Busted in B.C.

A blog was uncovered at House Hunt Victoria that used statistical magic to indicate a seller's market was developing in Victoria. A Victoria Realtor calculated months of inventory* to be 3.5 in July even though it was a over 7.5 months in June. Not likely. It appears he uses a smaller set of data for inventory while adjusting a larger set of data for sales. House Hunt Victoria explains what is wrong with this figure:

It's really hard to follow because he's all over the place, but essentially yes; he's narrowed the current active listings down to a subset of SFH in certain municipalities and then used the market-wide sales data averaged over the first 6 months of the year, lumped pending and completed sales together to further confuse the data and then done the math to come up with 3.5 MOI but called it MSI (a term that also seems to come out of no where).

But I will be the first to admit I could be wrong in my interpretations somewhere as it is very difficult to follow his explanation/calculations because they are all over the place. I'd love it if he would clarify, but he seems to be too busy having his best year ever in 2010 to respond appropriately.

Anyway the Realtor posted and later deleted comments on HHV's blog. His incorrect post remains.


Well done HHV.

*Months of Inventory is the time required to sell total inventory at the monthly sales rate

(un)Balanced Market

There have been some assertions recently that Calgary is in a "balanced" market from Bob Truman's What's New page.

Jan 25
It's a nice change from the past two years for everyone. It's taking an average of 52 days to sell a house, and going down. Traditionally, it would take a house 45 - 50 days to sell. Prices should fluctuate slightly from month-to month, but I don't expect any dramatic rise or fall. March, April and May will return as the usual big months for sales. The balanced market, as predicted, is here.

Jan 21
Sales of single family homes are about equal with historical averages for the first 20 days of January. With 628 sales so far this year, we're one ahead of the 7-year average of 627. The last time we had anything close to a normal balanced market was in 2005, and that year there were 560 sales. The average price in 2005 was $268,306. That's a 69% gain in three years.

Jan 12
The average price of single family homes in Calgary has risen $10,000 in the first 11 days of 2008. The median price has dropped $4,000. Condo avg price is down $4,000, median is up $3,000. So far in 2008, it looks like the balanced market is here and functioning well.

What does balance market mean? Here is the definition of "balance"

A state of equilibrium or parity characterized by cancellation of all forces by equal opposing forces.

Looking at the stats this January has not seen a balance between buyers and sellers. Between Jan 1-21 the sales/new listing ratio is around 30%*. This is low even when going back to "balanced" years before the boom.

The CREB used to define balanced market as between 2-3.5 months inventory before starting to play games with charts. Andrew Kyle, determined that on Jan 2 Calgary was in a buyer's market by the month's inventory of around 4.5. How many months inventory are we at considering the sales between Jan 1-24 (Mike's site)?

Months inventory= (Inventory / Sales ) x (24/30)
SFH = (3992/798)*(24/30) = 4 months
Condo = (1926/327)*(24/30) = 4.71 months

Buyers market according to Months inventory.
Buyers market according to Sales to Listing ratio.
Buyer market.

Also looking at Andrew's site shows that Days on Market has decreased fairly quickly starting in January in past years. We may be following that pattern again as spring market heats up but higher in absolute terms.

*Sales/New Listings ratio may be in fact higher due to relistings
The (24/30) part of the equation is to adjust for only 24 days of sales.