Where Have I Heard This "Story" Before?
Okay, perhaps nobody else has gotten tired of this, but it's something I couldn't help noticing about MSM coverage of our housing market. First, the obvious: constant references to how the market is returning to a more balanced state, which is better for buyers and sellers. How is it better? Supposedly a moderation of price increases that were starting to make the whole market unaffordable. The increase of listings is good because it means there is more choice after several years with frenzied activity.
However, what is this balance, really? Is housing more affordable? No, it's clear that its not. What's the one thing that would make it more affordable?
Umm, yeah, lower prices.
Does the MSM foresee lower prices in the near future? Of course not, instead, they look forward to a cooling of the red hot market and a continuation of single digit annual price gains.
This is not going to solve any of the problems of unaffordability! The present market is severely unaffordable by almost any historical measure. Don't believe me? Read this.
Now over at Housing Doom, they've picked up on the repetition of some of these arguments in Canada, and how they eerily mirror some of the same arguments made by the MSM in the US right around the time the American market started tanking. We even get a quote from VREB President Tony Joe in the Canadian story published in the Vancouver Sun in a story title: "Victoria real estate market gets 'back to normal' as industry sees signs housing boom is over".
"Joe said the market has been cool so far in 2008, but that's in comparison to 2007, an "exceptionally busy year when we exceeded all the numbers." "We're also looking over the last five or six years and what we're finding is things are just coming back to normal," he said. According to Landcor Data's first-quarter residential home sales summary, the economic malaise in the U.S. fuelled by the sub-prime mortgage crisis is having an effect on B.C. and Vancouver Island. The Island, Fraser Valley and northern B.C. have all seen the total value of sales in the first quarter drop compared with the first quarter of 2007, the first time all three regions have seen a quarterly decrease in the past four years."Compare that to these comments from a story in the USA Today back in 2006: "Phoenix: Prices, sales tumble, but that's 'getting back to normal'.
"The declines appear so dramatic because Phoenix's housing market last year (and for the past several years) was so hyperinflated. "Last year was just one of those atrocities that happens rarely," in terms of bidding wars and soaring prices, says Camille Sullivan, also an agent at Realty Executives. "I've never seen it before, and I've been doing this for 25 years. It was a very difficult time." Sullivan says the market is "stabilizing and getting back to normal." There are now about 47,500 homes for sale. That's about an eight-month supply, about the national average."
Is this deja-vu all over again?
Let's face it, Victoria is one of the most unaffordable housing markets in North America, which is nothing to celebrate. Talking about a slowdown to single digit increases? Nothing but a smokescreen.
Bring on the double digit price drops, and the sooner, the better!
Then the MSM can really report things are better for buyers. And considering gains sellers have made on paper in recent years, why exactly is it so darn painful for them to give back 10% or 20% anyway?
Rhetorical question - of course.
***Newsflash*** as of the weekend (July 12-13) the graffiti has been removed. But it lives on here forever...
Copyright © 2006–2008 by
clickcampaign marketing.
Some Rights Reserved.
Copyright Policy and Terms.
Designated trademarks and brands are the property of their respective owners.
Who's online
My personal favourite line realtors use, completely without irony, is "Not is a great time to buy or sell a house." It's just such a beautifully ridiculous contradiction, like saying a product is new and improved. It can never be a good time to both buy and sell. If it's good for one it's not good for the other, so at best it would be a totally average time to buy or sell a house.
Who knows what percentage of realtors believe their own BS. I'm sure there are a lot who honestly think that a market can go from speculative bubble to normal growth without a crash in between. They're the ones who weren't realtors five years ago and won't be realtors five years from now. If you only look at the sale/list ratio, then yeah we're in a balanced market. You just have to ignore all the affordability numbers and the tendency of deviations to revert to the mean.
But of course, that's why you never ask a hairdresser whether you need a haircut or a car salesman whether you need a new car. A car salesman isn't going to tell you to wait for two months till the 2009 models come out to save yourself thousands of dollars, and a realtor won't tell you to wait out the crash to save yourself hundreds of thousands.
Aleks,
I think your assessment pretty much matches mine. Even though some realtors point to a low-ish MOI in certain segments as signs that the market is healthy, or maybe just taking a breather, when you look at the surrounding area, which includes massive price and sales drops in the US, and sales and price drops in Alberta, along with stalled sales and increased inventory in Vancouver, along with increased inventory in Victoria, which, while not overwhelming, is still higher here than it has been in years, then look at massive inventory in the interior and up Island, what else can this possibly mean?
I know the central bankers and governments would like to finesse a way out of this situation that preserves equity and therefore the tax base, but I don't think that is going to happen. They've managed finesse moves previously in bigger markets, like the US lowering rates after the dotcom crash, but in the end, they still got a bust.
People will be reporting a bust here soon enough. The people in the know first will be the low-ball buyers who start to have their offers accepted. Are we all sending in offers marked down 10%? 20%? Are they getting replies? Or sneers? Is that changing this summer?
