Vancouver RE Average Price Chart Nov 2012

rebgv nov 12
– from REBGV, 4 Dec 2012

Headlined here for the record. Average prices are not the best way of following the market; averages (means) are easily skewed by outliers (especially in illiquid markets). The best measure are indices based on time1 to time2 same-property sales, like Case-Shiller and Teranet. Regardless, the average chart is published each month, and we continue to keep an eye on it. It’ll certainly be headline-worthy when detached average drops through $1M, and regular readers are aware we’re expecting later support (a bounce) at 2009 lows. For an older but still relevant chart discussion, see ‘Five Charts’ [VREAA 2010] – vreaa

32 responses to “Vancouver RE Average Price Chart Nov 2012

  1. Average price is definitely the more relevant statistic to real estate agents and their pocket book….

    Lower average price X Lower sales volumes = Delivering pizzas from their leased E series Mercedes.

  2. Reverting to average

  3. Average German in the House!

  4. Real Estate Tsunami

    Fellow posters,
    Let’s not be slaves to the graphs, especially those from REBGV.
    They don’t amount to a hill of beans.
    Take a stroll in your neighborhood and observe.
    How many for sale sign? How long on the market?
    These are the true indicators of the state of RE in your neighborhood.

  5. “The best measure are indices based on time1 to time2 same-property sales, like Case-Shiller and Teranet.”

    I have to disagree here VREAA, Taranet measures more common or constant resales that does not account for the pre-sale market where units can be flipped once or twice like resales. By not accounting for pre-appreciation, the index would underestimate during a rising market and underestimate during a declining market.

  6. Whats better?.. Here is the solution to the problem! …baby 😉

  7. @VREAA

    It all depends whether you’re trying to measure value or liquidity. Both are different.

    For example in the case of value: in a rising market buyers tend to base their decisions on a property’s resources and expectations of estimated capital gains (think emotions: they see it, it’s beautiful and believe it’s a good store of value, they buy it), whereas in a declining market, buyers tend to base their decisions on the seller’s situation and losses on risk (since they can’t properly value or estimate future capital gains, they price in risk, bidding down the seller or wait for prices to fall.)

    Of course, the question is: How can the evaluation of these exchanges be formulated into a national/regional index or average price? It can’t be, because these are behavioral exchanges that take place in inventory that are non-indicative in recently sold property statistics. A good example of discrepancies on exchanges can be shown on property price changes at vancouverpricedrop versus monthly statistics for the corresponding area.

    Example: if twenty similar properties are listed within a block and two sell for $1M at 90% of list — while the others are reduced 15-20% — does the two sold reflect the value of other properties listed? According to Taranet’s methodology, the 10% loss would be assumed for the other eighteen properties listed for 15-20% less and then carried forward until it is sold. This is flawed.

    In the case for valuating liquidity, there are three good metrics: dollar volume, sales and inventory. This is best summed up into one ratio: MOI, however, while most analysts use this to indicate how many months it would take to clear inventory, what it really reveals is how many more dollars are needed for the entire market to sell their properties at the average price. Formula: (Active Listings*Average Price)/(Sales*Average Price) In other words, if MOI is 7, the entire market would require 7x more dollar volume to sell at the average price. This is not a practical measurement because there is always a floating inventory, but it does measure how many properties are chasing dollars, or vice verse. The way I look at it, every property is worth $0 until it is executed at the bidding price. That is the real function of all markets.

    Future market prices can only be determined by what buyers are willing to pay it (totally unpredictable), therefore looking at behavior (as this blog does very well) and using one’s instinct is just as important as looking at statistical prices.

    So what’s better? New and more data.

  8. “Averages are a horrible place to go,” – Tsur Somerville
    http://www.cbc.ca/news/canada/story/2012/07/17/f-average-home-prices.html

  9. I have never understood Canadians tracking average housing prices. In the U.S. it is median (still not a great measure, but way better than average.) and to a lesser extent average price per sq ft (PPSF). Why even look at the average? It is so easily skewed on the way up and down. Median is a far better look at trends in real estate (but still not great). And no mention of average PPSF anywhere in Canada. Why? Is it not tracked anywhere?

