REAL ESTATE : September Observations

REAL ESTATE : September Observations

Saturday, September 29, 2012

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, (NOTE : SEE BELOW)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. 
COMMENT: The devil is in the details. What appears to be happening is a closed loop. With few exceptions, in the Metro area , new house requires an old house to tear down. Thus if new houses are selling at a discount, they won’t be buying old tear downs for the next project…they are getting rid of inventory and trying to sit and wait for the what the market adjustment will become aka what is the “new stable price”  with tear downs. Builders will say that their profit is made the day they buy the lot…..which can be interpreted as they hope to build in a market which has rising land prices.However…. if land prices are collapsing….best to sit it out.I am seeing a lot of empty lots where the house was torn down and it is sitting their growing weeds…things are on hold.
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.
Another good post by “whispersfromtheedgeoftherainforest”.
The stats tell an intersting story. Many peple live in the here and now….short attention spans and don’t stop back and see the big picture. The first chart shows Greater Vancouver sales for an almost 20 year period. Notice the peaks in 2003, 2005 and 2009 “THE PEAK” ) and has actually been in decline since then, regardless of what the vested interests say.
The Richmond sales graph shows that, sicne 1994, we are approaching  at an all time LOW in SFH sales
Total Vancouver Market Inventory

Jan. 3, 2012:      10,671

Feb. 1, 2012:      13,368 (+2,727)

March 1, 2012:   14,912 (+1,544)

April 2, 2012:     16,074 (+1,762)

May 1, 2012:      17,122 (+1,048)
June 1, 2012:     18,575 (

+ 1,453)
July 3, 2012:      18,818 (

+ 244)
August 1, 2012: 18,708 (- 110)
Sept. 4, 2012:     18,102 (-606)
Sept. 5, 2012:           18,263
Sept. 6, 2012:           18,378
Sept. 7, 2012:           18,516
Sept. 10, 2012:         18,612
Sept. 11, 2012:         18,710
Sept. 12, 2012:         18,838
Sept. 13, 2012:         18,931
Sept. 14, 2012:         19,099
Sept. 17, 2012:         19,116
Sept. 18, 2012:         19,146
Sept. 19, 2012:         19,206
Sept. 20, 2012:         19,276
Sept. 21, 2012:         19,310
Sept. 24, 2012:         19,368
Sept. 25, 2012:         19,413
Sept. 26, 2012:         19,487
Sept. 27, 2012: 19,497 (+1,395 so far this month)
New Listings      212
Price Changes   149
Sold Listings       71
Expired/Cancelled – 131

Inventory change: +10
This is one chart I really like to watch. Many parties who follow real estate discuss the magic “20,000” number in inventory. It was creeping up slowly, then started to drop over the summer. In my other posts, this was explained by listings expiry, and realtors likely advising clients to not flood the market with listings, and buyers also refusing to lower their prices.
However, many of us predict that the listings would rise in the fall.. supposedly another prime selling season…one more attempt before Christmas. However, more indication this is a sign of the Dam bursting, people are staring reality in the face, and the buyers pool is drying up. People either have to move, can’t afford the mortgage, no more easy $$$ via flipping. the “20,000” mark is only a matter of time…sooner than later.  Regardless…This will get U-G-L-Y.
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