“Van-West gives the impression that inventories are high. Now they are definitely seasonally high right now but when you get into the details, it tells an interesting picture. To do the analysis, I took all sales going back in time such that the total sales was the same as current inventory (approx 800 units). To get 800 sales we have had 225 days of activity and takes us back to mid-July. That’s not a great stat. However what’s more telling is how the cycle of buy / tear-down / build / sell is not completing. There are really no sales of new-builds. One may say this is HST and that is possibly some impact. However, It is very dramatic such that you would not expect it to be so significant.
For “new” properties, there are 17 months of inventory. Compared with a 7.5 average for the whole market. When breaking all properties by price, there is a very strong drop off in sales above the $2.8 million level. I know it’s not a bargain but I’m just telling the facts. For properties under that level, MOI is only really about 4 months – which would indicate quite tight supply. However, above that value, it immediately jumps over 10 and reaches 24 months at the 4 million level. this would not normally mean much as these units take a long time to normally sell but there are not normally 450 units for sale over 2.8 million. That is a crazy amount. you have to wonder how many are spec builders who will eventually have to bail. Or builders who will now have their capital tied up in these projects such that they can not buy a new tear-down. Or is it flip investors who suddenly will realize the game is over.
Volumes for the month are not great but not bad. I would say for Van-West they are above the 10-year average (unlike most other regions). However, are these now the last suckers who want to make some money and now who will be left with large losses? It appears that the cracks are showing.
How did the US housing market start it’s fall? Something about new home sales coming to a stop? The stats are interesting. Next analysis at month end will be on the Vancouver condo market. This is now showing signs of cracks – sales are really low, inventory is starting to really increase.”
– ZRH2YVR at VREAA 22 Feb 2012 at 2:18pm
[Thanks for this considered analysis, ZRH2YVR. -ed.]
Some of the comments that followed the above post:
“I’m fascinated to see, via what you’ve revealed, that what I thought I was observing here with my own eyes really is supported by statistics (new homes are not selling. This is also what the speculator I spoke to who was considering a bid on 6225 Balsam said).” – Vesta
“Your analysis re west side housing is spot on. Quilchena has many new homes for sale but only the original houses are now selling at even higher prices than last year. Hopefully these aren’t being purchased as tear-downs.”
Maybe, just maybe, buyers have caught on that these new particle board McMansions aren’t so great after all. Does anyone really need 7-8 bedrooms and 7-8 bathrooms in a SFH? As well, it’s very costly to maintain these huge houses!” – West Coast Woman
“Richmond is screwed big time! As of yesterday for the month of Feb, 937 sfh total listings, 32 sold. West Van sfh total listings 434, sold 34.” – Van Guy
Vancouver still appears to be nuts, the rest of the province should be causing mega concern for politicians. If prices start cratering another 10-20% that’s going to cause significantly more distress than the previous 10-20%. – jesse