The Power of Context
The problem with looking at one piece of data out of context is that, all too often, the context is what renders the data useful. This month’s Real Estate Board press release is a terrific example of this. And the problem with the Real Estate Board not doing a thorough analysis is that the media blindly reprints their press release.
Now that I’ve set the stage, let me 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 7 are considered to be buyer’s markets, below 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|
Everything is a Sellers Market
Our regular readers will quickly see that almost all of the markets moved further into seller’s market conditions over the last month (and the few that did move upwards, didn’t do so by any significant enough amount to be relevant). In fact, we are now in seller’s market conditions in all of the areas we track for this report. These market conditions are not new for condos and townhouses, which have been experiencing sustained seller’s market conditions long enough that pricing is driving upwards. The detached market, on the other hand, has been a much more balanced market over the last few months and it’s only recently (the last 3 weeks) that we’ve been experiencing seller’s market conditions on the detached side of things.
You Printed What??!
Imagine my surprise when the Vancouver Sun diligently reported that “buyers looking for a detached home will soon have more options to pick from and less competition to out-bid.” I then remember that journalism isn’t what it used to be and that they were probably not doing their own analysis, but instead getting their information from the Real Estate Board’s press release (which I then went to find) which stated that “Home buyers are beginning to have more selection to choose from in the detached market…”.
Here’s What’s ACTUALLY happening
At the end of the day, the numbers don’t lie. At the end of May 2017, there were 2818 detached homes on the market in our six geographic areas with 845 detached home sales through the month of May (or… 3.3 months of inventory). Compare that to the April 2017 numbers of 2684 total listings and 650 sales (or 4.2 months of inventory) and you can see that while there are more listings, the number of sales increased at a faster rate causing the market conditions to worsen for buyers.
I thought I’d illustrate the increased pace of the detached market with an example of a sale from a week ago. An older house (56 years old) with no updates and an unfinished basement on a 33×109.4 lot was listed for $1,200,000 two weeks ago. The closest comparable sale was a month previously of a 29-year old house on an identical lot with a suited basement a block down the street that had sold for $1,368,000. The older, un-renovated house without a suite ended up selling for $1,333,000 – not nearly enough of a difference to make up the difference in finishing between the two (let alone the extra kitchen and income potential offered by the 29 year old house).
GreeNDP and Housing
I’d be remiss not to mention the impact the changing political climate may have on the housing market. Opinions on the topic are wide-ranging, with some speculating that if/when the NDP/Green coalition takes power, the economy will suffer and housing prices will fall, while others are speculating that market demand is too strong to have a noticeable impact on housing prices for any sustained period. However, the changing political climate has already had the impact of everyone wondering what will happen to housing prices. Generally speaking, the slightest uncertainty has been enough to slow the market (ex. the foreign buyers tax last summer), so it is fairly reasonable to expect that the market will likely slow for some period in the not too distant future