Detached L.A.P.S. – REBGV

Bear-B-Gone

Ortho makes an insecticide called Bug B Gone. They claim that it ‘kills over 100 insects on contact,and won’t harm roses, flowers or shrubs.’ A crucial instruction on the label is to ‘shake well before using’.

Suspect is that yesterday’s Average Vancouver prices might be to bears what Ortho’s spray is to bugs. Luckily, they like the roses, flowers and shrubs won’t suffer immense harm but my guess is that they have already been well shaken.

Bears do however, have persistence. With that, a further suspicion is that all are holding their breath as they wait for salvation in the Housing Price Index numbers posted by the REBGV in the next few days.

To them, seeing average numbers climb like August’s are frustrating. If bears make bubbles then certainly August’s prices have deflated them. Quoting a renowned Bearish blogger: “If I am wrong and September shows less sales, more inventory and higher prices…I will close the blog down because there is no point commenting on an irrational market.”¹

It might be irrational but who ever claimed that buyers and sellers, those people who determine a market, act in a rational manner.

Seeking some degree of rationale, a more comprehensive view of the market is rendered when its elements are combined. The addition of Units Listed, Units Sold and Active Listing to the mix gives us a more complete perspective.

Vancouver Detached Units Listed

Units Listed continued to drop from April’s high of 3183, a record level. Down from June’s 2300, July rang in at 1,702 now followed by August’s 1,524.

Vancouver Detached Units Sold

If sales a market make, then this one is headed down a slow slide. Relative to earlier months, July took a beating with only 911 sales, down from June’s 1141 and April’s high of 1372. Now in August the market has sales slowing a little more settling in at 898. Buyer abscense continues to leave sellers little option but to make pricing adjustment.

Vancouver’s Detached Active Listings

Active Listings dropped but still remain high compared to past times. This remains discouraging for sellers as the persistent number of listings maintains competition. Currently at 6,572, Active listings are down by almost 1,000 units compared to June’s high of 7,529. Looking back, it makes today’s market look good when you consider that in April 1990 there were 10,382 active listings and only 1,008 sales.

It’s Just a Thought

While RE Bears take time to reflect it may also be a good time to consider how and where this market may be going. I have said a great number of times that I’m only correct 50% of the time. I stand by that figure!

Keeping the correctness ration in mind proposed is that we have a very interesting scenario comprised of more than just the raw house data talked about. We also have an inordinate inordinate number of real estate practitioners. July recorded that the number of Realtors® registered with the Real Estate Board of Greater Vancouver has climbed to 10,058. I recall a similar but lesser number of Realtors® years ago and I believe that at the same time there was also a great number of listings. I could retrieve actual year, date and numbers but for purpose of making a point I’m going to rely on memory.

So what does this mean? It’s not a far stretch of the imagination to suspect that many of the newer folks haven’t got a clue. This is not meant to be derogatory or inflammatory as we all have to start somewhere but, at some point you have to ask is it possible that without the necessary knowledge and experience, a lot of listings are on the market because Aunt Nell wanted to help ‘Sunny Boy’ get ahead.

Sunny Boy, who not wanting to offend Aunt Nell and who wanting to prove his worth, lists the house aggressively. He then does open houses while he prays and hopes that the market will look after him and render him a hero in good ol’ Aunt Nell’s eyes. Sonny Boy who because of pride can’t muster the boldness to say to Aunt Nell, “Dear Auntie I’ve messed up and the real value of you home today is probably $100,000 less. I’m sorry Aunt Nell but that extra pension you were hoping for is gone.” Sadly, he also can’t say to Aunt Nell, “better luck next time” as Aunt Nell in all probability won’t be here for the next time. The result is that listings that should be reduced to match the market’s pace are not and everyone merrily continues to live in hope.

Now if you thought the RE Bears have a problem so does this market of Aunt Nells. It is entirely possible that due to the suspected number of Aunt Nell listings, the real number to watch are those of expired listing mandates. Aunt Nell has a good sense of mortality. Though she may love and care for Sonny Boy, at some point that listing will expire. She will at that time feel that she has done her Auntly duty. More enlightened with market knowledge, she will this time choose a Realtor® with more experience, knowledge and market savvy as she prices her home to sell.

The secondary number to watch is what I will call the Sunny Boy fall off. Almost assuredly the decrease in Realtors® will result in a corresponding drop in the number of Active Listings.

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