“Low Supply and Snow Limit Vancouver-area Home Sales in February” – Vancouver Sun1
“Scotiabank CEO Concerned About Correction in Vancouver, Toronto Housing Market” – Global News2
Imagine reading those headlines and then having us tell you that you’re going to be competing against 5 other buyers for the home you want to purchase. As I write, that is exactly what is happening for two of our buyers – which invites the question: Why is the media reporting the “end of the Vancouver Real estate bubble?” And more importantly, what is actually happening in the market?
We’ll 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 buyers’ markets, below a 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|
A Strong (Non-Luxury) Market
It’s certainly true to say that some segments of our market are slow (incredibly slow in some cases), but the vast majority of homes in the Vancouver area are experiencing sellers’ market conditions. Statistically, the only “line” we can really draw would be loosely defined as the “luxury market.” That is, homes at the top end of whatever segment we’re looking at (ex. Eastside detached homes over $2 million, Westside detached over $3.5 million, New West homes over $1 million). In virtually all cases, homes in the “luxury” segment have experienced a dramatic slowdown and a steady (if not steep) decline on pricing since Summer 2016. The unwritten story (at least, uncovered by the media) is that the rest of the market is actually incredibly strong with multiple offers and price increases being the norm in those “affordable” segments. For instance, just last week, we saw an Eastside house priced at $1,338,000 sell with 11 offers for $1,650,888. Another example was the week before on a 1 bedroom condo in Fairview, priced at $530,000 that sold with 4 offers for $590,000.
Lack of Inventory
Other than the segmented market, the other interesting observation is the complete lack of inventory in virtually all areas of the market. While sales volume now remains lower than the last two years, a comparison of sales volumes for February show that February 2017 was a strong month when compared against 2012, 2013 or 2014. However, buyers are simply not seeing the kind of variety/choice that we typically experience in this season. If you ignore last year’s Spring, current inventory is running at approximately ½ of what we saw in February of 2012, 2013, 2014 or 2015. Obviously, when the supply side of a market equation isn’t sufficient, the market pressure will cause an increase in pricing – and that’s what we’re seeing in markets outside of the “luxury” end of the market.
1 – Vancouver Sun published March 2, 2017
2 – Global News February 28, 2017