Market Update December 2016

January 11, 2017

There was a distinct change of tone about the Vancouver housing market in the media at the end of October/early November. The message in August through most of October had been that the market was going to crash and carnage was imminent. When the crash failed to materialize, the headlines started to read about a cooling of prices. For those of you who follow our emails, you’ll note that early on we predicted some downturn in pricing, but remained very clear that a large-scale erosion of prices just didn’t make sense.

 

That aside, let’s look at the numbers. The numbers presented below are a ratio of the number of active listings (at end of month) over the number of sales in that month. Numbers above 7 are considered to be buyers’ markets, below 5 are sellers’ and in-between are considered balanced. Beside the number, I’ve indicated the direction the market moved when compared to the previous month.

 

Months Supply Van West Van East North Van Richmond Burnaby New West
Detached 7.8 Up 9.0 Down 4.5 Down 10.2 Down 8.6 Down 5.8 Up
Attached 2.9 Down 3.7 Up 1.8 Up 4.1 Up 3.8 Up 1.6 Down
Condo 2.7 Down 1.4 Down 1.7 Down 2.6 Up 1.9 Down 2.0 Up

 

More interesting than the numbers themselves is just how consistent these market pressure indicators have remained month over month. In almost every area, the numbers have shifted slightly one way or the other, but none have moved dramatically up or down. The consistency present in our marketplace is, itself, interesting. In many ways, it speaks to the continued need to close the gap in pricing between attached/condo and detached products. As interesting as that is, perhaps more interesting is the anecdotal evidence we’ve seen on the ground in the last week.

 

Since the beginning of the “crash” of 2016, we’ve been commenting that condos (particularly the entry-level priced ones) have remained very active with multiple offers still being fairly routine. This hasn’t changed in the last few weeks (and we could point to a few listings where exactly that happened). What we’ve observed in the past week, however, has been a renewed interest in detached homes. For instance, a home we listed last week on the West Side sold prior to the weekend open houses with multiple offers. Anecdotal evidence is not everything of course, but we’ve gathered enough of it to believe that our market conditions are in the midst of stabilizing. Our current theory is that pricing has fallen as much as it will and that prices will remain consistent for at least another month or so.

 

Switching gears briefly, we’d be negligent to ignore the fact that November 30 was the date where government-backed insured mortgages became more difficult to obtain. The result of this change has been a higher cost of borrowing and several of the major banks have already announced an increase to their prime rates. While we’re forecasting a bit more of an increase, we’re certainly not expecting major rate increases beyond that for the time being.