Canada's Housing Bubble

Sep 04, 2010 rebgv.org

The Real Estate Board of Greater Vancouver (REBGV) reports that the number of residential property sales in Greater Vancouver totalled 2,202 in August 2010. This represents a 36 per cent decline from the 3,441 sales in August 2009, and a 2.4 per cent decline compared to July 2010.....

Greater Vancouver Housing Price Index 2006 - 2010

Greater Vancouver Inventory 2006 - 2010

Greater Vancouver Sales 2006 - 2010

Greater Vancouver Sales 2006 - 2010

Greater Vancouver Months of Inventory 2006 - 2010

The Months of Inventory -MOI- is basically a ratio of the Inventory of homes for sale by the number of homes that have sold over a period of time. The higher the months of inventory, the slower the market and visa versa. Generally, 4-6 months of inventory signals a balanced market, less than that would undoubtedly be a very strong Seller’s market, & more than that would be a Buyer’s market. In the most basic sense, a strong market will have an MOI of under 5 .

Source: REBGV, SpreadSheets

Definitions of: Housing Price Index (HPI), Mean Average Price, Median Price

Mean: is an average that is arrived at by taking a range of home prices and dividing them by the number of units sold. If 12 homes sell in a price range from $220,000 to $690,000, the mean average price is determined by adding all of the sales prices and then dividing by 12.

Median: is the middle value. If 12 homes sell in a price range from $220,000 to $690,000, the median price is determined by arranging the sales prices from the lowest to highest. The media is the number in the middle.

For many decades, the mean and median average were standard industry measures for recording sales activity.
But these measures were not always accurate. In a neighborhood where 11 homes sell in the range of $650,000 to $850,000, and one home sells for $1.3 million, the average or mean will be significantly skewed.

The Housing Price Index (HPI): For accuracy, the Greater Vancouver and Fraser Valley Real Estate Boards developed the HPI, a tool to measure market activity.

The HPI is a measure of price change, for a set time period, for residential properties. It provides the most reliable information on housing price trends.

It’s modeled on the Consumer Price Index (CPI), which measures the rate of price change for a basket of goods and services including food, clothing, shelter, and transportation.

But instead of measuring goods and services, the HPI measures the change in the price of housing features such as lot size, number of rooms, age of the home and neighborhood.

The HPI tracks movement of mid-range priced homes and excludes extremely high and low priced properties.