FYI, we haven't bought, we haven't even been to a mortgage broker. In fact, I think we have decided to stay put for the time being. We'll make it work where we are!
It does appear that the market may have turned over the past 1-2 months. Listings are rocketing upwards, sales "appear" to be really low and slow. Realtors are saying that the market has "stabilized", some are even recommending to not rush into anything. People are talking about the slowing of the market, and friends are advising friends to be careful when looking at purchasing. These are all people that I think were very positive on the market 6 months ago.
Right now, there are 3888 active listings. February 29th there were 3526 active listings. The VREB always seems to state listings in a month to be lower that on this realtor's website. Regardless, VREB should have the active listings number for March to be around 350 higher than February's. That would put their listings at around 3660. This blows away the peak of listings from last year (June - around 3550) and we are only in March! If the number of sales is as low as it appears to be, March's numbers will be very interesting! We'll see how Tony Joe spins this month's numbers.
Listings of SFH priced over $700k is nearly bursting off my chart! There are currently more than 200 SFH listed with an asking price of $1 million or higher. Let's see, if there are 10 sales in that price range, we'd have 20 months supply of million dollars homes. Good grief!
CMHC has released their "Housing Now" report for Victoria for February.
92 comments:
From the "cheaprealty blog:
RE: "I must say I have been looking at the PCS for about 2 years now and I have never seen so many homes for sale and so few sales. This is for homes over $500,000 to unlimited."
I have been watching several PCS categories including Victoria AND up-island (actually seems to be doing a bit better than victoria -but starting off at a much lower average asking price) and your comment is right on in the pages I look at. (includes victoria condos which may be heading into meltdown)
Plus numerous price reductions ---and this is the "Hot" RE season.
IMHO March numbers are going to be pretty bad sales-wise and I imagine that the RE industry wizards are already working on their "onwards and upwards" spin for next week..
Boomer,
I agree with you about the listings piling on. The market is sliding down from the peak!! Here is a PCS screenshot of single family homes in Victoria and Saanich (E&W) under 750K. Note the large number of new listings and price reductions in the last 3 days.. Note the reductions are also happening in the under 600K market.
A number of properties have been selling for well below asking. I thought the bears might enjoy a slideshow I call Victoria RE Haircuts. Hit the X beside Loop Slide Show to watch full screen.
Roger said: "....I thought the bears might enjoy a slideshow I call Victoria RE Haircuts...."
The Henderson home in North Oak Bay is the general area I'm watching. Several other 1950s homes have sold in the $735k range, so original listing price was spot-on, based on the last year's actual sales.
I'm thrilled that this one sat for 6 weeks before selling at $685k.
To me, that's proof that Oak Bay is DOWN by about 10%. 2 1/2 years ago, this age/type/condition/size house was worth just $400k.
Present prices are still crazy. By the time the dust settles, I expect a 40-50% price decrease
These old, mouldy houses are worth no more than $400k, and that is based solely on the so-called VIP area. They are ugly houses with yukky layouts. The redeeming feature is proximity to Camosun/Uvic, (and maybe also that the lots are 1/4 acre).
Thanks for the slideshow Roger - it's beautiful!
Brilliant Roger. I hope you keep adding to it in the future.
Here's an update on the problems in California from Doug Noland's weekly article: (wow)
"February California median home prices declined $20,550 to $409,240. Median prices are now down $67,140 in two months and a stunning $179,730 since August. Prices are down 32% from June’s high, and are now even 13% below the level from three years ago. Granted, these median prices are impacted by the dearth of sales at the upper-end. Yet it’s clear that the California market is in the midst of an historic crash. The Credit standing of Golden State households, businesses, and various governmental agencies now deteriorates virtually by the day."
Olives.
Love your post over on KIV. I've loved reading the comments of those who are actually starting to talk about a change happening.
When I sit back and watch and don't jump in with both guns blazing it is fascinating what gets posted.
Does this mean there is a change in psychology? Finally!
I noticed that too s2, there are more bearish-type responses than the other way around - weird! And thanks to Beagle for posting (he/she is from here, right?)
A tiny little manufactured home I've been watching just got lowered $10,000... so the properties under $300,000 are getting hit too.
It's across the board. Those who haven't sold by now better be prepared to hold for years, or take a price drop of at least 15% as Garth Turner is predicting.
And possibly more as the "Olympic buyers" dissolve into mirage and urban legend.
Olives, that's me on KIV. Just adding a little bear food to the mix. :)
I don't know what to think anymore. We have been on the sidelines waiting for the market to soften here and seen anything but. We decided that renting is not for us and want to buy a home. In fact we just placed an offer this evening on a originally decorated 1950's house in Maplewood. Our offer was 10k shy of the 560k asking price with no subject to's except inspection AND a quick close. Just found out that we were blown away by multiple offers over the asking price!!! WTF. This house needed everything replaced, from the 1950s fridge, dark panelling, single pane windows to the pink shag carpet. We are totally fed up with Victoria and trying to keep up with a demograhic that cleary has more money to put down or more balls(or stupidity) to finance a huge amount. We are now considering a move up island so we can raise our young family and have time and money to BE a family instead of working to pay a huge mortgage off for a POS house. I just wonder who's going to be wiping all these baby booming arses in 20 years.. sorry about the vent. thanks for listening. I'll start looking for a waxed cardboard box for my family to live in now!
anon 10:48 said
In fact we just placed an offer this evening on a originally decorated 1950's house in Maplewood. Our offer was 10k shy of the 560k asking price with no subject to's except inspection AND a quick close. Just found out that we were blown away by multiple offers over the asking price!!! WTF.
I assume you were bidding on this new listing. New listings are great for sellers and agents because they can play one buyer off against another. Better deals can be made after a few weeks on the market. No one likes to make an emotional commitment to a home purchase only to lose out to another bidder. However, I think in a couple of months you will be glad you missed out on this one.
