The tides are turning. For several months we’ve been talking about how this unprecedented sellers’ market couldn’t (or wouldn’t) last forever and we now have statistical evidence that the market has begun to cool!
As usual, let’s start with the numbers. The numbers shown 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|
When graphed this way, it is clear to see there has already been a shift in the market on detached properties across the region. Sales of detached homes in our regions are down 25% in a year-over-year comparison (and 13% in month-over-month) while total listings on market are up by 17% in both year-over-year and month-over-month comparisons.
I should note that these are fairly early signs – that is, despite the shift, all of these markets are still experiencing sellers’ market conditions, just not as strongly as we’ve become accustomed to over the last 7 months. I should comment on the one anomaly, North Vancouver, where the number of sales actually increased and total listings remained the same. I would expect that we’ll see the North Van market cool as a reaction to the release of this month’s data. I would also point out that the feeling on the ground reflects the numbers above. Detached homes are getting fewer offers (sometimes still multiples, but not always) and some aren’t even selling at the first opportunity!
Condos/townhouses, you’ll note, have yet to see the same slowdown. For the most part, their numbers remained consistent in month-over-month analyses (and continue to show a strong disparity when compared to the 2015 numbers at this time of year, as has been the case for the rest of this calendar year so far).
The shift in the market is happening quickly. We are hearing more and more stories of offers falling apart due to financing, and more and more stories of sellers picking a price so much higher than the last sale (which might have worked a few months ago) that no one bothers to write an offer. We fully expect that condos will soon see a similar slowdown in activity.
We would caution our clients that this downturn doesn’t mean that pricing is automatically going to come back down. Given the “out of control” rise over the last 7 months, it would be fairly reasonable to expect some downturn on pricing, but we aren’t yet predicting substantial downward pressure on pricing.