There is a lot of old inventory on the market right now and by old I mean properties that have been listed for 6 or more months. I recently did some analysis to try and quantify this and the following graph shows the results. One thing to note, I do not use the industry standard DOM (days on market) stat to determine this since it is the most manipulated, useless statistic ever produced by the real estate boards. The approach that I use is that short breaks between listings do not reset the DOM stat back down to zero. If a property is listed for 300 days and then is pulled and relisted a month later it has a DOM of 330, not 0.
Here are the somewhat startling results (click to enlarge)
In January of 2008 we had just over 3000 of these old listings and this peaked near the middle of 2009 at 8671 before bottoming out at under 4000 listings. As of April 1, 2013 we have eclipsed the old mark by over 2000 listings and this number is growing daily. The property list includes the Fraser Valley and all property types but still, this is around 50% of all listings! This is yet another factor in a brewing perfect storm which is sure to drive down home prices in the GVRD over the next 18 months
Vancouver Price Drop 
An Observer: I am sure you did some serious number crunching to compile this chart; I appreciate all your hard work! Information like this is very important for a complete understanding of where the market is. Monthly, I look at the number of realtors who earned no commission for the month based on the information published by the REBGV; my Vancouver Realtor Hunger Index now includes data back to 2003 at: http://vancouverpeak.com/Thread-Vancouver-Realtor-Hunger-Index
The hunger index is really interesting. If you look at periods with 50%+ consecutive months
Before 2008 we had no periods with even 4 straight 50% months
June 2008 to March 2009 had 10 straight months
June 2010 to February 2011 had 9 straight months
We’re currently at 22 straight months (and 24 if you include a 49% month)
RFM Thanks for the data. I have put it in graph form and posted it on vancouver peak, it certainly shows a tread.
http://vancouverpeak.com/attachment.php?aid=87
This is going to be a year to remember.
Jaw-dropping, sobering information. Thank you so much for the meaningful work you do Observer!
Dear,
please attach a price chart for the same period to easily access “days on market” vs “price” correlation. This will show us a clearer picture of what to expect.
“since it is the most manipulated, useless statistic ever produced by the real estate boards” — haha, that sounds familiar! 😉
So you are using a short interval of 30 days for the reset interval? (I thought it was longer) If this graph is automatically crunched, maybe you could do one of those cool Jesse-charts where he uses a variable short interval to overlay what the inventory that would occur under different conditions. For example: you say reset DOM after 30 days, I say reset DOM after 60 days, and the next guy thinks a flipper can’t possibly relist within 90 days. Could you graph all 3, or more?
I think it would be a popular view over time. Cheers.
Observer,
Thanks for constantly coming up with new ways to debunk the false information spread by the RE agents.
I’m currently using the same 180 day interval as I do with the other reports for actual DOM. So for the purposes of this old inventory list it means that they have either been listed consistently for the last 6 months or are currently listed and also previously listed within the last 6 months. I can play around with the ranges and I’ll also be releasing a graph that shows regional breakdowns probably next month
With all these old listing, how come the house I want to buy for 40% less sells right away?
http://hammerwatkinson.com/mylistings.html/details-29590934
I happened to be near the area when it was first listed and it already had a sold sign on it. I know, be patient.
It’s the area, near cambie/main street is the most popular area in demand for vancouver right now. I have 4 friends that live in the area another 2 friends looking to buy in the area. In fact, I’m looking as well, but I’m waiting for the price correction. Since 2 years ago, I’ve been telling all of them it’s going to happen soon, but I’m like a broken record now.
What makes it so popular?
Sorry, but I can’t see why anyone in their right mind would shell out that kind of money for that old house on a tiny lot.
And who’s got that kind of money anyway?
This house was listed for almost 1.3 million. At 40% off it still would be around 800k.
Do you really think it’s worth that much?
I would pay $500K for this house
Main street is in east van, it’s right at the border of west side, which are the ~2 million and up dollar houses, so in comparison, 1.3 mill is considered cheap in that sense. By all means, I don’t think it’s cheap, and I think it’s worth maybe 700K because it has nice reno’s and I’m a bear.
It is tough to say if its worth 500K, 800K, 1.3M or whatever. If it does drop 40% the economy would probably be really bad and we’d all be out of a job anyway.
no, it’s not that tough actually.
You should track this one (down $1.5mil)
$5,488,000
MLS® V987185
8 Beds, 7 Baths
1010 W 57TH AV, Vancouver
Pocket change!
I buy three, my sister by three.
This kind of number boggles my mind. Assuming I have $500K sitting around in my mattress for dp, the interest alone can support 2 families comfortably. Forget about property tax, insurance and maintenance. I need to take my blue pill and go back into the Matrix where everything makes sense to me.
Interest on 500K is about 10K a year in interest at 2% – about the max you can get today.
You can feed 2 families with that? Not in Canada!
You can get about 5% after tax with $500K in various equities with basically no risk so about $25K but still, that you are right in that it wouldn’t be enough to take care of a single person let alone 2 families. At the same time people have lost all concept of money.
I bought my first home 10 years ago for $360K or about 2.5 times family income since me and my wife were both working full time with well paying jobs. We were concerned about that huge sum of money but it was a very nice home in a great family oriented neighbourhood with a large lot. A person we know just closed on a $1.1 million 40 year old home in Burnaby with the only redeeming factor being that it has a 10K sqft lot and this is roughly 10 times their income but they don’t seem to have any concerns at all about it.