The RE market peaked a couple of months ago and is now fairly erratic as numerous posts have recently indicated. Sure there are multiple offers on new listings but there are also lots of price reductions. Some buyers have not caught on to the fact that the market has peaked and are going to have buyer's remorse in a few months.
Houses are only worth what people will pay for them. When the Times Colonist publishes the stats next week more folks will see that the market has peaked. MLS inventory will be at a level not seen since March 2001; sales are down from last year and even VREB is talking about balanced conditions. Patient buyers will find better deals this summer. Once the economy starts tanking the deals will get even better.
ANON.10:48 re:"I don't know what to think anymore"
Amen, Roger
Its Spring--On Vancouver Island this means that RE "For Sale" signs spring up everywhere like daffodils and cherry blossoms and the aura of home lookers desperation fills the air. (aided and abetted by eager realtors and full page developers ads)
Regardless of your market expectations(unless you are a raving RE bull) and ESPECIALLY for a first time buyer this is most definitely NOT the time to be buying a home. You'll drive yourself nuts chasing deals that will be commonplace later in the summer or the fall if you can hang on that long.
Roger, you are correct. That was the listing. Thanks for your insight, I feel slightly better.
We simply refuse to pay more than asking in a competitive bid process. I just would not be able to sleep at night! We are trying to play it cool, knowing that there will always be a house coming on the market that appeals to us. The only problem is that these homes seemingly appeal to everyone else ready to buy, which puts us into another competitive bidding process(as this is our second in as many months). Can I assume that all the stale listings are either on busy roads or have some other major problems?
Funny though, while touring the open house, another P.O.'d buyer had a complete rant in this house about the price vs condition. We all agreed it was a 300k home.
Anyway, thanks to all the posters on this blog. It's been a great source of insight. Looking forward to the summer!!
ANON.10:48 re:"I don't know what to think anymore"
also-as you mentioned,if you have the flexibility, you really SHOULD take a look up island -the kind of money that you are talking about will still buy you a VERY significant home (or an equivalent place for a whole lot less borrowed money) north of the Malahat.
For example,Nanaimo has developed into a nice town with many lovely areas (with views) and real estate prices (still)which will make you smile... Victoria aint necessarily the centre of the Universe.
If you can find a way to make a living in Port Alberni that's the place to look at.
http://www.arrowsmithlistings.com/alberni.htm
The real estate there is easily half the price of the CRD
New listings will cost you more!!
I was thinking about anon's experience in buying a new listing in Maplewood. Bidding on new listings, especially the ones with open houses, may result in paying way more than market value. There are several reasons why I believe this to be the case and they are all based on expectations.
The seller is very optimistic about the prospects of getting their full asking price for the first couple of weeks after they go on sale. After dozens of people have marched through their house, with no offers or maybe a lowball, they become more realistic and are open to accepting what the buyer considers reasonable.
The listing agent is also enthusiastic and hopes to sell quickly. Many keep the listing in their pocket for a week or so in the hopes of double ending the sale and getting both halves of the commission. Little money has been spent on advertising and minimal time has been spent as well so their is a real push to sell. The old "there is another offer coming in" line is very popular during the first few weeks. It is harder to use this manipulative tactic as the time passes.
The buyer's agent has probably shown the buyer a number of houses by now and will really want to make the deal happen. Remember the commission is being paid by the seller. I personally know of one situation where the agent told the buyers to leave the price blank and they would negotiate the best price!! The buyer's agent will encourage the buyer to compete against the other buyers if they are "really serious".
The buyer is his own worst enemy. (Think of lining up for condo pre-sales.) The buyer will often attend the new listing open house and see all the other potential buyers. This creates a sense of urgency, which as a former salesmen I can tell you is a key factor in making any sale. The buyer will often make a hasty decision, based on pressure (i.e. multiple offers) and will pay more than the property is worth. The other factor is psychological: the desire to win the game and beat the other players. As anon has stated losing the bidding game is not a great feeling especially if it has happened in the recent past.
RE agents encourage sellers to be realistic in their pricing from day one. This makes multiple offers and quick sales possible even in today's market conditions. Many sellers are greedy and the patient buyer can wait for the inevitable price reductions, increased DOM and opportunity for a lowball.
If you must buy remember there is always another house coming on the market within a few days - be patient and don't pay too much!
just to see if I'm reading the posted sfh listings chart correctly -- listings under $500k have dropped significantly so far this year? So while above $700k and above market is bloated, is this a good news story for what I would have thought to be the average sfh buyer in Victoria?
Any thoughts or opinions on the Bear Mountain area? I have been looking at houses there and am considering a purchase. I am wondering if it's worth waiting a few months to to see if the rising number of overall Victoria listings will result in some downward price pressure. The market itself in Bear Mtn. (and Langford in general) seems to be fairly bouyant.
I'm convinced that the market should/will fall as well, but when I walk around Oak Bay, Fairfield and James Bay, I see a lot of sold stickers?? These people buying must be the greater fools? Don't they read, see what's going on in the rest of the world? Why are they buying? What's going on?
Yes, there are still a lot of greater fools around, but they are getting thinner on the ground as compared to sellers. The lucky ones who manage to sell at close to asking in this market should truly thank the real estate gods because this is all living on borrowed time. Exactly two years ago I was visiting San Francisco and prices there were crazier than here, crazy like Vancouver. The week I was there, the San Francisco paper had a huge headline on the front page, not the real estate section, that said, SELL NOW, and predicted everything that has come to pass in the ensuing two year U.S. crash.