    -Socal Expat

    • I like the average price, median price, and the number of sales. It’s enough to guess the distribution of sales prices, and by comparing to previous months you can see if the average or median was skewed.

    • I think the point is that the R/E sales gang picks and chooses whatever numbers they find most useful to them on any given date. Arguing about it amongst ourselves is pretty much pointless when the daily data stream is just being used to push an agenda favourable to more sales.

    • variant of SNR pb – depending on feature to isolate one can dream up any number of fancy data treatments but they all involve assumptions, with under-appreciated consequences … kiss concept – just sample vol, median + upper/lower quartile, trended and a good eye does a lot

  10. Real Estate Tsunami

    Watchdog, YVR, FARMER,VREAA,
    Do you have enough data to make some predictions about the direction of RE in the Lower Mainland for 2013?
    Obviously, can’t rely on the parties with vested interest.
    I’m sure many readers of this blog would be interested.
    Thanks

    • Sales weak, prices down.

    • Real Estate Tsunami

      VREAA,FARMER,
      I know it’s tough, but how much down 20,30,40%

      • We are repeatedly on record as saying peak to trough will be 50%-66%-off.
        Time-frame unclear though… years will vary… quick quick slow? slow quick quick? The exact trajectory to the bottom is impossible to predict.. there will be bounces, too. It’ll be years before we hit the trough.

  11. Agree with Vreaa. Prices are heading down. It is very difficult to be honest to come up with any rationalization for the market to rebound and head higher at this stage. We are already in a period of debt exhaustion. If we had not already hit the upside limit for the percentage of the population invested in R/E then it would be the current credit restrictions that would be the drag on bouyancy. And as we have seen, first time buyers have been thinned out substantially by a number of regulatory changes and this is perhaps the strongest argument for the softening we now witness. There is little ammunition remaining to power the market higher as buyers are in retreat and without the starters it bcomes more difficult for others to move up. The foreign inflows of cash meanwhile is proving to be a false hope. Ham is not going to impact more than a few select regions of the city in any event. So yes, in a nutshell, weak demand will lead to price declines. It is already happening. Even sentiment has turned negative. So down she goes.

  12. Some technicians would look at the SFH average price chart and read a bullish flag patter which should be followed by the 5th (and final) advancing wave. This would fit well with the current drop in volume as well.

    It’s probably more instructive to formulate a candlestick pattern using detailed prices every two or three months with one skipped month in between. One can then use the beginning and ending month averages for the open and close, respectively. A statistical confidence band (say 15% and 85% of sales prices for the period) can then be used for the candlestick high and low.

    Candlestick charts provide a summary form of price distribution during the period and over several periods together with some pretty reliable patterns for short-term forecasting and “gut-feel” verification. Is that a shooting star followed by a hanging man within the flag?

  13. Watchdog, etc ->
    We are aware that there are many, many important factors to attempt to follow if you want to understand any market.
    Price is just one of those factors, but an important one.
    When trying to follow the price movement of ‘Vancouver RE’, it is, unfortunately, far harder to quantitate than it is for a stock.
    With data availability what it is, Teranet is the best (but still imperfect) estimate of actual prices. We also continue to follow REBGV averages and HPI, but both are limited.
    So, yes, we are aware there are lots of important factors influencing the market, but my comment was solely around which price to use as the ‘price of record’. I agree that a thorough price-per-square-foot (land and interior) would have been even better, but we don’t have that available.
    As it is, most market watchers keep an eye on all forms of price data available, but also keep the limitations in mind.
    *Ironically, in the end, we believe that some anecdotal price changes will end up being what people really use to measure the crash: “That house sold for ‘x’ in 2011, and it then sold again for ‘y’ in 20XX !!” (BTW, Teranet attempts to be a composite of such anecdotes).

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