Do some simple math. I am assuming that Seeking knowledge is referring to the amount of mortgage interest paid on a 5 Million dollar house with a 10% down payment, rather than the amount of interest that that DP could receive in a savings account.
Good point, that was probably what he was referring to
Yes, it’s 3% on a $5M mortgage = $150K per ann. Plus all the other carrying costs and the opportunity cost of the 500K I had sitting inside my mattress.
Sorry if I wasn’t clear. Humour loses its effectiveness if it needs to be explained. I’ll keep my day job.
Whoa! I would never buy a 5 million dollar home with only a 10% DP. When I bought my place for 1.3 mil in 2010, I had 300K DP. I wasn’t comfortable buying anything more. I realize that people making less than me buy more trophy properties but to be honest it’s just me and my wife and we don’t need a trophy property. Right now, life is good, our mortgage is less than 10% of our gross HH income and any extra money goes into equities which has made us over 10% since start of year and over 15% since last year (not including dividends), while our RE “investment” (our home) has tanked.
LOL, you can track that one likely for a LOOONG time, the 2012 assessment is shown at $3,353,000. Another 50% drop … then we can start tracking it.
This was meant in response to …
Intrigued observer April 8, 2013 at 3:57 pm
You should track this one (down $1.5mil)
$5,488,000
MLS® V987185
8 Beds, 7 Baths
1010 W 57TH AV, Vancouver
I thought I replied to that comment, not sure why my comment ended up here …
Excellent chart! This is very gives great incite and really shows you what is happening behind the curtain. I hope this becomes a monthly mainstay. As always, much appreciated.
Agree, this chart would make an excellent regular. These stale listings are like a giant boulder teetering on the edge of a cliff over Wylie Coyotes head. Nothing too bad has happen yet but it’s coming and Wylie won’t know what hit him.
When I watch international house hunters, I get really mad at how some people that have a $250K budget and looking at a beautiful 3000 Sq foot house on a 10000 Sq foot lot and complain that the yard is too small, and that the colour of the walls are too white. I wish I could slap them across the face with a vancouver real estate paper.
Impossible to quantify, but in my immediate neighbourhood, within a few blocks are at least 8 new builds, previously listed, not sold, sitting empty. Shadow inventory, AKA pent-up supply!
Also to note, a certain condo building close by currently has four realtor signs up, yet none on MLS.
Correct me if I’m wrong, but I believe they don’t show up in inventory? What about sales, will they get counted if sold? How much of that is there really, and what distortions to inventory and MOI does that create.
Same with Olympic Village condos. They still have tons for sale and a few are creeping onto the MLS, but I have no idea how they are counted in the sales tally.
Observer or anyone else?
There is no law that anyone has to sell with a Realtor or list on the MLS system, with or without a realtor. Don’t forget there are also FSBO’s and private land deals as well. The real estate boards report MLS data. The only place I can see that you are going to find all the data available on how many properties actually change hands in any given month, would be Land Titles. I’m thinking you would have to spend your own time and money to comb through their records.
Natalie,
It is true that you don’t have to list your property on MLS, but what are the chances of selling your property yourself?
All relevant information that a seller (or buyer) needs is closely guarded by the RE industry.
It’s pretty much a monopoly. In any other industry this would have been outlawed a long time ago.
Real Estate Tsunami: MLS is a privately funded website, created and maintained Realtors. There are plenty of FSBO sites out there as well, also privately funded. They don’t work as well, I agree. I’m not convinced MLS has a monopoly simply because other ways of marketing aren’t as successful. You can hire a company to do nothing more than post your home on our MLS site, for a nominal fee and they offer no other services to you. Is it the nominal fee you are opposed to?
My point is that vital information such as the sold price of properties is not available to the average person in Canada. It is in the States.
RET: Yes, I agree…the information should be available after the transaction has completed and keys exchange hands. That said, I believe the BC Assessment site had those numbers available, recent numbers anyway. http://evaluebc.bcassessment.ca/ Go here…I think you will be able to find what you need.
An Observer – Remember this from your March 25 posting?
http://www.realtor.ca/propertyDetails.aspx?propertyId=12969032&PidKey=1514877095
Looks like they set up a bidding war and nobody showed…
It was listed a $299k, just re listed today for $576k, one thousand dollars more than it was listed for in Feb.
In what other market anywhere can you offer an item for sale at a certain price, yet not have to sell it to someone with that amount of subject-free cash? Cash equivalent perhaps, certified cheque, bank draft etc, but the principle is the same.
Isn’t it illegal to advertise a price that you won’t sell the item for?
It is if it’s an auction. Is a real estate sale considered an auction? It certainly looks like one.
LOL same thing with the other listing by the same owners…
Was listed for $499k, just re-listed for $799K.
Is it time to start panicking yet?
Yes, yes it is…
Things are going to be horrible here over the next 5 years but in 2018 we’ll have affordable homes, real opportunity and jobs, a non-socialist government (NDP will be crushed again – this time it won’t completely be their fault – and hopefully liberals realize that they have become socialists over the last few years) and a chance to rebuild this mess that is going to devastate the province.
That’s what I’m hoping anyways and the only way for that to happen is for this bubble to explode.
Or perhaps, given what has occurred elsewhere where bubbles of this magnitude crashed, huge bank bailouts, permanent stagnation, severe long-term unemployment and underemployment, ongoing and devastating cuts to needed government services, a revulsion towards all the traditional political parties, deeper political polarization, the malignant growth of racism and the first germs of fascist currents and, last but not least, many of those who remain employed and had hoped to purchase a house due to the decline in prices unable to due to severe credit restrictions.
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