I rent with a family of six, a large house on prime Victoria real estate. House was recently sold to a developer. It is a 50's tear-down; he's planning to put multi-family on it. But not this year. So we're staying put. I will not buy until prices are 50% of peak, just like they are now in S.F. If it takes two years, so what. I can rent another big, easy-care house for awhile, not worry about taxes or maintenance, and save myself a couple of hundred grand or more. Worth it even if rents are getting higher. It's always a matter of price, price, price for buyers. Never pay more than what something is really worth. I'm a three-time homeowner who has been more than happy to sit this one out until the "madness is over," as they say at HHV. Honestly, why cripple yourself with an asset you absolutely know is bound to go down in value, but you get to pay for it, with interest, at your peak price UNTIL YOU DIE!
I will not buy until prices are 50% of peak, just like they are now in S.F.
Rubbish. Prices are down 16% in SF from the peak according to Case Shiller.
anon 11:27 said:
I'm convinced that the market should/will fall as well, but when I walk around Oak Bay, Fairfield and James Bay, I see a lot of sold stickers??
People are always buying - in up or down markets. However prices are being reduced in many areas. Even Oak Bay has had considerable reductions from the initial asking price. Sometimes this happens after only a few days on the market.
Here are just a few examples in a slideshow called Oak Bay Trend Setters Hit the X button beside Loop Slide Show to watch full screen.
Even Oak Bay has had considerable reductions from the initial asking price.
So what? Like that silly Victoria flippers in trouble blog, you attach great significance to reductions in listing price. News flash: adjusting the listing price down only means the seller is testing the market to get the best price. It doesn't represent a loss.
kellygreen said
Honestly, why cripple yourself with an asset you absolutely know is bound to go down in value, but you get to pay for it, with interest, at your peak price UNTIL YOU DIE!
Kelly - welcome to the blog. I think your last statement pretty well sums up most bears' thoughts in a single sentence.
Thanks for the update Roger!
Bursting Property Bubble Feared
"South Korea may experience a property bubble burst like the United States if sluggish home sales continue amid an economic downturn, pushing more builders to the brink of bankruptcy and eroding debt repayment capabilities of mortgage borrowers, according to an economic institute Sunday."
First the US, then Spain and the UK, now maybe Korea. A lot of big economies having this housing problem. Last year it was all contained to a small sub prime segment in the US. And the so call experts said no worries.
Kellygreen - for 50 percent off peak, perhaps you meant Fort Lauderdale? Some homes weren't even selling with a 90 percent reduction:
http://www.heraldtribune.com/article/20080329/REALESTATE/803290640/1537/BUSINESS
Kellygreen - for 50 percent off peak, perhaps you meant Fort Lauderdale?
Yeah, I confuse Fort Lauderdale with SF all the time. More likely he was talking BS.
sitting pretty said:
"Yeah, I confuse Fort Lauderdale with SF all the time."
No surprise there.
The RE industry considers the sale price/listing price ratio an important metric. In sellers' markets this ratio is around .98 and it is lower in buyers' markets.
Overpricing your house initially to "test the market" or for any other reason is one way to get less money for your home. This local REALTOR® sums it up as follows:
If your home is not priced competitively, buyers will reject it in favour of other larger homes for the same price. At the same time, the buyers who should be looking at your house will not see it because it is priced over their heads. The result is increased market time, and even when the price is eventually lowered, the buyers are wary because "nobody wants to buy a house that nobody else wants". The result is low offers and an unwillingness to negotiate. Every seller wants to realize as much money as possible from the sale, but a listing priced too high often eventually sells for less than market value.
If you want market condition data based on BC assessment and the sale of actual homes in a given area you should look at Landcors Housing Price Index. The Housing Price Index is a new product developed by Landcor™ Data Corporation. The purpose of the Housing Price Index is to track trends in the general level of residential property prices throughout British Columbia over the past two years. You can view trends in the real estate market for BC and areas or jurisdictions within BC that you select.
Take a look at Victoria and Oak Bay HPI; they both peaked and are falling.
Interesting link roger , thanks for posting. I never new something like that existed.
Sorry to be a pest, but I'll ask it again -- does the chart displaying yoy SFH listings show that listings $500k and under are declining? And does this indicate, as the blog post suggests, that the market has turned down?
I just worry because perhaps unlike others(?), I can't imagine affording a house over $500k. And a market where listings in such a reasonable range are drying up, does not seem like a bear market to me....
This is my theory on lack of lower priced listings. It's all the local average wage earner can afford so they get bought up even though most are terrible houses and they have to totally overextend to do it. But there is hope because a glut is forming in the higher end houses 700,000+, probably because the out of town rich buyers are buying elsewhere now that it's a lot cheaper or maybe the rich aren't so rich anymore. But as that inventory piles up eventually the prices will have to crack. My prediction is next year sometime when the perfect storm of recession, pre Olympic sell off, and a major change in buyer and seller psychology all hit at the same time.
Thanks Beagle--appreciate the interpretation. Does this mean those of us who who can't buy above $500k now (and again, I cant be alone) needs to sit tight til 2009? Wow.
anon 7:26 said
Sorry to be a pest, but I'll ask it again -- does the chart displaying yoy SFH listings show that listings $500k and under are declining? And does this indicate, as the blog post suggests, that the market has turned down?
I believe that the RE market has peaked and that prices above the median (around 500K) are starting to drop for single family homes. Affordability for buyers has reached unsustainable levels; there is growing inventory and sales are lower than last year at this time.
Below 500K there is still strong demand because there is not as much SFH inventory. Below 500K prices appear to have flattened out (not dropped) but that is only my guess based at looking at PCS data.
If you talk to an RE agent that has been around for awhile they will tell you that the high end homes go up first in a rising market and drop first in a falling market. As the SFH market above 500K continues to weaken prices will drop and a 725K house will fall to 675K. Houses at 675K will then drop and so on. Eventually reductions will ripple down to the under 500K market.
The market correction will not happen over a few months. The American market started the downturn over a year ago and still has more to go. Patience is required unless you have a long time horizon (i.e. >10 years) and you are sure you can ride out the cycle.
