Thursday, March 05, 2009

Fraser Valley Real Estate - February 2009 Stats

The Fraser Valley Real Estate Board posted the February 2009 Statistics package and here it is on the down low.

Sales stink like the fresh manure smell that permeates the Valley many days! Sales are at levels not seen since the 1980s.

Active Listings are quite high for this time of year and seem to be rising in the normal seasonal pattern.


Since sales rose a bit from January the number of months that it would take at the current sales rate to sell all the homes for sale in the Fraser Valley dropped to 'only' 14 months. This means that if you are trying to sell a home right now, it might take a while unless you drop the price - a revolutionary idea to be sure - this whole supply / demand equilibria thing.

The benchmark price has fallen 13% in 9 months now with more price drops to come it seems.


The correlation between the supply / demand situation and price changes is strong. If prices are to increase substantially anytime soon it will take a massive rise in sales, large reduction in active listings or both for this to change.
By performing some simple seasonal analysis it seems that months of inventory will probably bottom this year at the 7-9 MOI level in either April or May. This does not indicate upward price pressure and by later in the year we could be looking at some very significant price declines. The Fraser Valley is on track to lose another 15% or so in 2009. There are potential events that could influence the market in either direction as well.

4 comments:

JimTan said...

“By performing some simple seasonal analysis it seems that months of inventory will probably bottom this year at the 7-9 MOI level in either April or May. This does not indicate upward price pressure and by later in the year we could be looking at some very significant price declines.”

Mohican,

Please amplify this statement. What are your MOI projections for 'later in the year' that would cause prices to fall significantly. By a strange coincidence, I am looking to buy in spring when everybody is selling.

mohican said...

Jimtan - if you observe the relationship, shown in chart, between MOI and price changes, then you will plainly see that when MOI is high, prices fall and conversely when MOI is low, prices rise. Simple.

If we make some basic assumptions that the market won't get worse but won't get better either in terms of sales and active listings, then we can project MOI for the remainder of the year. If we assume that things will not get worse or better, then MOI should be in the 7-9 range through March, April and May. This level indicates stable prices to me. After the normal spring rush of activity, sales typically level off and fall while active listings rise through the summer and fall. If we follow the same pattern as the last few years then this would indicate that MOI will peak above 20 in the late fall and this indicates severe negative price pressure.

vancityguy said...

mohican

Great blog here.

Just one question. Everyone and their dog has an opinion of the deflation/inflation argument going forward into 2009/2010. I lean towards the inflationary camp myself.

If, in the event we face moderate to high inflation in a relatively short period given the recent rises in money supply, what's your opinion on housing prices.

I can't quite answer my own question, though, I suppose, if we're in for our own lost decade it won't matter.

patriotz said...

If, in the event we face moderate to high inflation in a relatively short period given the recent rises in money supply, what's your opinion on housing prices.

Down, big time:

1. Huge increase in interest rates.
2. Wages will not keep up with inflation in a recession.
-> 3. Affordability even worse than today.

The optimal scenario for house prices going forward is general price stability. Either inflation or deflation is negative. And needless to say, even the optimal scenario doesn't look good.