Maybe. I don't think it can take much longer. Affordability is out the window, and without big jumps in price to provide the "house flipping" incentive, first time buyers and flippers will both be out of the market at the same time.
A market without first time buyers and without flippers? That could never be considered "balanced" in my books, no matter what MOI number is on the books. I mean, who else is left to buy at the bottom in that scenario?
Well, so much for Dave's theory that inventory can climb to the moon without a concomitant fall in prices.....looks like basic law of suppy-and-demand still holds water. ;-)
Price cuts cool real estate sizzle Board president says well-priced listings sell fast
"Last month, the number of sales slid to 723 from 770 in May. In June of last year, total sales reached 949, the board said.
The average price of a single-family house was $580,104, down from $601,897 in May. The median price dropped to $538,000 in June, down from $545,000 the previous month.
Meanwhile, the number of properties on the market through the Greater Victoria multiple listing service rose to 4,513 last month, up by 27 per cent from June of 2007, the board said.
The average number of days on the market for sold single-family properties was 42 last month, up from 35 in June of 2007, the board said. But year-to-date, the average number of days on the market is 38, lower than 40 days for the same months last year, Joe said."
Kabloona -
thanks for the stat links from the TC and Carla Wilson, I like how they get the word "sizzle" in the TC headline, even though the average price dropped $20,000 in a month where sales dropped by like 225 units compared to last year and 50 units compared to last month.
I like the spin on how if people exit to the sidelines now pent up demand will be released soon to reinvigorate the market.
Didn't work in California, though....
Yeah, I thought that front-page spin was egregiously stupid. Almost passed my morning coffee thru my nose when they referred to a blatant market decline as "going from sizzle to a slow boil"...say what?
I guess it's all part of the "re-balancing" market, right....? But Tony was so adamantly bullish a few weeks ago.....I just don't get it. ;-)
Greg,
I think the TC is engaging in hyperbole with the slow boil comment. Take a look at these June 08 Graphs and Charts in slideshow format. I hope your readers find them interesting.
Roger
I had to smile when they snuck that comment about pent up demand in at the end. We've had abnormally high sales volume for five years, so I'm not sure when this demand was supposed to be building up. Over this summer?
What I expect to see is the release of pent up supply, as speculators try to dump their units before the crash really gets going.
Roger, thanks for the link to your chart slideshows. Informative as always.
Can you do me a favour, do you know where I can access the full June stats, so I can calculate the number of million dollar plus sales? I see they dropped it from the summary this month. Maybe somebody at VREB didn't like the latest 14 months of inventory figure? Maybe the million dollar plus sales fell and that number was going to get even bigger?
Anyway, if you can point me to a link for that number, I would appreciate it.
Greg,
The detailed VREB report is not available until about the middle of the month. I will post the link when it is available.
Roger
Kabloona, Victoria isn't a big enough market to gauge prices on a month to month basis. if you look back at the data you will see that prices jump up and down quite substantially from month to month. The current prices are within the general trendline. I think we have to give it another couple months before making a judgement as to whether the trend has broken downwards.
Sales haven't dropped off that much in Victoria. The sales levels in June 2008 are quite similar to those in June 2006 at a time when prices went up. Inventory is up, but not by a huge amount.
I would still say we are in a balanced market. The number of new listings is starting to go down and within a month or two inventory will start to drop as well.
Yeah, I'm sure it's just a blip. A downward blip, nothing to worry about....also a downward blip in the Lower Mainland, Edmonton, Calgary, Toronto...well, downward blips in pretty much all of North America. Like the RE pumpers were saying on CTV and CHEK News last night: It's a great time to buy! ;-)
Okay, riddle me this: why would inventory drop in the dog days of July and August if sales don't start accelerating - which they clearly aren't? Are the properties just going to be de-listed in 60 to 90 days when they fail to sell?
My general observation on RE markets: if you don't see a hot Spring market, you can pretty much be certain the rest of the year will also stink. And that kind of market can't sustain rising prices....
Wow! Amazing charts as usual Roger. I especially love the yoy median and average price graph. That average looks just poised to drop under the line! Thanks for all that work. People are really distressed you have dropped off the other blogs! I'm just glad to see your stuff somewhere, and thanks Greg for your great pictures.
By the way, I am terribly hurt not to be in the poll. I know I'm a fairly newbie, but, what, not annoying enough to make the list? Or don't post enough? Or just too boring? Oh, well, I see Olives isn't there either. I guess I'll just have to get over it. Or try to write more annoying posts.
Sorry about that Victorianna, I should have added you in the first place, but I guess when I added all those names I was looking at a couple other blogs and I missed you at that time. Consider the situation rectified. Unfortunately, I cannot change my earlier vote to vote for you, because you are definitely not annoying enough...
I added Olives too, let's see who can get some votes, right now sitting pretty is as popular as jmk used to be. In fact, I think sitting pretty and jmk share a lot in common...