Wed Post #2: Lower total inventory doesn't mean improving market conditions

As we noted earlier today, yesterday was an interesting day in our Inventory watch on the side bar.

As the Inventory scroll states, "Inventory has probably now peaked for 2012 and we will see more and more listings pulled off the market in hopes the market will recover in the Spring. The main watch now is to see if we will have any days in the final two months where sales surpass the number of new listings for that day."

Yesterday almost achieved that historic first for 2012.  We came in with 114 new listings and 114 sales.

The broader story, however, is total inventory.

All month long inventory has been contracting. Some have fretted/rejoiced that this indicates the market is turning around.

Huh?

Consider that at the beginning of 2012, inventory sat at 10,671.  Current inventory is more than 65% above that level right now.

The fact of the matter is that inventory historically contracts in October and carries on through to January, when listings begin to surge again back into the market.

Larry Yatkowsky tackled this issue on his blog and created the graph you see above.

As you can see, inventory is currently sitting at incredibly lofty levels, equal to where it was at the heights of the peak summer season in 2011 and 2010.

That's right... the inventory on the market right now is at the same level as we would normally see during the busy summer season in other years. As Yatkowsky notes:

The current decline seems like a slow slide. At its current pace it is not moving quickly enough to realign this market’s active listings with previous years.

Exactly.

Despite the traditional listings decline as we head into winter, Inventory is still at extraordinarily high levels.

These conditions recently prompted Richmond real estate agent Arnold Shuchat to observe conditions at the end of November are such that:

In house sales, volume is down 68.5% relative to last year and the median price is down 3%.  

In townhouse sales, volume is down 74.6% relative to last year and the median price is down 9.6%.

In apartment sales, volume is down 58.7% relative to last year and the mdeian price is down 16.5%

A continued erosion of price support and diminishing volume of sales will provide terrific buying opportunities for home shoppers.

Inventory, although lower, is still massively high for this time of year.

And it's effect on the market remains the same.

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"It's a market that will have a lot of units for sale and more coming on stream."

Over the past two months we have been talking about the exploding number of real estate listings in Vancouver, listings which have grown by more than 50% since the first business day of 2012.

On his Facebook page today, local real estate icon Ozzie Jurock made a post which contained the following observation about the real estate market in greater Vancouver:

"(It's) a market that will have a lot of units for sale and more coming on stream."

Jurock used this teaser to let followers know about his OpEd piece in yesterday's Vancouver Sun, a piece that had several nuggets of interesting info and expanded on his observations about increasing inventory:

As of Feb. 29, 2012, there were 6,000-plus condos for sale through the Vancouver Real Estate Board - up 15% compared to the previous year.

At the same time, sales of used condos were down by 18%.

Add to this the fact that - according to MPC Intelligence - there are some 8,000 pre-sale condos being launched in the first six months of this year.

Now Ozzie's piece was all about how to buy a condo in such a market, but anybody looking to sell in the environment must have felt their blood run cold when they read this.

Because you saw that correctly - a tsunami of pre-sale condos is about to descend upon the real market, a wave of product which will more than DOUBLE the current available condo inventory.

Perhaps this explains some realtor advice given to some friends recently.

Looking to sell their Coquitlam condo (which they bought brand new 5 years ago), their realtor commented on the current competitive marketplace.

His advice?

Completely renovate the condo - new floors, new paint, new appliances, etc - because this was the only way to successfully market the unit against new stock coming on the market.

At first I wasn't sure why he was adamant they take these steps. I know listings were going up, but I had no idea the amount of available condo inventory was about to more than double.

Now it all makes sense - the local real estate sales game is about to become a highly competitive sport.

And - I suspect - a very ruthless one at that.

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Wed Post#1: Inventory Listings

Back on Saturday we made a post about the surge in Vancouver Real Estate listings inventory and asked what Macleans had stated on their magazine cover: Is it time to panic?

We noted that the blog Vancouver Condo Info was reporting daily updates on sales and listings with information provided by local realtor Paul B.

Those listings numbers have been telling an interesting tale since the beginning of the year.

On January 3rd, 2012 there was a total inventory of 10,671 listings.

By February 1, 2012 that number had soared to 13,368.

As of today we cracked the 15,000 mark with a total of 15,012.

