Wednesday, February 04, 2009

Greater Vancouver Real Estate Data - January 2009

Greater Vancouver was still witnessing an unseasonably high level of real estate inventory as the first month of 2009 wound down. In fact, active listings rose steadily throughout the month after the large amount of expirations traditionally associated with the beginning of the year.

Sales were at the lowest levels not seen for over a decade. In fact, I do not have data going back far enough to see a lower sales month for January.

Consequently, the supply / demand metric that I like to focus on - Months of Inventory - is at an extremely elevated level to start the year. As you can plainly see, months of inventory typically rises from February/March through the fall. I think we can expect MOI to fall from this level during February and perhaps March as sales typically pick up, which changes the denominator of the MOI.

The correlation of quarterly price changes and months of inventory is still highly correlated.

The benchmark detached house price moved up by 1.7% during January compared to December and I must admit this seems a bit unusual given the extreme supply / demand pressure in the market. From month to month we can see deviations from the fairly solid relationship between Months of Inventory and price changes but on a quarterly basis there is much less deviation. I am looking for price changes to smooth out over a quarterly period.

I expect that the rise in the price attributed to January will be gone by the time we finish March. Over a three month period the correlation between Months of Inentory and Price Changes suggests that we will see a quarterly price change of -5% to -10% when MOI is around the 20 mark.


Naveen Gopal said...

Classic Bull Trap, IMO. The last of the optimists who really believe that this is the bottom (and who pay no attention to actual statistics) are probably buying in and bidding prices up. It wouldn't even surprise me if we had positive price moves in February. In March I don't think it will be possible. Also I'm sure it is the sales mix. One thing is for sure, it won't last and it won't be long before we sink into the abyss.

Any uptick will only serve to increase the flood of listings that will eventually cascade onto the market this year.

blueskies said...

love those charts!

that little uptick in the benchmark will be known as the "spring '09 dead cat bounce"

enjoy it while it lasts....

Unknown said...

I think the uptick was caused by the lower interest rates. They don't have much more to fall, so that can't happen too much anymore. This ain't a dead cat bounce; a dead cat bounce IMHO occurs after the market hits the bottom and bounces up a smidgen before settling on the bottom for a long rest. We're a long way from the bottom. The cat just caught a thermal from all the hot air the RE pimps have been blowing up at it. Still can't stop it from dropping like a dead cat.

Also, when vancouver benchmarks have been plotted on the Case-Schiller graphs, the vancouver decline is the steepest by far of any of the american cities. Perhaps there's a terminal velocity that RE can fall and vancouver exceeded it. The uptick was just the market stabilizing (LOL!) to a terminal velocity of price declines.

jesse said...

That's right. Dead cats bounce off the sidewalk, not hitting a gust of wind falling past the 32nd floor.

M- said...

Mohican: as always, thanks for the stats summary!