Speculation and a Slowing Market
I haven’t had a lot of conversations with clients in the last month that don’t have some time spent discussing rising interest rates and slowing markets. Certainly, it does appear that the Vancouver market is at the beginning of a significant shift in pace – but, some of that is speculation.
Let’s start with the usual stats first. As usual, 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 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|
Region by Region
The interesting thing about being in a changing market is that not all segments of the market change – and they certainly don’t change at the same pace. Westside detached sales numbers bounced back to a more seasonally typical number, but the more dramatic shift was that many potential sellers took their homes off the market, causing the market to quicken slightly (ever so slightly, to be clear). Whereas Eastside detached home owners seem not to have heard the bad news (for them anyway) yet and more east side homes came to the market than previous – while at the same time, sales numbers decreased significantly. Area by area and category by category, our market has fragmented. The result of such a fragmentation is that buyer’s are confused and need more high quality advice. Unfortunately, the media (and by extension the Real Estate Board) only offers large sweeping numbers and trends for the region.
Add to that the uncertainty that exists on the macro level and you can’t help but wonder how anyone is buying homes at all right now. The Bank of Canada rate has already increased twice this year and it wouldn’t be too shocking to see a third increase this calendar year. The mortgage underwriting rules will likely change soon (with the consultation period now over) and the provincial government has yet to deliver the “death blow” to the housing market that it all but promised during the campaign.
Slow Down Without a Crash
What is perhaps most interesting to note is that while we have seen a slow down in activity levels in many segments, the slow down has meant that some buyers who previously felt pushed out of the market are now seeing an opportunity to get into it. For many years, I’ve held a belief in the long-term strength of Vancouver real estate – and I’ve often referred to the pent-up demand of displaced buyers as one of the reasons for that strength. So, while we believe the pace is going to get a bit more reasonable and realistic, we don’t believe we’re going to see significant price declines either.