Most of the surge came in January, but the trend has continued in February as listings of properties for sale are far outpacing properties sold. Take a look at data posted so far for in the month of February:

Date   Listing  Price(+-)  Sold   Inv    Inv(+-) 
Feb 1     305      74        38   13,368  
Feb 2     251      64       155   13,447    79
Feb 3     249      56       122   13,548   101
Feb 6     325      82       113   13,691   143
Feb 7     281      70       140   13,793   102
Feb 8     516     138       214   14,013   220
Feb 10    234      63        94   14,108    95
Feb 13    314     106       133   14,187    79
Feb 14    281      85       147   14,273    86
Feb 15    254      60       112   14,365    92
Feb 16    252      94       110   14,411    46
Feb 17    225      84       148   14,436    25
Feb 20    317     133       141   14,526    90
Feb 22    239      96       135   14,664   138
Feb 23    222      67       108   14,709    45
Feb 24    220      88       112   14,775    66
Feb 27    294     129       107   14,931   156
Feb 28    294     120       179   15,012    81

In two months we have added almost 50% more inventory to the total amount of Real Estate for sale.  Each and every single business day this year has seen more properties listed than sold.

And only now is the Housing Bubble truly going mainstream.

On the right you will see we have added a tracking box for daily inventory totals.  Will the onslaught of listings continue through what should prime selling time known as the 'Spring Market'?

At what point does inventory have significant impact on prices... 18,000? 20,000?

We will keep daily track on the left to chart this trend.

Hat tip to wreckonomics for the graphic above.

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Tues Post #2: A Tsunami of listings flooding market?

"If you are a seller - list now!"

                                                                            

                                                                     - Ozzie Jurock newsletter advice 

                                                                        January 7, 2012

Our friends over at Vancouver Condo Info keep track of the daily R/E numbers and the emerging story is quite fascinating.

In 2011 there was not one single day where the number of new listings exceeded 400 in one day.

In January 2012 the listings have been coming fast and furious.  On Monday those listings crested that magic 400 mark as Vancouver had 428 new listings on Monday alone (with only 65 sales). For reference in 2011 the most listings on any single day in Vancouver for the month of January totalled 292 (Jan. 17, 2011).

Even in Richmond, another haven of Hot Asian Money last year, there have been 534 new listings from January 3-16 (with only 85 sales).

Where is this going?  It's still to early to tell but I suspect a lot of sellers are sure relieved to see the banks engaging in an interest rate war with each other (as noted yesterday).

Less than enthralled with the bank's interest rate war is the IMF.  As the San Francisco Chronicle notes the IMF is concerned the record low interest rates are combining with record household debt to pose a significant risk to the economy with excessive speculation.

Will these moves blow the market even higher?

Will demand be offset by a surge of sellers willing to cut prices to take advantage of a market flush with greater fools jacked on cheap money who are all to willing to inflict 'cashtration' on themselves?

Time will tell.

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Is January shaping up to be a Real Estate disaster in Greater Vancouver?

Over the past two weeks we have seen a seemingly endless stream of negative Real Estate items, including the stunning recommendation from R/E optimist Ozzie Jurock that if you are a seller - list NOW!, if you are a buyer - hold off.

You have to wonder... what will be the impact on buyer psychology of all this bearish analysis?  I mean... who wants to catch a falling knife, right?

Indications from those close to the industry indicate that last week's numbers were absolutely brutal for the R/E industry.  Over on the blog, Vancouver Condo Info, this sentiment was echo'd by contributor ZRH2YVR who says: 

• "Sales at this time of year are typically slow, but the level of sales now is only a trickle. There is a definite indicator that the areas which have spiked last year are no longer the hot areas. Inventory of the market is high for this time of year and listings are coming in at record pace for January."

He predicts that Greater Vancouver could exceed the highest inventory on record which occurred in 2008. Those on the blog who track daily inventory and sales numbers report that the Greater Vancouver inventory total soared to over 12,000 listings last week.

While the month is only half over, Vancouver West detached sales are on a pace to see a 66% decline for the month of January. Vancouver's two closest suburbs are on track for an equally dismal performance: Richmond is on track for a 51% decline in detached home sales and Burnaby for a 59% decline.

It will be very interesting to watch the impact of all the negative stories in the mainstream media on the real estate market for the rest of the month.

There is no doubt, the swirling tides of change are brewing in the market.

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