Condos and townhouses will drop sooner and at a faster rate.
IN SF, realistic pundits are PREDICTING a 50% drop by the time the market bottoms out. Along with the Greater Depression that is coming.
ALL bubble gains WILL be wiped out sooner or later, and the losses will be far worse due to hyperinflation (at least down south as the USD crashes and burns and the Fed keeps rocketing out useless paper.)
What is not known is whether or not prices will keep dropping below the point of parity that would have been where they would have been had the bubble not occured. If the Greater Depression hits, anything is possible. Prices could drop back 30 years. There just isn't enough money in the Fed or the government down there to bail everyone out, nor is there the will. Entire neighborhoods will be left vacant except for the few that own their homes free and clear and those that can make their adjusted mortgage payments.
Thanks to you also Roger--but I see many bears declaring 'look out below' and affirming in this bog and others that the housing market is, or will shortly be, in free-fall -- I wish.
But for the average home buyer, this does not seem to be an entirely probable assessment of near term potential opportunities?
OK, sitting pretty & kellygreen, let's play nice --
The case-shiller index shows a 16% drop from peak (15.8 usually gets rounded up, ya know...) not 50%.
However, two points:
The case-shiller index attempts controls for a change in the types of homes that are selling. It is possible to see something closer to a 50% drop in the average selling price with only a 16% in the case-shiller index. Especially if higher priced homes just ain't selling. Period. Mind you, the index (like the HPI in Vancouver) is a better measure of what's happening to individual value.
The case-shiller index shown was last updated in January. It's probably more than 20% off peak by now.
Think about that -- a first time buyer buying $400K worth of property in May 2007 just saw $80K evaporate in less than a year. Bet he wishes he'd kept renting...
Just realized I needed to identify myself--lest i be grouped in with anon posters like the one above predicting armageddon for San Francisco and the US. I mean if these conditions ensue, it won't really matter where you have your mony invested will it?
There hasn't been such a thing as a $400k property in SF in about 3 years. And I doubt there will be any time soon.
sfh soon -
Let's put this in perspective: Victoria real estate is just coming off it's longest winning streak, ever. By which I mean, there has never been a longer sustained increase in property values, ahead of inflation, than what we have just seen. Any measure of affordability is worse now than it has ever been. Ask RBC, demographia, heck even Royale-Lepage.
There is not a single financial indicator at this moment that is pointing "up" for real estate. Where there is health in the economy, it does not point to an increase in buyers, in purchasing strength, in house-buying intentions, you name it.
The last hope for a soft landing is that inventory won't go up. You can guess how I'm feeling about that.
Even a few months ago, there were folks in the US saying there is no bubble, this is sustainable, expect slower but moderate growth...
They looked at the fact that some people were still buying, prices in some markets were still rising, there was still the occasional bidding war, the houses that were still selling were getting something close to the asking price...
You might think the story is "Chicken Little" my friend, but waht if it's "The Emperor Has No Clothes."
And before you counter that all these housing bulls are a little to "Boy Who Cried Wolf" don't forget, in the end that wolf was real. And one of these days, he might just blow him down some houses!
I think Awum you are sending me hope that I, who can afford maybe a $400k house, will someday soon be able to afford the median sfh in Victoria proper? In the next few months?
Home sales decreased 28.5% in February in California compared with the same period a year ago, while the median price of an existing home fell 26.2%, the California Association of Realtors® (C.A.R.) reported this week.”
Pulled this from Rismedia.com, March 26, 2008.
This time, next year, is it unthinkable that the median SFH price in Greater Victoria with be below $400K, compared to the current $534K? That's what a 26% drop looks like. They would have told you a year ago in California that it was whacky to expect anything like that.
So is it a whacky prediction for Victoria now?
You can argue that it won't happen. Don't argue that it's impossible.
Here's a story to warm your heart. Especially the part at the end where the couple thought that market was never going to come down...
http://www.tradingmarkets.com/.site/news/Stock%20News/1242745/
Makes my heart smile!
Quote: I will not buy until prices are 50% of peak, just like they are now in S.F.
Rubbish. Prices are down 16% in SF from the peak according to Case Shiller.
Quite right. I was overenthusiastic in my oversimplification, and rightly busted. According to the San Francisco Chronicle, March 13, prices are only 18 percent down from the peak. Though it is interesting that about 10 percent of that decline occurred in Jan/Feb 2008.
It’s actually sales that are currently more than 43 percent down in the Bay area , down in the 9 Bay Area counties between 35 and 53 percent depending on the county. But prices are by no means finished.
And yes, some analysts are predicting more than 50 percent drops, ultimately. Here’s just one: Schahrzad Berkland, a realtor, real estate analyst for The Berkland Group, and advisor to the San Diego Reinvestment Task Force Foreclosure Subcommittee, has predicted a 53% drop in prices for San Francisco.
More on California:
San Francisco Chronicle, Jan 17. 11:06 PST SAN FRANCISCO -- As foreclosures, scarcer mortgages and general uncertainty continue to pummel the real estate market, Bay Area median home prices and sales volumes experienced significant declines in December, according to a report released Thursday.
For the nine-county area, the median home price fell 4.9 percent and sales volume plummeted 43.2 percent to a record low in December - the 35th consecutive month of decreasing sales, said DataQuick Information Systems, a La Jolla (San Diego County) research firm.
-- Price. The median price for an existing, single-family home in the region was $620,000 in December, down 4.9 percent from $652,000 a year ago, DataQuick said. The resale median dropped in every county except Santa Clara, where it was up 4.6 percent.
And from the LA Times: The California Association of Realtors reports median prices fell 27.2% from year-ago levels in the hard-hit Inland Empire east of Los Angeles, 30.9% in Sacramento, and 39.1% in Santa Barbara County.
