Fraser Valley Region of Greater Vancouver in deep Real Estate trouble?

Back on May 7th, reference was made to the April Real Estate numbers in our fair Province of British Columbia.

In that post we noted that while Vancouver proper ramps up in it's combustible intense heat, the periphery continues to languish. We observed that the Fraser Valley had stalled and any comment that sales were flat would be generous in the extreme.

Reinforcing this is an article in the local Fraser Valley newspaper, the Langley Advance.

After property sales in the two communities dropped substantially in April, the Advance is reporting that Realtors in the Fraser Valley are warning people in Abbotsford and Mission not to panic.

And why would they 'panic'?

Sales of detached houses in Abbotsford fell last month by 33% compared to sales in April 2010. 

In Mission the plunged down 42% from April of 2010 and crated 48% when compared to March of 2011.

But that's nothing compared to townhouse and apartment sales.

In Abbotsford they are down 43.5% and 7.1%  respectively from where they were a year ago.

And in Mission they have utterly collapsed by 77.8% and 71.4% each compared to April 2010.

The collapse in sales hasn't started to affect prices yet, however, as they have soared 11.5% since last year.

But it's only a matter of time.

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April Real Estate Numbers

Last week we mentioned how we expected the April Real Estate statistics would continue to show that Vancouver proper R/E would remain hot, but that the larger periphery around the Village on the Edge of the Rainforest is NOT selling at all.

And that is the case.

Above (click on image to enlarge) are the statistics for Vancouver in a chart from realtor Larry Yatkowsky. The Euphoric Stage of the bubble is playing out in almost perfect chart form now and the climb is almost breathtaking.

But while Vancouver proper ramps up in it's combustible intense heat, the  periphery continues to languish.

The Fraser Valley has stalled. It would be polite to only say that sales and prices are flat. From the Fraser Valley Real Estate Board:

• "The Fraser Valley Real Estate Board processed 1,516 property sales on its Multiple Listing Service in April, a decrease of 15% compared to 1,793 sold during April of last year, and a decrease of 17% compared to March’s 1,818 sales."

Across the water, our Province's capital city is a 'washout' according to the City's main daily newspaper. Victoria had it's lowest April R/E sales totals in over a decade.

Meanwhile in the Okanagan region of the Province, the sales to listings percentage is sitting at 5-8%.  When you have a 5% sales/list ratio it means there is almost two years of inventory waiting to be sold.

A complete list of the BC region can be seen here.

They say a 'watched pot never boils' and for many of the local R/E bubble watchers, the playing out of the Vancouver Housing Bubble has been agonizingly slow. The bubble watchers all know that the fundamentals point to a bubble, they all know values have out-stripped local incomes, and they all know all the signs of an imminent bubble collapse are there.

And now conditions are, in fact, unwinding.

Do a google search of the term "real estate bubble the periphery collapses first"  and you get link after link detailing how this is one of the warning signs of a collapsing property bubble.

Do not revel in this.  The pain we will feel in the years ahead will be significant. Even those who have been wise enough to protect their equity gains, even those who have avoided the 'debt trap' by not succumbing to the buying pressure; all will be significantly impacted by the collapse.

Perhaps the only good thing is that, in recent months, the warnings have been well publicized by the mainstream media as well as the blogosphere.

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You have to know when to hold them...

Today the 'official' July 2010 real estate sales statistics were released for both Greater Vancouver and the Fraser Valley.

And as we posted on the weekend, the picture is not pretty.

How ugly is it, you ask?

“We didn’t anticipate this level of change,” said Deanna Horn, Fraser Valley Real Estate Board President.

Of course the inability of the Real Estate Boards to 'anticipate' is almost considered a joke on the real estate blogs, as this post over on VREAA illuminates.

As expected, the Greater Vancouver Residential Benchmark price is down for the third consecutive month:

April, 2010: $593,419
May, 2010: $590,662
June, 2010: $580,237
July, 2010: $577,074

Sales in July fell 45% from the same month last year, and prices have fallen 2.8% since peaking in April... not quite a 'crash' by any stretch of the imagination, but the endgame is clearly afoot.

According to the Real Estate Board of Greater Vancouver (REBGV) the supply of properties for sale has increased so significantly that the decline in sales now threatens to pull prices lower, with inventory levels 33% higher than this time last year.

In fact, the REBGV now calls Vancouver a “buyer’s market,” which seems odd because clearly people aren't buying.

Is this a temporary lull or the start of a significant drop in real estate values? That, of course, is the central question being debated by the R/E bulls and bears.

Once again I feel compelled to cast an eye towards Bob Rennie, Vancouver's anointed condo king.

His stunning marketing moves to slash prices by 40% in both the Okanagan and for condos in Vancouver at the luxury Fairfield Estates serve as a bellwether.

The market is changing and he is responding by attempting to stay ahead of the curve. Either Rennie is throwing away massive potential profits or he is facilitating significant reductions in advance of a bloodbath starting in earnest.

When the 'crash' starts with 40% reductions from the market's biggest player, the prognosis in Camp Rennie can't be very bright.

A good gambler knows when to hold... and when to fold.

And Rennie does not appear to be willing to up the ante.

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