Wednesday, September 03, 2008

REBGV August 2008 Stats and Charts

Well, I'm back from vacation and, other than a little bit of rain, it was wonderful.

Here are the details regarding the market activity during August 2008 in the Real Estate Board of Greater Vancouver area. Click on the images to make them bigger.

Sales were 53% lower than last August.

Active Listings are at unseasonably high levels - 75% higher than last year.

Months of Inventory is ridiculously high at over 12 months. This is an extreme level, which is putting lots of pressure on sellers to cut prices and gives buyers the upper hand in negotiations.

The ratio of sales to active listings is so low right now that it appears as if nothing is selling at all.

The current level of inventory and extremely low sales is leading to some very negative price pressure, with the benchmark price falling 2% during August alone and over 4% during the last 3 months. It looks as if prices will be negative Year over Year at the end of September.

The real estate market is a 'market' after all and markets are subject to the laws of supply and demand. A new equilibrium is being reached right now, which is causing prices to fall, as buyers are negotiating tougher deals and sellers are being forced to be more creative or aggressive.

That's it for now. FVREB report will be out soon and I will provide another update then.


Ken Simpson said...

Wow, I have to admit these stats are worse than I had expected. More than 12 months of inventory! Holy cow! That's well into the danger zone, Batman!

A 4% QOQ depreciation works out to 15% annual depreciation (0.96 ^ 4). At this rate, by next August house prices will have to climb by 18% to get back to August 2008 levels.

Let's see, that will put my $629K rental at a still-ridiculous $535K. Add in another two years of 15% drops and we're getting into the right range for rent parity...

No, I don't think the market will last that long - far too painful. We'll be seeing 30% annual depreciation by the end of this year.

mohican said...

I agree ken. This is happening much faster than I anticipated and I think the change is still accelerating at this point. It is possible that we'll have -10% for 2008 and that would probably put us at an annualized decline rate of -25%.

We will probably see the largest declines since 1982 during 2009. It has been a long time coming but the correction is here now.

M- said...

No kidding it's been quick -- it feels like the market really turned on a dime starting late in the spring. Since then as the pool of greater fools dries up, there's fewer and fewer of them available, leading to stagnation on the market.

To me, it looks like the buyers are going to win this war, as the sellers are starting to capitulate in ever-greater numbers. Houses that should sell easily (based on the market last winter) have been sitting and sitting.

Prices in my old neighbourhood have come down and are now convincingly lower than they were when I sold in the spring of '07.

The crash is just getting underway!

van_coffee said...

Wow -
These are "abrupt" downward moves.

I love the look of that average price graph from 1977 - August 2008. (no need for a discussion of the validity of the average price).

In March 2008 - Average was $918,593

In August 2008 - Average was $808,016

This is a 12% drop in 5 months - which is like 30% annualized.

How far does this take us back on the graph, you ask.....

Back to March 2007 - 17 months ago. The dynamics have changed much faster than I thought, and I'm pretty darn bearish.

Thanks again for all the fine work Mohican.

jesse said...

The QOQ trendline is uncanny. Hoocoodanode.

oh please said...

FV on the other hand is a bit of surprise - SF prices back up 2% after last month's 5+% drop.

OTOH sales to actives is 8%, so that's 12.5 months of supply. I would expect the slide to resume in September.

There's a lot of volatility in the numbers. How do you reconcile townhouses being down 20% in N. Delta and up 7% in Abbotsford?

jesse said...

"Prices in my old neighbourhood have come down and are now convincingly lower than they were when I sold in the spring of '07."

Really? That would mean the headline benchmark is not accurate compared to your local observations.

fish10 said...

Outstanding charts.

Thanks for your hard work Mohican.

arit said...

Greetings blogosphere!

If we were to extend our previously abused metaphore of Wiley Coyote running off the cliff, these amazing graphs require an adjustment to the picture.

Coyote has just started the fall... IN JUPITER.

Best regards


wizardofozziejurock said...

Nice charts Mohican...

It's like someone grabbed Vancouverites by their collective collar and gave them a good slap across the face - and by God it worked. The place has come to its senses. The buyer's strike is on!

Metaldwarf said...

if people start to foreclose our canadian banks are going to get hammered just like the us banks. thus far we have been fairly well protected compared to down south. im thinking of selling out my canadian dividend stocks/funds (mostly bank and financial companies) and getting the hell outta dodge.

the next question is where to move the money too?

Warren said...

Foreclosure laws here are vastly different, we don't see the magnitude of the US. Just because things are going down the tubes here doesn't mean the rest of the country isn't keeping up with their payments either.

BTW, no major US banks have failed. TD just upped their dividend here (I own shares thankyouverymuch). Problems? Yes. Panic? No.