Greater Victoria has shown quite consistent sales numbers for the past 2 years. It appears that the median price has or is peaking, as increases since last summer have been marginal.
Victoria proper has seen strong sales thus far this year. There are still some significant year-over-year median price increases.
Sales in Saanich (East and West), with the exception of February and April, have been slightly less than previous years. Median prices appear to have stalled out as well.
Langford sales, thus far this year, have been similar to the past two years. Of course, May 2006 was an anomaly. Prices have been all over, but do appear to still be rising.
I've also thrown together a graph for the year-over-year median price increases. There is definitely a downward trend. This past month, Langford had the first YOY negative median price increase.
22 comments:
I would take the Langford/Colwood sales with some apprehension as there are only a few condominium complexes built and the developers are able to temporarily control this market segment.
There is an 11 month supply of condomiums in the Westshore. While, Victoria's urban core has a 3 month supply. Yet, the Westshore prices are similar to that of Victoria. There should be a significant price difference for location between these two areas.
Eventually, with the increasing building inventory, the Westshore monopoly will disolve and we shall see the beginning of serious price declines.
Siobhan
>>Eventually, with the increasing >>building inventory...we shall >>see the beginning of serious >>price declines.
Ironically, I have a condo-owner friend in Victoria who can't wait until more condos are completed around him.
His reasoning is that, his condo will be worth even more then!
Does that make sense to anybody?
PB,
If higher interest rates are needed to begin a correction,then we have had a couple of hikes in the last month,plus most likely a few more if the prime goes up in July and another prime hike in September being possible. If this moves the mortgage rates up another full point from here then how on earth can this market withstand it without prices declining ?
Throw in this effect on the Alberta market and wouldnt this dampen the snowbird who wants a second home here ? We are talking 2000 interest rates here in the next while which were 7%,right now the posted rates are 6 something on a five year,and only the best clients get the mark down I believe.
Toss in increasing unemployment due to all these projects being completed then we have all the ingredients in place,just a matter of when. The sellers who have been trying to sell the last several months and have to sell must be chomping at the bit and reductions will start showing up soon.
Ironically, I have a condo-owner friend in Victoria who can't wait until more condos are completed around him.
His reasoning is that, his condo will be worth even more then!
Does that make sense to anybody?
Sure. Take downtown for instance. Its vitality depends on lots of people living there and being able to walk to and from groceries, restaurants, bars, theaters etc. Except those businesses don't do so well, or never open, if everyone drives out to the malls. So more downtown condos means a more vibrant downtown.
"Quadra Village" which someone here was deriding recently, could benefit from more condos. There is now a Fairways. There are a few good mom-and-pop restaurants. There is a theater, a small coffee shop and a bar. If there was another 1000 people living near there, there would be more similar amenities, driving up the desireablitly of the location, and thus the value of homes there.
If you take Vancouver's downtown peninsula, I don't think the old buildings built in the 60s and 70s lost value because of competing brand new product. They went up in value too because people wanted to live in that cosmopolitan part of town.
Simple supply and demand is a nice way to think about markets. But I wouldn't assume demand is a constant force.
I agree, VG. Rising interest rates, less and less speculation due to minor RE value increases, increasing unemployment (although, I think this will have a minor effect). I think that Alberta has turned as bubblicious as anyone. The Financial Post had an article (Thursday I believe) that stated how many fewer riggers will be needed this year. And of course, the 800 lb gorilla in the corner, the U.S. housing market. All we need is the MSM to jump on board (the other day, co-workers were still talking about how hot the market is).
All these things and more, I think we may have a perfect storm brewing.
"All these things and more, I think we may have a perfect storm brewing. "
I totally agree PB,as you know I have felt this way for the last several months bigtime.
Just listened to Victor Adair on the Michael Campbell show and he had some extremely interesting comments on what he is saying in his speaking engagements in Geneva this past few days to the big money boys along with a couple of other prominent market analysts.
Interest rate hikes will exceed what is predicted over the next year or so,all world wide asset classes like real estate and base metals that have gone up big will correct in a big way cause it was hot money driving them up beyond what the real market demand was.
As well the US dollar will appreciate here but the Canadian dollar should be par in due time so no inverse effect,plus gold will drop below $600 for at least 6-12 months (been my gut feel as well the last while if the US interest rates go up). He's not predicting a depression by any means but a return to sanity.
I have listened to Victor Adair for quite awhile now and he has always been one of the best and tells it like it is by the fundamentals and the charts.
Sounds interesting. Through what media are you listening to Victor?
