Wednesday, September 05, 2007

FVREB August Data

Here is the data release from the Fraser Valley Real Estate Board. The numbers were strong from a sales and pricing perspective. Inventory has not exploded as in many other markets and sales are still brisk, resulting in price increases. August was the month when most of the lower rate mortgage pre-approvals expired and that clearly had an impact on sales so it will be interesting to see what September brings for listings and sales data. Typically, inventory has risen through the fall and sales typically slow down too.

There were 1763 Sales and 8286 Active Listings representing 4.7 Months of Inventory. I expect inventory to explode upwards in the next few months and the months of inventory to be above 6.0 by October. There is a very strong correlation between the Months of Inventory and Quarterly Price Changes.

Median Price of a detached house was $485,000.00
Median Price of an apartment was $212,000.00
Median Price of a townhouse was $310,000.00

House Price Index of 220.3
9.3% Year over year increase in prices
2.2% quarterly increase in prices
1.3% month over month increase in prices

This chart represents the past data and my future expectations if inventory shoots up and sales drop off substaintially. If inventory is stable and sales are strong then my expectations are out the window!


jesse said...

I like the last graph showing YOY price changes vs time. Check out the Seattle Bubble graph comparing (time shifted) YOY vs time graphs for various US cities. Note Seattle inventory has increased significantly in the past while and it will be interesting to see if similar events happen in FVREB too.

Jim said...

Why would inventory explode? It hasn't yet in the key listing months?

mohican said...

I expect sales to drop off because of lower rate mortgage pre-approvals expiring in August and the effects of the credit crunch to lower marginal buyers access to mortgage funding. The sales drop combined with normal listing activity will result in a significant upward swing in Active Listings.

RentingSucks said...

Do you think the CMHC 44 percent GDSR for people with good credit will be at all affected by the credit crunch? Being a government organization aren't they basically immune to risk or at least are not motivated to act on a perceived increase in risk?

The CMHC has also loosened up the credit requirements for more marginal lenders as well. Could this counteract the affects of the higher rates?

mohican said...

rentingsucks - my understanding of the CMHC policies is that they have been in place for quite some time now so the effects have been felt already.

My reference to marginal buyers is referring to the sieze up in the Asset Backed Commercial Paper market and some of the feed through disruption of funding to the Canadian sub-prime mortgage market which represents between 5% - 10% of the Vancouver mortgage market.

RentingSucks said...

The phrase used was "several months ago" in the mortgage fudging thread. The only way I found out about the loosening was through anecdotal evidence through friends that applied for mortgages. It wasn't a big announcement anyway and you can't find out about it on the CMHC website. So maybe several months is enough time for word of mouth to get out or there might be still people who find out how much the banks will let them borrow that will trickle in over the next little while and keep the market strong.

I'm personally hoping it all goes down the dumper soon and fast but I think there are forces at working aiming at making it slow and painful (they think they're helping or have political motives).

Funshine said...

Invetory hasn't shot up, but your graph clearly shows that inventory is significantly higher in July 2007 versus July 2005 & 2006. On the other hand the sales volume is very constant. The stage is set for higher inventory still.