Below are updated sales, inventory and months of inventory graphs for Greater Vancouver to November 2011.
And the detached benchmark price:
Commentary: November 2011, continuing from previous months, has produced more tepid sales numbers than years past. Months of inventory (MOI, the number of months it would take to clear month-end inventory at current monthly sales levels), a key indicator of market liquidity and impending price strength, is at about 6, a level concomitant with flat prices.
Total inventory has likely peaked in October (it peaked mid-month, but not shown due to monthly sample rate); if the market were under significant distress we would have expect increased inventory buildup through November, which did not happen. New listings have been consistently about 20% higher in 2011 than 2010 with sales roughly flat. That indicates a greater percentage of listed properties will be unable to elicit a sale.
Below is the predictor of price gains, based on half-over-half price change to months of inventory correlation:
What this shows is the change in prices in a month from 6 months ago based on actual data and “predicting” the price based on months of inventory from that month based on linear regression of half-over-half price change to months of inventory (with 3 month moving average).
In summary November 2011 has mirrored November 2010 closely, with slightly more weakness due to higher inventory levels and lower sales. December and January are slow months for listings and sales, so while the reports may be of some interest there won't be much to draw any meaningful conclusions. It is likely that severe market distress, should it occur as in 2008, would only be evident going into the summer, validated by robust inventory growth and increasingly slower sales. While I am not calling for such an event in 2012, there are real and tangible risks of it occurring based on slower population growth, increased dwelling starts, slower GDP growth in Asia, and potentially further mortgage lending restrictions in overheated markets like Vancouver's.