Wednesday, July 23, 2014

Incomes versus prices: what say the numbers?

Statistics Canada released a report of household earnings based on 2012 reported income recently. Depending on your POV, you may or may not be surprised to learn Calgarians reported the highest earnings in the nation. Thought it may be fun to compare 2012 earnings with 2014 average home prices as reported by CREA for a few towns in the Great White North.

City Median income Average price Price/Income
Calgary $98,300 $466,994 4.75
Edmonton $96,030 $371,839 3.87
Ottawa $94,230 $365,366 3.87
St. John's $87,150 $349,649 4.01
Victoria $81,580 $496,225 6.08
Canada $74,540 $413,215 5.54
Vancouver $71,140 $796,714 11.19
Toronto $71,210 $568,953 7.99

I was surprised by the incomes reported in Victoria. I would have thought they'd be closer to Vancouver. Perhaps not unexpected is the fact that the two most expensive towns to own a home are also below the national average for income. It's not completely clear what the inputs for "average home price" are in CREA's system, but I'd wager they're lumping and smoothing condos, semi-detached and detached. 

Useful exercise? Thoughts? I'm sure some of the more number savvy folks around here can improve upon my Grade 3 level analysis in the comments. 

Thursday, July 3, 2014

July update

Busy times at work and home, so haven't had much time for the blog lately. Of course the small matter that we're no longer house hunting in Victoria plays a role.   However the comments are great as always, so here's another post to keep the party going.   

June numbers are out and I'm happy to see that a bit of the old VREB salesman spark is back.  It's a good time to buy and a good time to sell, so everyone should be happy, most of all the realtors.  It was looking like a mass extinction event was underway for Victoria realtors, but this upswing could forestall that.

Year over year sales increases are starting to peter out, mostly because we're starting to compare to months where it was already picking up last year.  Prices up a bit in the core, down a bit on the west shore.

Marko reports that many buyers are holding on to their rentals to get a better price.  Just like they were last year, and the year before, and the year before that.   Eventually, "I'll hold out another year" turns into "f*ck it let's sell".

Monday, June 2, 2014

May results and a whine from the mortgage industry

May numbers are in, and they're about as expected.  714 sales which puts us on the low middle between a hot market (963 in May 2007) and a moribund one (572 in May 2011).   Prices are well within the margin of noise, with SFH medians up a bit, and townhouses and condos flat.





Just Jack has it right when he says that the market is very fragmented.  There are both reasonably good deals in certain segments, while others have barely declined at all.  The best options price-wise seem to be those houses that have one or two little defects, or a few year old condos.  Unless that condo is cash flow positive, it's likely a losing proposition in the foreseeable future.

While Victoria's market is spectacularly unexciting, the rest of the country seems to be doing ok, with just a few cracks showing in such unimportant places like Halifax and Quebec..  and Ottawa...  and Montreal.  Not to worry.   However just in case there is something to worry about - like more government regulation - the Canadian Association of Accredited Mortgage Professionals are either hosting their annual get together for hay fever suffers (CAAMP ACCHA!), or have released their spring quarterly report.    In there they conclude that the 2012 mortgage changes were inappropriate, in that they apparently didn't do much to slow price appreciation in Canada.

Otherwise there isn't much of interest, mostly because the survey isn't worth a lot.  When they claim that average Canadian homeowner equity has increased by 6 percentage points in 6 months, you can pretty much judge the validity of the rest of the numbers.

One interesting tidbit:  Adding up the increased payments and lump sum payments, we get 12 billion in additional mortgage pay down in 2013.   Pretty impressive right?  Except at the same time home owners extracted $52.7 billion in equity out of their homes.  Well I'm sure the economy won't miss that $40 billion in spending when that well dries up.

Tuesday, May 20, 2014

May 20 Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.


May 2014May
 2013
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales229
406


659
New Listings572909

1428
Active Listings45124578

4783
Sales to New Listings
40%
45%

46%
Sales Projection719687*


Months of Inventory
7.3


*Counting the stat as a weekday.  

Monday, May 12, 2014

It's looking awful fishy out there

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.


May 2014May
 2013
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales229



659
New Listings572


1428
Active Listings4512


4783
Sales to New Listings
40%



46%
Sales Projection719


Months of Inventory
7.3


More listings piling on and lower sales/list than last year.  Seems the market is equalizing again or as Marko says "a whole lot of boring".

End of month numbers are no different.  The more data we get, the more it seems the decline went from 2010 to 2012, with flat afterwards.  It took a big shift in sales mix to keep median prices flat during the inventory spike after the 2012 CMHC changes, but stay flat they did.  I wonder what the sales mix is like these days?


Tuesday, April 29, 2014

Another brick is pulled

Just when the Victoria market was starting to show some signs of life after four years of decline, the noose is tightened a bit more.

First off, the BC Financial Institutions Commission (FICOM) is proposing a set of Residential Mortgage Underwriting Guidelines to bring BC credit unions (who are not covered under the federal Office of the Superintendent of Financial Institutions, or OSFI) in line with federal regulations restricting HELOCs to a max of 65% of the value of the mortgage, amongst other restrictions.

In an interview with CMT, Doug McLean, the Deputy Superintendent of FICOM claims that the new BC guidelines have nothing to do with the feds, but they were certainly inspired by them given the similarities.  Perhaps Doug also got a little antsy from the likes of Vancity offering a little too much lending "innovation" by letting people borrow half their minimum down payments.

The new guidelines are out for feedback, but if I know government agencies, that's hardly more than a formality and they will likely be adopted almost as is. How many people will be affected?  Impossible to say, but what's certain is this will prevent some people from extracting equity from their homes, and prevent others from qualifying to buy, thus taking some demand out of the market.

At the same time, CMHC is getting nervous again and is tightening the screws on borrowers.  CMHC has announced that they will stop insuring second homes (Finally! Which industry shill on their board thought that was ever reasonable??) and stop accepting "non-traditional" (aka fake) proof  of income for self-employed borrowers.  Again, the impact isn't huge, with those programs making up only 3% of CMHC business, but the little adjustments add up (more info on the changes here).  And CMHC isn't done yet, even announcing that more changes are coming.  Funny how things change when you throw out the industry insiders and bring in people that actually know how to regulate financial institutions.

All this comes with the chance it might destabilize our apparently stabilizing market.  After 4 years of decline and 6 years of flat prices in Victoria, it seems our market has shed some risk while the rest of the country continued to go bananas (1.3 months of inventory in Calgary right now!).  However the government remains the wildcard in this game, and they are not concerned with little Victoria.  In order to slow the nation, Victoria might get sideswiped.

Monday, April 28, 2014

April 28 Market Update

MLS numbers update courtesy of the VREB via Marko Juras. These numbers are for the Victoria Real Estate Board's reporting area, including Sooke, Shawnigan Lake and the Gulf Islands.


April 2014April
 2013
Wk 1Wk 2Wk 3Wk 4
Unconditional Sales108
278
436564
615
New Listings33869510731374
1408
Active Listings4087417042894394
4585
Sales to New Listings
32%
40%41%41%
44%
Sales Projection---679 685653
Months of Inventory
7.5


Just about done with April, and it's slowed down a bit from the pace we saw at the beginning of the month.  In fact, it looks like for the first time in almost a year the sales/list ratio will be lower than last year.  Sales will be higher, but if this is the start of a shift the months of YoY improvements might be over.