Prices are stagnant since August 2007.
Inventory is ballooning and sales are falling.
The crash is coming - like a slow moving train wreck.
"There were 956 MLS® sales processed in January, a decrease of 4 per cent compared to the 1,001 sales processed the same month in 2007. However, there was an 18 per cent increase in new listings in January 2008 compared to the number received in January last year – 2,850 new listings compared to 2,425. January’s total active inventory at 7,554 listings finished 24 per cent higher than the 6,099 active listings during January 2007."
We also had the highest months of inventory number in recent history at 7.9 months at the current sales pace to sell through the entire inventory. Inventory typically increases dramatically from January through to the fall. Sales typically rise as well. With affordability constraints what they are I believe sales will trend lower than past years during 2008.
Click on the chart to enlarge.
Median prices are at the same level as last summer.
The house price index is at the same level as August. Year over year price changes continue to trend downwards. Even if prices don't change at all in the next 3 months we will hit an annual price change of 0%. I believe the rush to the exits will begin in earnest after that point as people realize the game is up.
Radley over at the Calgary Real Estate Blog inspired me to change the way I display price changes vs. months of inventory. The scatterplot indicates the high negative correlation between months of supply and quarterly price changes and we should look for this correlation to remain strong as 2008 unfolds. We have low sales, the highest annual starting point for inventory in the Fraser Valley ever and thousands of new units set to complete during the year. Bearish indeed.
These numbers are the most bearish since I've been following the local real estate market (since late 2005) and even more bearish than I expected. Sales were lower and new listings higher. I don't want to get too ahead of myself here, because people's behaviour is generally mystifying, but if January is any indication, 2008 will be the year of the turnaround in prices. How far down could we go? Perhaps San Diego can give us a clue.