‘Heat-Map’ of Home Price Index, Greater Vancouver, Month Over Month Change, 2007-Present

Month Over Month Price Changes, Home Price Index, Greater Vancouver
The chart care of Canadian Watchdog at VREAA 15 Apr 2012 at 6:07pm
Watchdog adds: “Let’s remember these are the new HPI stats that are quality adjusted to smooth out volatility. I just started analyzing Van stats and can already say REBGV’s prices are sustaining because sales are low. When sales are low, the sample size is smaller. Average prices are only as strong as the sales volume to back them up, or in other words, the market has not been tested to handle higher sales volume yet. If/when the trend reverses, it is likely that sales will increase and prices will fall due to slashed prices. As for that heatmap, what amazes me is how square the 2008 crises sell-off was. It goes to show how sensitive RE is to stocks.”

Click the chart to enlarge it.
Nice work, Canadian Watchdog, thanks for sharing.
The homogeneity of the 2008 decline is indeed remarkable. It’s the kind of pattern that will manifest in any earnest decline; we anticipate we’ll see it again, perhaps soon.
The 2010 and 2011 weakness can be seen to be more pronounced in attached properties, less in detached. We’d also expect that pattern to be lost in an earnest decline.
We look forward to updates of this chart in future.
Canadian Watchdog can be followed at twitter.com/CanadaWatchdog
– vreaa

UPDATE: For reference, here is a chart of the stock-markets over the same period (TSX red; SPX blue; Shanghai gold); not perfectly aligned, so check the x-axes (will perhaps fiddle and try to align):

UPDATE2: CW’s heat map with stock market chart as above overlaid; with x-axes aligned. Just from eyeballing, almost definitely a positive correlation.:

18 responses to “‘Heat-Map’ of Home Price Index, Greater Vancouver, Month Over Month Change, 2007-Present

  1. Heatmap? Anyone care to explain what I am looking at on this chart. Sorry, but I don’t know what this is telling me at a glance.

    • Blue = prices went up month on month. Red = down.

      This graph shows how correlated various areas are to each other, to price gains or falls.

      The colour scheme does not show magnitude of declines. The 2008 cohort shows a different behaviour to subsequent years. This is something that in retrospect makes some sense, that lenders had crimped lending in March, and never fully recovered until March ’09 when CMHC backed “everything” in various forms, a condition not substantially changed until this year.

      • Thanks Jesse, that helps. So then this is the raw data for the new HPI that is supposed to be our info source on housing instead of the old median, mean, average based on prices alone? Having quite a day here.

        Then I clicked on “Canadian Watchdog” and started reading other material he has put up. Good stuff there actually and I got lost for part of the afternoon following along on many of the links he has posted. First time I have ever read anything off a Twitter that I can recall. I use a computer but I am still pretty much in the Stone Age here.

  2. I don’t get the RE sensitive to stocks angle. The market as measured by inventory and sales was under distress in April 2008. Price drops came later.

    Another thing to try is looking at yoy or half-on-half changes, as there will be less noise. Half on half is likely the one worth tracking based on my analysis.

    Keep up the good work!

    • There arguably is a StckMrkt:VancRE correlation although we, like you, have previously estimated that Vanc RE was on the way down before stocks crashed in earnest.
      If I get a chance I’ll try to blend the stock-market chart and the Vanc RE ‘chart’, out of interest.

      • Correlation varies depending on what you’re measuring against. Below are cross-plotted charts with Van detached and condo prices versus the TSX.

        Detached prices were less correlated but you can see condo prices and stocks and fairly inline while both topping out in April 2008. It’s hard to disagree that big money and markets move entire industries.

      • see our overlay update.

      • Very helpful. Thanks you guys.

      • Nonetheless there was definite distress in April in ’08. A local Realtor commented that April was “crickets”. Basedon my analysis price drops are negatively correlated to MOI, a simple supply-demand relationship.. Priceslag inventory growth, indeed dropping price levels are an indication the market has been strained for months.

        In my view the more appropriate correlation to make is to year-on-year MOI changes to credit markets. The TED spread hit the fan in Marchand brieflycooled in the summer beforegoing gonzoagain in the fall. I wouldn’t be surprised if crimped loan approvals were the smoking gun.

        Too early to be definitive but this year has some similar symptoms to 2008. Does that mean stocksare going to drop?. I don’t know but there are some clues that debt accumulation is being clamped by TPTB through their various methods of influence and control. No tinfoil hat, just look at the actions of CMHC and OSFI this year.

    • Not responding to stock market. Stocks and Vancouver RE are responding to liquidity.

  3. “This graph shows how correlated various areas are to each other, to price gains or falls”.

    in the last 24 months east and van west went in opposite directions in 14 of those months

  4. Pingback: 'HeatMap' of Home Price Index, Greater Vancouver, Month Over … | Steve Latham – Vancouver's Best Realtor – Phone 604-220-9695

  5. Inflation/deflation. It’s all one big lever now. Wait till that breaks.

  6. Would be interesting to overlay both Interest rates, QE and CMHC exposure.

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