On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% in median prices reported this week by the National Association of Realtors. On an absolute basis, the California meltdown is even more severe: Nationally, prices fell over the past year at a rate of $338 per week; in California, prices fell at a rate of $2,788 per week.
According to the CAR, "The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007." The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.
And from Bloomberg, March 20
The state had the most foreclosure filings in the U.S. last year and the biggest fourth-quarter decline in prices, according to RealtyTrac Inc., an Irvine, California-based seller of data on defaults, and the Office of Federal Housing Enterprise Oversight in Washington.
``The depth and magnitude of what's happening in the real estate market is really, really grim,'' said Russell Fehr, Sacramento's finance director, in an interview.
California, the most populous U.S. state and accounting for almost one-seventh of gross domestic product, will lose $25 billion in personal income by the end of 2008 and property values will fall by $630.7 billion, according to forecasts from economist Jerry Nickelsburg at the University of California, Los Angeles, and the U.S. Conference of Mayors.
``The housing slump is the real drag on the economy,'' Nickelsburg said.
But San Francisco is OK, right? Just like here. And heaven knows Victoria has as much to offer as SF.
"But there is hope because a glut is forming in the higher end houses 700,000+, probably because the out of town rich buyers are buying elsewhere now that it's a lot cheaper or maybe the rich aren't so rich anymore."
I also think that for many retirees Victoria was just a trend. Now it is not. A few of my friends parents tried to live here but realized that the weather was not as good as they thought (yes it is the best in Canada but that is not saying much). Also these 60 something people were dismayed with all the addicts downtown. It turned out not to be the place they had in mind.
Also and friend who lives in the Songhees (she is in her early 40s and is one of the youngest ) says that all the retirees do is complain about the above. I think people thought it would be a much different place.
It was just a trend and now it is over. Waterfront at one point was undervalued and people were grabbing it left and right. Now it is just sitting. I have PCS and even my RE agent admitted the coveted waterfront is not moving.
Quote: I will not buy until prices are 50% of peak, just like they are now in S.F.
Rubbish. Prices are down 16% in SF from the peak according to Case Shiller.
Quite right. I was overenthusiastic in my oversimplification, and rightly busted. According to the San Francisco Chronicle, March 13, prices are only 18 percent down from the peak. Though it is interesting that about 10 percent of that decline occurred in Jan/Feb 2008.
It’s actually sales that are currently more than 43 percent down in the Bay area , down in the 9 Bay Area counties between 35 and 53 percent depending on the county. But prices are by no means finished.
And yes, some analysts are predicting more than 50 percent drops, ultimately. Here’s just one: Schahrzad Berkland, a realtor, real estate analyst for The Berkland Group, and advisor to the San Diego Reinvestment Task Force Foreclosure Subcommittee, has predicted a 53% drop in prices for San Francisco.
More on California:
San Francisco Chronicle, Jan 17. 11:06 PST SAN FRANCISCO -- As foreclosures, scarcer mortgages and general uncertainty continue to pummel the real estate market, Bay Area median home prices and sales volumes experienced significant declines in December, according to a report released Thursday.
For the nine-county area, the median home price fell 4.9 percent and sales volume plummeted 43.2 percent to a record low in December - the 35th consecutive month of decreasing sales, said DataQuick Information Systems, a La Jolla (San Diego County) research firm.
-- Price. The median price for an existing, single-family home in the region was $620,000 in December, down 4.9 percent from $652,000 a year ago, DataQuick said. The resale median dropped in every county except Santa Clara, where it was up 4.6 percent.
And from the LA Times: The California Association of Realtors reports median prices fell 27.2% from year-ago levels in the hard-hit Inland Empire east of Los Angeles, 30.9% in Sacramento, and 39.1% in Santa Barbara County.
On a percentage basis, the California price meltdown is more than three times as severe as the national decline of 8.2% in median prices reported this week by the National Association of Realtors. On an absolute basis, the California meltdown is even more severe: Nationally, prices fell over the past year at a rate of $338 per week; in California, prices fell at a rate of $2,788 per week.
According to the CAR, "The median sales price of an existing, single-family detached home in California during February 2008 was $409,240, a 26.2 percent decrease from the revised $554,280 median for February 2007." The February 2008 median price fell 4.8 percent compared with January’s revised $429,790 median price.
And from Bloomberg, March 20
The state had the most foreclosure filings in the U.S. last year and the biggest fourth-quarter decline in prices, according to RealtyTrac Inc., an Irvine, California-based seller of data on defaults, and the Office of Federal Housing Enterprise Oversight in Washington.
``The depth and magnitude of what's happening in the real estate market is really, really grim,'' said Russell Fehr, Sacramento's finance director, in an interview.
California, the most populous U.S. state and accounting for almost one-seventh of gross domestic product, will lose $25 billion in personal income by the end of 2008 and property values will fall by $630.7 billion, according to forecasts from economist Jerry Nickelsburg at the University of California, Los Angeles, and the U.S. Conference of Mayors.
``The housing slump is the real drag on the economy,'' Nickelsburg said.
But San Francisco is OK, right? Just like here. And heaven knows Victoria has as much to offer as SF.
OK, truly, truly sorry about the extremely long double post. I was pasting, and well...
How about all those investors from San Francisco who were supposed to fly in the little Canadair jet flight this summer. The TC was fixated with notion that the new direct flight with UA (it probably will be cancelled like the Delta flight to SLC was) will bring all these new RE investors (that's the first topic that comes into their greedy and biased minds). What about those hits on the Bare Mountain server from Phoenix investors? We don't hear the TC mention any of that lately? I can't wait for a follow-up story on that.. we should ask Clara to write about it.
" I have PCS and even my RE agent admitted the coveted waterfront is not moving."
