Monday, June 8, 2009

Updated Graphs on Vancouver Real Estate

A couple of interesting graphs for you today.

Every year (be they good years or bad) it seems there is a 'spring bounce' in real estate sales. Winter is always a slow time for housing sales and things always pick up in the spring.

The graph above was posted over on Vancouver Condo Info and shows Sacramento over the last three years.

Sacramento has been hit hard in the real estate crash, but as you will notice, Spring has always given the market a boost. The 'spring bounce' has occured each and every year over the last three years despite the fact the market has crashed significantly.

Next we have a graph for San Diego which shows a similar pattern.

As you can see the chart shows the San Diego market starting to drop in September 2005, then it plateau's and bounces in April 2006, drops again, there is a spring bounce in May 2007, the market then drops dramatically, slightly plateaus and rises in spring 2008, and then plummets again with the graph ending in another spring bounce for 2009.

With this pattern in mind, lets look at Vancouver. Vancouver, compared to the US cities, has only just started it's housing collapse.

These two graphs are from Housing Analysis. The first graph charts is a three month moving average which is comparable to the US Case-Shiller data. The graph compares Vancouver to some of the worst-hit cities in the US (San Diego, Miami, Pheonix, and San Franciso. It also compares Seattle and Oregon for reference). Click on the image to enlarge it.

The graph compares the cities side-by-side since the start of their respective collapses. Vancouver is only 11 month into its collapse.

As you can see, Vancouver has fallen faster than all these other cities at their 11 month mark, except Miami. And it is only the spring bounce that has pulled us back from a collapse faster than Miami.

Yes... that's right, the rate of collapse for Vancouver is FASTER than what is being experienced in the worst US cities. If the trend continues the collapse will be just as hard as has been experienced in the United States.

Just for comparison, here is a graph which compares Vancouver to some US cities using the raw benchmark value vs. the Case-Shiller HPI. Again, you can click on the image to enlarge it.

The raw benchmark gives the spring bounce a more pronounced look, but the data still reveals the same thing. Vancouver, at the 11 month mark, has dropped faster than any US city at their 11 month mark except Miami.

Harken back to April 26, 2005. In an interview with Jim O'Connell on Report on Business Television (and reported in the Globe and Mail) Robert Shiller was commenting on the US housing situation just as the problems were starting to loom. Shiller, a Yale Economist, said, "This is the biggest national bubble that the U.S. has seen in over a century. A violent correction is imminent. When people are flocking into the housing market buying more and more houses, it's not a sustainable situation."

Shiller went on to note that the bubble is building in "glamour cities and glamour vacation areas" in the United States and Canada.

Ominously, Prof. Shiller was moved to comment on Vancouver. He said that "Vancouver is the most bubbly city in the world," and that the city has a history of volatile housing prices. He saw no reason Vancouver wouldn't burst exactly like the most bubbly cities in the United States.

The real estate industry wants you to believe the market is turning around and that the recovery has started.

Is it a recovery? Or is it merely a spring respite before the market plunges again?

You know where I stand on that question.


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