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Quarterly Market Update - September 2012

Sales continued to slide in South Surrey/White Rock this past quarter but the selection of competitively priced properties remains robust. The sales to active listing ratios for the various categories of properties tell the story. This ratio measures the percentage of listings that sell in a given period of time with the total number of listings available during that time. According to the Fraser Valley Real Estate Board, anything less than 18% is considered a Buyer’s market.

Overall for our area this ratio was 9.28%. Houses were selling at a ratio of 11.37%, apartments at 7.04%, and townhouses at 10.63%. A year ago the ratios were 16.03%, 8.47% and 14.07% respectively, so with the exception of apartments, we are in a very different market than we were last year at this time. This certainly was not unexpected with many prognosticators calling for a correction in the market since late in 2011.

The total number of year to date sales in the Peninsula, including all categories of real estate is 25% less than last year. However detached sales, which account for the majority of sales, are down 38% from last year while apartment and townhouse sales actually have increased. It is also taking longer for houses, apartments and townhouses to sell.

One would expect with the foregoing numbers that price indices should be on a downward trend and indeed the overall year to date average price for our area is down 4.3% to $742,213. Breaking out the house, townhouse and apartment prices we get conflicting numbers.

The median and average price for a house in September, were both higher than September 2011 as were the year to date figures. Townhouse indices increased on the month to month comparison but not on the year to date comparison. The median price for apartments barely moved compared to September 2012, while the average price was up 3%. The year to date median price and the year to date average price were down and up respectively but only marginally.

I can understand that there would be little price movement in apartments and townhouses given that the those segments were already showing signs of weakness in 2011 along with the fact that the number of sales for the two categories held steady compared to 2011, but what gives with the increase in house prices coinciding with a 38% drop in sales? I have heard one economist explain that price indices usually take some time to reflect what is actually happening in the market but he did not really offer any other explanation. Personally, I think comparing September prices to August 2012 prices gives better idea of what is actually happening to the indices. Checking the previous month over month prices confirms that there is indeed a trend towards softer prices. It is only a matter of time before the year to date and month to previous year’s month, come into line with what is happening in our market.

I would describe our current market as transitional where the buyers are wondering if the prices are going to soften even more and the Sellers are reluctant to accept that they missed the peak of the market to sell. While this will take some time to sort itself out, there are still many buyers and sellers who are going to come to a satisfactory compromise and realize their goals.

The buyers who are waiting for the bottom and the sellers who refuse to accept what is happening had better not be in a hurry.