A Tale of Two Markets…Still
“Two distinct markets have emerged this summer.” I’ve lifted this quote from the Real Estate Board of Greater Vancouver’s media release published last week. I found the quote particularly comical because we started talking about the two distinct markets back in September last year!
Let’s start with the usual stats – the numbers shown are a ratio of the number of active listings (at end of month) over the number of sales in that month. Numbers above a 7 are considered to be buyer’s markets, below a 5 are seller’s 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|
It Was the Best of Times, It Was the Worst of Times…
Going back to August last year, we noted a shift in our marketplace (and indeed published several monthly market updates discussing this). Prior to that time, the attached market would follow the detached market, often a few weeks behind on its shifts and less dramatic in its percentage changes. However, the slowdown in our market last Fall was more pronounced the higher the price of the property. So while prices of detached homes fell by 6.6%, condo prices during that time fell by 0.4%. Given this statistic, it will come as no surprise that detached homes were almost all experiencing buyer’s market conditions while condos barely moved from the 0.5-2 months of supply indicating a strong seller’s market. Since then, the detached market has experienced what I’m going to call its traditional Spring uptick in activity, whereas the condo market couldn’t shift into a higher gear and has kept trucking along (at an incredibly fast pace).
With the history well established, we turn our attention to more current events where we see that the detached market is showing signs of slowing again. Many of the detached markets moved into balanced market territory and all of them trended in that direction. The attached side of the market, on the other hand, is showing very little sign of letting up. In keeping with recent history, the more expensive options within the attached category (townhouses) do appear to be losing a bit of steam, whereas condos have somehow managed to find themselves even harder to buy than they were last month.
The Bank of Canada’s upcoming announcement (July 12) is widely expected to be an interest rate hike. Indeed, RBC announced rate hikes last Thursday in preparation for this announcement. It is not unreasonable to expect that an interest rate increase (assuming that our economy can sustain an increase for any measure of time and the rates don’t come back down in the next six months) will have a slowing effect on our housing market. Simply put, buyers will qualify for (and can afford to spend) that much less, thereby taking some buyers out of the market. And so, I think we’re destined to continue seeing two different markets in Vancouver for quite some time indeed.
For a more detailed analysis on buying into the Vancouver market, the impact of the recent changes in BC’s political landscape and other fun stuff, listen to episode 22 of The Vancouver UnReal Estate Show podcast: http://www.keithroy.com/22-is-now-a-good-time-to-buy-in-vancouver
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