I know of one place out in Sidney on the waterfront and is asking comparable prices to other waterfronts at just over a million or so and it has been for sale for over a year now. I think it has been relisted a few times now. You would have thought places like that would have been snapped up ages ago.
anon 9:31 said
I also think that for many retirees Victoria was just a trend. Now it is not. A few of my friends parents tried to live here but realized that the weather was not as good as they thought (yes it is the best in Canada but that is not saying much).
Here is some more grist for the mill. Parksville-Qualicum beach is known as a haven for retirees. Many moved for the weather when the SFH prices were low. Now sales are way down from last year and prices have been flat for months. Here are some stats:
Jan. 2007 SFH sales - 42
Jan. 2008 SFH sales - 31 (down)
Feb. 2007 SFH sales - 54
Feb. 2008 SFH sales - 40 (down)
Mar. 2007 SFH sales - 66
Mar. 2008 SFH sales - 60??
Feb. 2007 SFH listings - 292
Feb. 2008 SFH listings - 284 (down)
Mar. 2007 SFH listings - 298
Mar. 2008 SFH listings - 480 MLS (UP)
You can see that SFH listings have been piling on this month. Sales were down in February from last year. Even if 60 sell this month that is a ratio of 1:8 sold/active listings. The VIREB report last month gave the sales/new listings ratio at 33%. Under 40% is a buyer's market. With demand dropping and supply rising there will be a price correction by the summer.
Why the change?? Retirees used to come in the winter and look around and now they are going to the US because of the par dollar. Many used to buy during their stay. There were a lot of Alberta buyers but the market there has slowed down and they can't sell for what they could at the peak.
Also and friend who lives in the Songhees says that all the retirees do is complain about the above.
Don't retirees always complain about everything? If you've moved away from family and old friends, what else is there to do really? :-)
Here's an interesting thing from the Case-Shiller index: The peak, or the turning point, varied from city to city. Some peaked in 2007, some in 2006. However, the markets tended to peak in the May-June-July period. Seems to hold true generally for other peaks in previous years as well.
I know we're not the US, but...
Waterfront isn't moving because MOST ultra rich who can afford it also are in-the-know about the risk of Tsunami damage from offshore faults. And even though they can afford astronomical insurance rates, they don't particularly relish the thought of replacing all their costly posessions once they've washed out to sea.
Waterfront ain't what it's cracked up to be.
SFH soon? said...
Just realized I needed to identify myself--lest i be grouped in with anon posters like the one above predicting armageddon for San Francisco and the US. I mean if these conditions ensue, it won't really matter where you have your mony invested will it?
Precious metals are always a good bet, especially when all paper is crashing. No matter how much the managers try to keep the prices down. Manipulation shenanigans can only go so far.
Anyone know what's up with the "Victoria Flippers In Trouble" blog? First it's up, then it's down due to "violations in terms of service". Then it's up again yesterday for awhile, now it's down again.
Does Blogger just kneejerk pull blogs when enough realtors complain without checking or what? How could it be okay'ed to be accessible again, and then just a day later yanked again with the same "violations in terms of service."
DON'T tell me Blogger works on an automatic flagging procedure like Craigslist... shoot first, then ask questions later. If so, that blog will be blinking on and off forever.
I find one thing that gets lost whenever comparing percentages up/down. A 100 percent gain is wiped out with only a 50 percent loss. So losses are always muted compared to gains.
Waterfront,
I know a few people that have waterfront (my girlfriend just sold and moved back east). Some are stunning homes some are not.
They say it can be cold and nasty. You never get warm. Salt gets all over your windows. Etc. Etc. When my friend bought it 7 years ago she was all excited and now said she would never buy it again. You have to be facing the right direction.
Americans bought up the water-front because it was cheap and now it is not and just not worth it.
This is not Malibu.
Waterfront and high end homes are hardly selling like hotcakes. There are over 200 for sale over $1M. 20 sold in January and 10 in February.
Had to share this one... the sad thing about it... 99% of the BRAND NEW houses on Bear Mountain look EXACTLY like it. What's up with that?
This beauty is for the folks who want desperately to pretend that Frank Lloyd Wright never existed. Built in 1906, needs to be rebuilt FROM THE GROUND UP. Wonder if it even has in the wall electric wiring, or if the gaslight pipes are still in the walls? Family kitchen? FORGET IT! Besides, back when it was built only the cook went in the kitchen anyway.
All for a mere $698,000. Quick, this Andy Hardy/Judy Garland monstrosity won't last long.
(This house isn't worth picking up and dropping on the Wicked Witch of the West.)
$180,000. TOPS. In Detroit, this beauty would be FREE. Scratch that, they would have torn it down.
In 1955.
Hi all, I've been lurking around these blogs for a little while and love to read the comments. I'd like an opinion from you guys if I could.
I'm a first-time buyer in my 20's and a few months ago, I was itching to buy a condo. Since then I found out I could barely afford anything over $200,000 even with a 40year mortgage and have come to my senses and will wait and save up a bunch more - no 40 year mortgage for me!
What do you think the condos under $200,000 will do? I'm assuming they have to come down sooner or later. I also want to spend a few years saving for a big downpayment but I don't want to see the prices go down and then back up before I have enough saved. Any comments for a first timer?
For all of you wondering where all these people are coming from that account for current "SOLD" signs that you see in Oak Bay, etc...
Keep in mind that a "SOLD" sign doesn't necessarily represent new money in the real estate system.
The last three coworkers/friends that I know who put SOLD signs on their properties ALL did so because they were basically using their existing homes to move sideways in the market (ie: moving slightly up or slightly down in their ownership. The older homeowners wanted to sell and move into a condo, the younger ones want to sell their small homes/condos and move into a larger home).
So, always remember that a great many "SOLD" signs you see out there should really read "TRADED". Especially these days, you DO NOT assume they represent "new money" (greater fools) by any means.
