‘Drop From Peak Chart’ and Recent Market Action – Paint Dries Faster In Vancouver!

A ‘Drop From Peak Chart’ constructed and posted by ‘an observer’ at their invaluable blog, ‘Vancouver Price Drop’ [8 Feb 2013]. [click to enlarge]

This elegant chart shows how SFH (single family home) prices in various major markets in the US descended from their peaks.
Superimposed on this is our own BC Lower Mainland SFH price drop. At eight months into the LML descent, we are outstripping the rate of price drop experienced by all US markets, save Miami.
It may feel like prices aren’t budging, or that they are dropping very slowly, but this is not the case.
– vreaa

In a related vein, these very useful market updates and commentary from yvr2zrh (zrh2yvr) at VCI 8 Feb 2013 11:15am & 9 Feb 2013 3:00am; and at VREAA 9 Feb 2013 1:23pm

Market Overview:
“A couple of views 1 week into the month.
1.) Every person who did not sell in Van West last year seems to be hitting the list button this week. We are on pace for close to 500 new listings in one month of Van West – – this is by far a record.
2.) Detached listings are up more than attached and sales are down more than attached. We are on pace for 10+ MOI on detached for Feb – – yeah – Mr. Muir – sellers don’t have to sell eh??
3.) Sorry to be a broken record but – – Richmond – Dead. Forecasting close to 1,000 listings at month end already and 18 MOI. Must be fun . .
4.) Van East attached – pretty balanced – still. Projecting 5 MOI this month which is still up from 4 last year.
5.) Biggest loser? West Vancouver. Forecasting 18 MOI this year for Feb compared to 6 last year. North Van at 6 compared to 2.5 last year. North Van is one of the true middle class (low offshore spec) areas left. 2.6 MOI last year was still very very tight – – at 6 – it’s not bad but really slow for spring. Generally North Van just suffers from low amounts of spec sales so generally not very high inventory.
6.) Burnaby? I’m not joking but last year it was MOI of 3 in Feb and this year we are looking at 12. Oh well – – sorry if you’re trying to sell in Burnaby.
7.) Finally- Van West – – Should end up with 9.5 MOI. Last year, when we thought things were pretty soft already – it was 4.5 (a high amount for Feb). . .
If we end Feb with less than 1700 sales – the HPI will be flat to only modestly down (a big achivement for Feb). . .
Using REBGV numbers – I currently forecast over 15K for Feb inventory. Compares with 14K last year. Note that this excludes bare land and multi-unit properties.
As a trend – – Feb is worse than Jan on a seasonally adj basis.
However- as you all know – – people just don’t have to sell – – and – – as we all know – – People never have to buy.”

Comparisons With 2009:
We all know the market is bad, regardless of any realtorspeak that has made the press in the past week. We also mostly know that the worst period in Vancouver real estate was from September 2008 through about March 2009. Those months were the lowest sales since 2000 and some of them (such as Nov/Dec 2008) are unlikely to be reached again in the future. However, right now we are again at an inflection point. On a market wide basis, February 2013 is shaping up to be the 2nd worst Feb in recent years. However, as you look at the pockets – it is clear that there are some where performance is much worse.
So – Comparing Feb 2013 with Feb 2009, here are some general thoughts based on the current trend.
1.) Sales are higher in 2013 and should be about 10% over Feb 2009. This is a massive deterioration from last month as Jan 2013 was 75% over Jan 2009. This is the effect of a market that is weakening now compared to a market in 2009 that was strengthening.
2.) Listings are much higher than 2009. 2009 was low but in 2013, we are 1.5 StdDev above the average from 2002-2011. So – given that the board is saying people won’t list – I think it is a wish more than a fact. (they are trying to re-create the 2009 market by removing listings – which actually happened then as people were in a state of shock – this is not happening now – people have lost a lot of money and they do not want to lose more . . . so they list).
3.) We are on track for worst sell to list in any February in recent history.
4.) Some markets are worse. Van West Detached forecasting worst Feb in history with lowest sales and highest listings. Don’t know if anyone has access to Van West Detached listings for past 15 years but did we ever have over 400 listings in a month?
5.) Richmond Detached – heading for worst Feb ever. . . .
6.) Even Vancouver West Condos – Volumes looking to be below 2009 with higher listings. (We are not however seeing record listings in Condos – they are high but we would need 20-30% more listing volume here to show panic – – – )
7.) Van East detached – Not seeing the same panic in listing volume as Van West. Sales are down however. Lower inventory and lower listing rate will keep MOI here a bit lower (i.e. 8 instead of 12)
8.) Richmond Condos? Panic !!!! Sell now or forever eat Dim Sum and live in the Mandarin Residences!!!! Not sure why you would ever buy a condo there until 30-40% price decreases occur.
9.) West Van – – Sales volume quite similar to 2009, slow – – but listing volume is way up. I would say it is Panic there in a West Van sort of way. Think about it – West Van has 10,000 detached homes. At the current selling rate, the turnover in the real estate stock would take 30 years. Seems a little long – the average time in a house is likely not that long . . !!! Good luck to them all.
10.) North Van Detached – Modestly better than 2009.
11.) Burnaby – Sales rate is similar but listing rate up 42%.
February is barely a week old. However – it is already certain to be the worst Sale to List ratio ever and have an inventory increase not seen in any other February.

Move-Up Market Freezes:
“It is amazing. Friday had 1 sold and 25 new lists for Van West detached. Almost all stats continue to point to problems. We are getting seasonal increases in average. Not sure why really as the median is going down but average seems to be sneaking up – likely because of a few $10M properties selling on low sales. In any case – – One thing that just has to be hurting this market is the continued flat-down prices on condos. I just have to look at all the young people that I worked with in Vancouver in 5 years that had bought condos since 2007. So many of them are now at that stage in life where they should be looking to get to the next step. However, they have no equity from investment gains and transaction costs will eat most of their savings equity. They make decent income but pay $1800-$2000 per month to live in a 650 sq ft 1 bedroom. That really sucks – – One of my friends is really nice, super smart, motivated and a good worker. Can’t seem to get a better job and wants to move to a house in North Van (Must be the Persian connection.). However, . . . he’s stuck in a Rennie Special . . . . . . after 5 years of slaving the mortgage payments, the person that made the most money was Rennie himself – – ;. . . .
Anyhow . . . I’m looking forward to March as for sure it will be below 2009 . . . . . one month earlier than last year.”
—

Further commentary on Vancouver price weakness in a recent post by Ben Rabidoux at The Economic Analyst [Real estate sales in Vancouver, Victoria crumble in January; Rot is worse than headlines indicate 5 Feb 2013]. Excerpt:
“January sales-to-new listings ratio.. was the second weakest in well over a decade (next only to January 2009 when people were still not sure if the financial system would survive) and a months of inventory reading that is the second highest in well over a decade. I’ve only compiled detailed data for Vancouver back to 2000, but I suspect that, outside of 2009, you’d have to go back to the early 90s to find numbers this weak. In short, January was a brutal month in Vancouver.

On 28 Nov 2012 Ben gave a presentation in Vancouver on Canadian Housing that was discussed in a thread here 29 Nov 2012. The full presentation is up on youtube, for those who haven’t yet seen it:

‘Canadian Real Estate: What happens next?’, Ben Rabidoux, Vancouver, 28 Nov 2012