Tuesday, July 24, 2012

Are plunging real estate sales about to bypass the lows of 2008/2009?

To those who watch real estate, the sales totals the part few days are setting off alarm bells.

Summer is normally a slow period, but the latest results are positively dismal. The last three sales days have all come in under 100 sales.

Last Thursday's total was 87, Friday was 61, and yesterday - normally a high day because of the weekend - yielded only 86 sales!

And these totals are still infused with some delayed pre-July 9th sales. In the rush to beat the new mortgage rule deadline, many sales from the deadline surge are only now being recorded as closed. Of the 86 reported sales today, at least 33 were pre-July 9th.

Comparing daily sales to last year, average sales per day in July 2012 was 132. This July we are at 109 and falling. Some are even speculating that when the pre-July 9th sales work their way through the system we may see some sales day totals under 50!

Single Family House (SFH) sales are falling off a cliff, down 25% over last year and down 10% from last month at least.

The dismal numbers have some industry members fearing sales may plunge below 2008 levels as summer becomes fall.

Realtor Larry Yatkowsky takes a look at the numbers and suspects the market may be on the verge of a significant plunge.

Yatkowsky notes:
Back in June of 2008 Vancouver’s housing market was in the middle of a steep dive as it recorded only 33,136 sales. The decreasing number of sales continued to twist and turn as it dropped to September 2008′s total of 28,475 sales. That particular dive straightened months later with a grand splash as April 2009 recorded total sales of 21,459.
After the looking at the current trending sales numbers, Yatkowsky ruminates circumstances may be about to get much worse than in 2008 and that another big dive in sales may be coming:
It appears that the dive graph called Vancouver house sales contains indicators that the market may surpass September 2008′s lackluster performance with June 2012 recording 28,617 sales – only a few hundred sales separate the two... and its indicators (suggest) Vancouver’s real estate market’s performance is not about to straighten.

Will the result in Fall 2012 be a plunge greater than in September 2008? Will the slide continue below the bottom hit in April 2009?

Emergency level interest rates pulled Vancouver out of the last slide.

That stimulus won't be available this time so you can understand Yatkowsky's concern.

Alarm bells are going off for industry insiders.

You have to wonder at what point those alarm bells will start to sound with the average joe on the street. Because when they do, then the sales crash will become a price crash.


Email: village_whisperer@live.ca
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  1. It would be interesting to know how the averge daily expired listings is trending compared to historical Norms. I see days like today where expired listings far outpace sales and it makes me wonder what the size of the "shadow" inventory is of homes sitting on the sidelines until prices rebound (or panic sets in)

  2. I'm starting to think the more important number here are not inventory levels but indicators of an upcoming recession/depression (or really a worsening of the current one, depending on who you ask). 10 Year bonds for Spain and Italy are going through the roof. Spain is appearing to need a national bailout, and Italy is too big to save if it needs one. Meanwhile the US 10 Year (and Canada) is down further (great if you own REITs).

    When bonds are at Spain levels it means investors want a sizable return because of risk of default. When bonds are low like they are in the US it means investors believe there will be a prolonged recession but the investment is safe. Investors aren't worried about a "fiscal cliff"

    The severity of the real estate correction will likely be driven by the above numbers along with the price of oil, which with the exception of a conflict of Iran, can only go down as things worsen.

  3. @JR

    Yup, slowdown = job losses = forced homesales = continued downward market pricing trend.

  4. yup , and to add,

    If the drought in the US gets any worse watch food prices really spike and discretionary spending pull back.

  5. It will flat line for awhile. People hate loss and they just wont sell. They will just grind it out. Until you see some serious job loss no major price correction. It will be a slow bleed for an asset that has been oversold and a glut of product out there. Give it a month or two a projects that are being marketed now will be pulled.
    I predict by Sept 2012 you will see your listing tally head in reverse as people will pull there stale listing off of the market. And just sit it out for awhile.