And...
Anonymous:
"A 100 percent gain is wiped out with only a 50 percent loss."
EXCELLENT POINT!
If you want to (try) to keep your real estate agent honest, ask him/her if he/she knows any other real estate agents that have recently sold their own Victoria property and bought one down south instead.
The more intelligent Victoria-area realtors are definitely doing this, for obvious reasons.
ALSO, ask your real estate agent why an area like Oak Bay, which historically may have 20 or 25 listings at this time of year currently has upwards of 100 listings.
If they keep on trying to spin those two things as if they mean nothing, I'm sure we'd all like to have a good laugh and hear how they lamely attempt to do so.
anon said:
"The more intelligent Victoria-area realtors are definitely doing this, for obvious reasons."
I don't understand this at all - we know the U.S. housing market is crashing (we can turn on the TV and see it with our own eyes), especially in places like Arizona, and that they still have a long way to go to be affordable (to Americans). Why wouldn't Canadians wait a year or two or more to get even bigger discounts on these U.S. properties?
there is also the concern of huge increases in property taxes down south due to the precarious financial situation of many states/municipalities.
I dunno, doesn't seem like a good time to be buying anywhere.
No, your absolutely right Olives, it's probably not.
Not until all the chickens come home to roost and the economic markets fully pop and bottom out.
There's this Arizona realtor trying to unload houses on Craiglist he's got listed for about a tenth of what they go for here. NO ONE, not even the realtors here, are buying them.
If you want to (try) to keep your real estate agent honest, ask him/her if he/she knows any other real estate agents that have recently sold their own Victoria property and bought one down south instead.
I suppose they live in cardboard boxes under the Johnson St. bridge after they do this.
The more intelligent Victoria-area realtors are definitely doing this, for obvious reasons.
OK, I'll bite. What are these "obvious" reasons?
"Why wouldn't Canadians wait a year or two or more to get even bigger discounts on these U.S. properties?"
Because they are brainwashed into the "have to have it NOW not later" mentality and the real estate machine feeds into this propaganda BS. It happens at every bubble peak,don't be a bagholder,wait a year or two for sanity to return. Massive debt will soon be out of vogue and those who wait will prosper bigtime.
anon 1:18 said:
ALSO, ask your real estate agent why an area like Oak Bay, which historically may have 20 or 25 listings at this time of year currently has upwards of 100 listings.
The answer is simple: Over $1M sales are way down just like everywhere else in the CRD.
Over $1M - today 50 listings on MLS
-- 3 sales in January & 1 in February
Under $1M - today 39 listings on MLS
-- 7 sales in January & 18 in February
The next time some annoying real-estate-cheerleading friend of yours is inclined to quote the latest local real-estate-market pablum from a rag like the Times-Colonist or the Vancouver Sun, consider this:
"Independent, publicly traded American newspapers have lost forty-two per cent of their market value in the past three years"
http://www.newyorker.com/reporting/2008/03/31/080331fa_fact_alterman?currentPage=all
Canadian newspapers are no doubt suffering greatly as well.
Unfortunately, this means that in many cases newspapers are no longer trying to print news, so much as selling the contents of their stories to the highest bidders.
When a very large percentage of its ads are paid for by the Real Estate Industry, is a newspaper going to go out of its way to warn the general public about the truth of the deflating housing market, and upset its sugar-daddy? Or is it going to try its best to put a positive spin on any bad real estate figures that come out (or at least be very quiet about reporting the bad news)?
Today the US announced they may be revamping the entire financial system. You should be able to find it all over google news, but in short, the guys that completely messed up the economy want even more power so that they can, umm... "fix it"! Yeah, there's a plan that will work. We're all going to hell, I tell you!
Check out this summary of the state of things: (many good links for the below, 1 page down on that site).
* Housing is imploding.
* There are $500 Trillion in derivatives that no one can possibly understand the financial risks on.
* A huge portion of those derivatives are with JP Morgan (JPM).
* Bear Stearns stock went from $170 to $10 in a year in Shotgun Wedding between Bear Stearns and JP Morgan arranged by the Fed
* Questions Linger Over Lehman's Balance Sheet as Lehman Brothers (LEH) is leveraged 31.7 times.
* Citigroup (C) had to be bailed out by Abu Dhabi Deal Raises Questions About Citigroup's Health
* Merrill Lynch needed $6.6 Billion Bailout From Kuwait, Mizuho.
* Cost of Capital "Ratchets Up" at Citigroup and Merrill
* Morgan Stanley (MS) sold 9.9% of the firm to China after handing out huge bonuses.
* People are walking away from homes
Businesses Are Advised To Walk Away from agreed upon deals.
* There is an open public debate on Moral Obligations Of Walking Away
* 1 in 10 of the entire state of Ohio is on food stamps.
* Florida, Ohio, and Michigan are in an economic depression.
* There is No market for Asset Backed Commercial Paper (ABCP).
* German Banks Fears Global * Meltdown caused by US subprime debt
* There is a $1.1 Trillion HELOC Problem
* Unemployment is poised to soar.
* Commercial real estate is massively overbuilt and poised to plunge.
* Goldman Sachs (GS) is calling for another $460 billion in writedowns.
* The SEC Openly Invites Corporations To Lie.
So, you still think Victoria won't be impacted? I laugh at you out loud!
"The next time some annoying real-estate-cheerleading friend of yours is inclined to quote the latest local real-estate-market pablum from a rag like the Times-Colonist or the Vancouver Sun"
Or just ask them to actually read the Sun.
The end draws nigh for real estate boom
Looks like the Sun is changing its tune, I wonder if the TC will print something like this from Garth Turner.
There were a lot more price reductions in the under 750K SFH Victoria and Saanich listings today. I guess a lot more people are still "testing the market". You can see the updated slide show here. Hit the X beside Loop Slide Show to watch full screen.