CKNW.com ...you have to go to the free sign up to the Archive section somewhere on the left side of the home page.... it was on at 9 AM about 40 mins into the show.
Thanks.
Forgot one important point, the easy liquidity will tighten, and that is key. When that happens the high risk borrowers who have one only arm to sign with will not qualify for loans,this will really hurt the car sales and most definitley real estate.
If you take Vancouver's downtown peninsula, I don't think the old buildings built in the 60s and 70s lost value because of competing brand new product.
They sure did in 1981-82. If many more units are built than people want and are able to buy, you've got a glut, and prices go down, bigtime. Condo projects were actually abandoned while under construction.
Sure on a micro level, increasing the number of units in a neighbourhood may improve amenities and value. But if this happens metro-wide, the increase in aggregate supply is going to be much more significant.
I wasn't deriding Quadra Village. I was deriding the term "Trendy" Quadra Village.
S2
Hi S2,
Sorry about that. You are right - its not exactly trendy yet!
However, if I was looking for a pretty cheap area that will probably get nicer in the next 10 or so years, that would be a part of town I would consider.
Which part of Quadra are we talking here ? by Hillside ?
Yes. Quadra and Hillside. I think there is more there in terms of amenities than Cook Street Village now that Fairways is there. Another restaurant/bar or two and that strip would be pretty nice, particularly if they can densify more. High-class like Cook Street, probably not, but I think we could use a funkier neighborhood that isn't just a strip mall.
Dicey clientele in that neighborhood,might take a long time for that one to work.Safeway used to be there and it didn't help much,and is why they moved I believe.
Hi VG,
That must have been a long time ago. We moved here in 86, and I only remember it as The Brick. But I may not be remembering properly. It certainly makes sense as a grocery store.
>>this will really hurt the car >>sales and most definitley real >>estate.
Talking about hurting car sales and real estate here, I think the rising Canadian dollar is likely to have some very negative effects on these Canadian markets. Why?
(1) For car sales: Take *ANY* car, and compare the manufacturer's suggested retail prices in the U.S. and in Canada. After you figure in the current currency exchange rate and add 13% GST to the U.S. price, the Canadian prices are much, much, much higher. Any Canadians that realize this are either going to put off buying a car in Canada until the Canadian retailers shape up, or find a way to buy in the U.S.
(2) For all those U.S. investors in Canadian real estate, now if most definitely the time for them to sell, and much fewer of them have any incentive to buy here. At least three reasons for this are: (i) the historically high Canadian dollar means it is time for the U.S. citizens' to cash out on their investments here - they might not see such a favourable exchange rate ever again.
(ii) the crash of the real estate bubble in the U.S. may be nothing more than a far-off concept for Canadians, but it is a reality for U.S. investors, who will want to sell out of the Canadian market before the effects of the crash reach Canada(which they *will*)
(iii) Recent passport regulations in the U.S. are making it much more of a hassle for U.S. citizens to visit Canada, and bring their extended family and friends to their Canadian "vacation" homes. How many U.S. families with two kids will lining up to fork out $500 U.S. to get U.S. passports, just so that they can visit Uncle Bob's place in Victoria? (Whereas before, this trip used to cost them comparatively nothing)?
Put (i),(ii),(iii) together, and you've got quite a potent mix of reasons that smart U.S. money should be getting the heck out of Canada, without looking back.
jmk,
Yes,Safeway closed out after being there forever and The Brick moved in. I rarely shopped there but there was a liquor store too for a long while and it attracted the unsavories of the area. Can't remember when it closed out but it was generally not a great area to set up shop.
VG
Do you think there can be a "return to sanity" without a depression? Doesn't there have to be a bust after a boom?
Quadra Village improved after the liquor store moved, but it is still creepy around there if you ask me. Safeway moved out in about 1989 or so.
>>Doesn't there have to be a bust >>after a boom?
No, there doesn't.
I've mentioned this before, but the housing correction will not necessarily take the form of prices suddenly lowering.
An equally effective housing correction would be for prices to stay stale (not rising, or rising on very little) for the next 4 to 5 years.
The net effect effect of prices not moving up (or down) would be that they return to historical price averages (thanks to inflation).
One reason some people think the stagnation path to a "return to sanity" is more likely is because real estate prices stend to be sticky on their way down (stubborn sellers often refuse to sell for less than what they dreamed, and hold on for longer than they originally expected)
I have been learning austrian theory - boom then bust, credit contraction, deflation,depression, etc.
I would imagine with interest rates and unemployment rising, housing prices won't stay stale for long
it is all certainly very interesting to watch
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