high during January and February there will be significant negative price pressure coming into the spring selling season.
The market continues to amaze me with an incomprehendable amount of demand at these price levels. I fail to understand why someone would buy a home that they can rent for half the monthly nut.
Mohican's 2008 Forecast for the FVREB:
1) Months of Inventory will remain above 6 for the entire year.
2) YOY appreciation will be 0% or negative by July/August.
3) The FVREB House Price Index will be -5% to -10% for 2008. December 2007 is the all time high at 220.3 and it will be 200 to 205 by the end of the year.
Note: If MOI drops below 6 I think that the price changes will not be as negative as I suggest. Of course this is all hypothetical and I've been wrong before.