I have posted my inventory charts for Greater Vancouver if you follow that market. Inventory up 17%
http://paul-northvancouverhomes.blogspot.com/
I read this blog every day. Lots of great comments.
>>Or just ask them to actually >>read the Sun.
...
>>Looks like the Sun is changing >>its tune,
Hardly!!!
Publishing ONE balanced article after several years of publishing countless articles cheerleading the local real estate bubble (directly or inirectly)...and quoting local real estate professionals verbatim as if they were unbiased... hardly makes for the Sun changing its tune.
Give me about EIGHT more years of NON-STOP articles, at least ONE per week, that go on and on about how real estate prices are NOT guaranteed to go up, how Vancouver is NOT "different", and how in fact prices are headed DOWN...
Give me THAT and I will concede that the Vancouver Sun has finally atoned for its past stupidity... and that it is reporting about real estate on a level playing field.
BTW that Vancouver Sun article - was it front page news, like every other weekly real-estate-cheerleading article in the Sun is?
VREB RELEASES NUMBERS!!
MARCH REAL ESTATE STATS
SFH Average Sales Price (GV) UP 9.9K
Mar-08 597.2k *** Feb-08 587.3K
Mar-07 542.5K *** Feb-07 534.1K
SFH Median Sales Price (GV) DOWN 13.9K
Mar-08 529.6K *** Feb-08 543.5K
Mar-07 489.9K *** Feb-07 472.0K
MLS Sales DOWN 15% YOY
Mar-08 707 *** Feb-08 619
Mar-07 833 *** Feb-07 707
New MLS listings UP 6% YOY
Mar-08 1390 *** Feb-08 1260
Mar-07 1315 *** Feb-07 1205
Active MLS listings UP 17% YOY
Mar-08 3591 *** Feb-08 3311
Mar-07 3079 *** Feb-07 2919
Analysis of VREB March Stats
March was a great month for bears. Sales were down YOY as we enter the busy spring sales season. Inventory rose to a level not seen for years. The median price of 529.6K (the yardstick for market trend analysis) dropped by 13.9K. in March and is now equal to the January 2008 level of 529.9K. The average price rose by 9.7K but this is due to the fact that 20 houses sold in March for over $1M (compared to 10 in February).
The condo market average price fell by 5K and the median rose by 1K. The only good news for bulls was the townhouse market where the average price rose by 36K and the median rose by 17K.
Tony Joe of VREB had this to say about the market:
"With more properties available for sale, buyers now have a greater choice, but the continued demand for homes and steady prices mean sellers can anticipate strong interest in properties that are realistically priced."
Translation: Inventory is rising, sales are down from last year and the median price is dropping. SFH sellers better be realistic or they won't sell. Buyers can take their time and be aggressive with their offers.
All in all folks this market has turned down...
Thank you Roger, for the excellent overview of the stats!
Thanks for the analysis Roger.
Although bulls will only hear what bulls want to hear.
I know of a couple of young people who are still thinking it is hot and are being talked into a ludicrous situation. Woe is them.
On a lighter note. My April fool's joke has been to tell family and friends that we finally bought a house.
They have fallen for it and are very excited for us.
I'm stretching it out as long as I can.
What a hoot. Usually I can never trick anyone.
Dear all frequenters of this blog:
I have spent severals months frequenting this Victoria Housing (and other housing) blogs, and I thank you all for the very compelling commentary, statistics, and conversation regarding the real estate bubble and the future of real estate in Victoria.
Buying a family home at the best of times is an unnverving commitment, but the possibility of buying one at the possible peak of a real estate bubble --- the likes of which many of us have never seen in our lives --- is something that can make or break our futures.
It is with great gratitude and respect, then, that I now have finally decided that the Victoria market is *indeed* different from the rest of North America, and will forever increase in value in such a pace as to be deemed perpetually "hot" (ie: have continuing and unlimited interest and investment sources).
What changed my mind so forcefully?
I could attempt to summarize to you the CBC video report that changed my mind once and for all, but nothing does it justice short of you seeing the journalist's analyses for yourself in its entirety. It truly puts future of Victoria real estate in perspective:
http://www.youtube.com/watch?v=eBGIQ7ZuuiU&feature=related
-Dallas
Please start a new thread, even if it's an open one. Maybe you can allow a maximum of 100 comments per thread, please? It gets too hard to read. Thank you
Dallas...Chapple? The well-know Victoria realtor, perchance?
Dallas Chapple? Er no.
Dallas as in "Dallar Road" is why I came up with the handle.
Silly me, Dallas. I should know that all the local realtors have better things to do than to frequent bear blogs. Would you be so kind as to check the address of your YouTube video; I tried to view it and was directed to red-headed "Rick Roll" singing a pop music tune.
vicrebear:
(1)
For today only, go to Youtube and pick ANY "featured video" and you'll get a better idea about what this is about.
(2)
If you still don't understand it, look up "rickroll" in wikipedia.
Oh-kay. April fool's jokes are supposed to stop at noon, not 2:16 pm.
>>April fool's jokes are supposed
>> to stop at noon, not 2:16 pm.
Never understood that theory. If that's the case, why didn't they call it "April Fool's Half-day"?
"...why didn't they call it "April Fool's Half-day?"
Good question. As good a question as, "Why did they come up with April Fool's Day in the first place?"
Anyway, I'm a patsy for any gag that has a pop culture, meme or Internet theme to it, as I'm just a barely 'e'-literate middle-aged yokel.
Still dont get that rickroll thing. What's so funny about posting a link to a guy singing pop music from the 80's? And why his video and not some other one?
I don't get the rickroll thing either.
However, I liked the video and gave it an 8 out of 10, but would find it difficult to dance to.
Dick Clark
Someone paid $320k for a double wide in Sidney? 55+ to boot?
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