September Observations

Real Estate sales for the month of September are now officially over.

Vancouver Realtor Paul Boenisch, who provides the figures you see on your right, hasn't provided an update yet so we don't have figures for September 28th at this time.

Another realtor (Rob Chipman) has indicated that we closed out the last sales day of September with only 64 sales.

That will make September 2012 worse than September 2008 and the worst sales total for the month of September since 1994 - when they started compiling these records. This, as you know, follows a summer that was just as abysmal.

The chart below shows you those monthly sales (2012 lacks the reported 64 sales on Sept. 28).

Sales in the suburb of Richmond (formerly a HAM hotbed) continue to be horrendous as well.  Early speculation was that there would be an increase in sales (from homes that had drastically reduced prices below assessment), but even this trend collapsed.

There are currently 1,187 single family houses listed for sale in Richmond. As of yesterday there had only been 53 sales.

That puts also Richmond on pace for the worst September since 1994.

(hat tip to Inventory on VCI for both of these charts)

Observer (from Vancouver Price Drop) notes that the downtown core is starting to see price movement on condos available for sale.

It has everyone keenly watching to see what will happen now in October.

As we noted on Thursday, one Vancouver realtor is forecasting weaker sales in the coming months based on historical data. This is a trend which Jesse, from the excellent blog Housing Analysis, originally identified early in September.

Will be see surging inventory to match this anticipated drop in sales?

October/November historically see the pace of listing decline significantly.  If someone was going to list for fall, they usually do it in September.  Does this mean listings have peaked for the year?

Regular VCI contributor YVR2ZRH offers this insightful analysis:

Van West and East SFH were really some of the only places that were up last month over the previous month. West Van was up but Aug was really low so no surpirse. 

Richmond actually fell even more. It is now down really to a basic trickle. However, Richmond sold way more new builds on large price reductions than tear-downs, which did not seem to sell at all. Condo prices are down. On an average basis, we are down pretty much 5% from last month.  SFH prices were actually down on average but there were some really odd movements in median. There has been a recent slow down of the lower priced tear downs but an increase in the higher priced properties (who have not moved for months – so are now getting big price reductions). It’s like a wave motion where these high priced places finally take price reductions – some after 10-18 months. 

Burnaby, North Van and West Van sold about the same at approx 40 units. 

Inventory increases were large in Van-East attached (13%), North Van SFH (22%) and Burnaby (9%) from the previous month. MOI has just reached 12.0 for REBGV (remember that PaulB includes land/multi which REBGV excludes.) 

Sales in final half of month was at a pace which was 5% above the first half. This is typical. September is supposed to be busy – it wasn’t – no matter how you slice it – it was terrible – but September did tick up from August. 

Thus we should see about 1900 units sold this October. It’s a bit to do with the business days / weekend but 1900 is really possible at today’s sales volumes – this will lead to MOI of 9.8 for Oct. That is not really great but it is a turn from Sep. 

October 2012 will not fall to the 2008 levels – not even close – it’s just not possible. Although we are at 12 for MOI now, we can not expect that to continue and can not expect inventory to increase any more. It may end Oct at the same level as Sep – but we are done. The year is over – it was bad. If you take the YTD sales, I think we are the worst in 15 years. Perhaps when we are done, we will be below 2008.

As always the unfolding story of the real estate bubble is fascinating to watch. 

In 2008 the dismal sales were triggered by the Financial Crisis.

This time around sales are coming in worse than 2008. But, unlike in 2008, collapsing sales will not see intervention from government to prop up the market this time around.

Have we only delayed the reckoning that should have occurred in 2009, and it is finally playing out now?

We shall see.

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Email: village_whisperer@live.ca
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Media urges first time buyers to rent right now, not buy

Two days ago we told you have BC Real Estate Association Chief Apologist, err... Economist, Cameron Muir was insisting that there was no need to worry about real estate sales because one-third of our real estate market is first-time buyers.

Muir is adamant there is no shortage of those 'first time buyers' to keep greasing the wheels of our Lower Mainland property ladder:

“As long as we have first-time buyers that can get into the market to buy the homes from the people who are moving up, moving over, moving down, then the market should remain healthy.” 

With that in mind, you have to imagine that Muir is less than enthralled with the latest offering from the Globe and Mail Newspaper.

In an article titled, 'What’s the rush, first-time buyers? Now's the time to rent' the G and M proposes that the working title for the next phase of the housing market might just be titled: Revenge of the first-time buyer.

Rookie home buyers have been whip-sawed in recent years. They’ve been fed a line that renting is disastrous behaviour, and they’ve been witness to steep price increases that suggest they need to immediately buy a house, any house, before they’re priced out of the market. Last month, the federal government piled on with new rules that will result in higher mortgage payments for many first-time buyers.

But first-timers are about to get some leverage. Housing markets in a few cities are cooling, and some forecasters see national prices falling 10 to 25 per cent. Meantime, interest rates are expected to more or less remain at today’s fantastically low levels for a while longer.

Prudent first-time buyers will exploit this. They’ll build up their down payments, they’ll prepare themselves by researching the costs of owning a house and they’ll venture into the market with firm limits on what they’re willing to spend. First-timers account for just over one-third of the housing market, which means they have quite a bit of clout. If they were to take a buying hiatus, it could really slow the market down.

The obvious benefit of waiting to buy a home is that you have a chance to save a bigger down payment.

Listen closely... hear it?

That's the sound of Muir choking on his morning wheaties as he reads that.

The article continues:

TD’s forecast on prices reinforces the argument for first-time buyers to take their time. One of the prime motivators for rookie buyers in the past couple of years has been the fear that price increases would eventually make a house unaffordable. Market conditions across the country differ, but some of the hottest markets are now slowing. Nationally, TD has been forecasting an average decline of 10 to 15 per cent over the next three years. Mr. Alexander calls it a “steady cooling.”

Forecasts of more severe declines are out there. For example, the firm Capital Economics has said we have a housing bubble in Canada that will take housing prices down 25 per cent when it bursts over the next couple of years.

The logic is inescapable.

Buying right now, especially for first time buyers, is the wrong thing to do.

And the Globe finishes with the best piece of advice you can get right now:

Renting is not a waste of money. It’s what you sensibly do while waiting for the right time to buy a house. Right now, it makes sense to wait longer.

Amen to that!

(Hat tip: @YVRHousing tweet)

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Email: village_whisperer@live.ca
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Please read disclaimer at bottom of blog.