Please read the full analysis of the release here at Calculated Risk.
The main chart I want to draw your attention to is the Months of Inventory chart.
The REBGV has been fluctuating in the 3 to 6 months of inventory level for the past 3 years and has witnessed rising real estate prices during this time. Quality adjusted US real estate prices peaked in the later part of 2005 and began their descent in earnest during the summer of 2006. By my estimation we are tracking exactly 2 years behind the US market.
In order for us to see price decreases we need to have over 6 months of inventory for a sustained period of time. The higher the inventory goes the faster the price drops will be. Keep an eye on Paul B's site for inventory updates for the REBGV. I will post Fraser Valley stats here at the beginning of each month. Fraser Valley is already over 7 months of inventory.
6 comments:
Yep, you're pretty much bang on. Inventory will increase, sale will drop, prices come crumbling down. Hopefully this happens sooner then later. Getting tired of paying rent.
My guess is that Vancouver will at least partially close the two-year lag behind the US. There are several reasons to expect this: a) Vancouver has traditionally been an unstable market -- spikes and crashes are in our nature; b) Vancouver's price-to-income and price-to-rent ratios are well above the average US figures; c) the housing news coming out of the US will impact psychology in a way that did not happen at the beginning of the US downturn; d) we are moving into a global slowdown, which was not the case when prices headed south down south.
Very good points newcomer.
I'm amazed that it took this long for our bubble to get punctured. Our crash won't be hampered by the uncetainties that slowed the downturn in the US.
mohican; I disagree I think Vancouver is at the Jan Feb point o 2007 on the graph. I think out 2006 was the blip up/down you see in the US market. We are tracking them for futures BUT not on the same time scale. We will overtake them within months. Vancouver is differant! :-)
Getting tired of paying rent.
It's not a matter of paying rent or not. It's whether it's cheaper to rent a house or rent the money to buy one.
Rent is what you pay to use capital.
Mo,thanks for the charts.
It would be very interesting to see a graph showing the correlation of MOI and median price over the past 25 years. Anyone know where the data is? I could try to figure out how to make a chart...
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