The REBGV released their monthly price, sales, and inventory statistics for July 2008 and here it is on the down low.
Active Listings are at an unprecedented level.
Sales are at an abysmal level.
The number of months of inventory is sky high representing the inability of buyers and sellers to come to a quick agreement on the value of properties in the area.
Prices have fallen for two straight months now and are rapidly retreating to year ago levels as the few sellers who must sell drop their prices and buyers who have the means are agreeing to these lower price levels.
I was truly amazed at how quickly inventory levels have grown this year and I was wondering if the tight correlation between months of inventory and price changes would continue during a down market. It is continuing and seems to be an amazingly accurate representation of the effect of high MOI on price change.
7 comments:
I'm still impressed by that scatterplot-- it very intuitively conveys a wealth of information!
Vancouver Westside SFH median prices:
July ‘08: $1,326,500
June ‘08: $1,549,000 (DOWN 14% MOM)
July ‘07: $1,415,000 (DOWN 6% YOY)
I've tracked the same absorption rate vs. price change in Calgary. Vancouver summer '08 is looking exactly like Calgary summer '07. What I found is that prices slumped the quickest soon as inventory and absorption rate exploded. Since then, the price corrections have been much more moderate.
To me it appears, that speculators dash out of the market in the first phase and prices adjust quickly at first. The second phase is more related to inventory pressure from builders and developers which is taking a longer time to unwind. Lastly, pressure from home owners due to low affordability and mortgage arrears will continue to mount.
The Calgary real estate market is not seeing the kind of bust that the U.S. witnessed to date (although it could still happen). We aren't having the same kind of foreclosure boom that occurred in the United States, so the high absorption rate hasn't translated into the same kind of price declines that would have been predicted from the supply/demand balance.
I'm estimating that the housing cycle is going to be somewhat J-shaped for Calgary. Fast price decline for a short term, and then some smaller declines for several years until other economic fundamentals catch up.
REBGV SFH average prices:
July '08: $828,781
June '08: $904,167 (DOWN 8% MOM)
July '07: $831,195 (DOWN 0.3% YOY)
Peak: Feb '08: $920,643 (DOWN 10% off the peak)
Months of inventory stands at 4.9 months in Calgary... not nearly as bad as Vancouver has built up.
radley77...I am seeing the same thing in edmonton. But there are some big discounts if you can find desperate sellers. Going to be interesting.
We aren't having the same kind of foreclosure boom that occurred in the United States
This will undoubtedly come later, just as it did in the US, once prices have dropped and stayed down for a year or so.
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