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June 2019 Real Estate Market Update

According to the Real Estate Board of Greater Vancouver’s stats report, housing sales last month was the lowest selling June since 2000. It was 34.7% below the 10-year June sales average.
Same with the previous two years, home sales had reached their peaks in May before leveling off in June (see graph below):

Home inventory continued to accumulate as home sales started to level off.
When we look at supply and demand with the Sales/Active Ratio graph below, we see the market had returned to the balanced market level in 2013-2014 before the boom started in 2015 when home inventory dropped to a all time low at the end of 2015.

It had been a very strong seller’s market for the past four years. Buyers didn’t have much selections to choose from and they had to act very quickly to secure any deals. Now in this balanced market, buyers can finally take the time to do the normal due diligence expected when buying a home such as doing inspections, having financing subjects, etc.

As for sellers, homes are still selling but the asking price has to reflect the current market. We look at comparable homes that had been sold in the past 30-days to determine the current market price of a home. The tax assessment only reflect the price of June 1st of last year.

According to Kim Spencer, the manager of the Real Estate Board of Greater Vancouver’s Professional Standards Department, he had seen the real estate market slowed down like this three times in his real estate career.

Real estate market is cyclic. It always has ups and downs both in the short-term and in the long-term. The sales numbers, home inventory, sales/active ratios, the price all go up and down.

But in the long run, home prices generally go up (graph below). Even when the price dips down, it never goes back to the price at the beginning. How we wish that we can go back in time and buy single family houses at $400,000! That’s why they say, don’t wait to buy real estate. Buy real estate and wait!

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Increased Home Supply and Below Average Demand from Home Buyers in February

We are seeing the effect of increase mortgage interest rate and government involvement on curbing the rapidly rising of home prices in Greater Vancouver.

Compared to the same month last year, we saw a 32.8% decrease in homes sale. But compared to the previous month, we see a 34.5% increase in sales.

The market is not as hot as last year but it is picking up as Spring is approaching. Year over year, the market usually does better between March and June. We still see some multiple offers in Downtown Vancouver and Burnaby’s condo market but we also see a lot of price reductions.

As we can see in the sales-to-active listings ratios for February 2019 below, the townhouse and condo markets are now in the balanced market, meaning home buyers have more choices and face less pressure to act very quickly and sellers can still expect too sell if the home is reasonably priced. As for single family homes, buyers now still have more advantages over sellers. It is a great time to buy single family houses.

Sources: Real Estate Board of Greater Vancouver

If we look at the sales-to-active listings ratio for the past 10 years (graph below), we can see that the most recent seller’s market in 2017 did not reach the height it did in 2016!

People often ask us which way the market is going in all kinds of markets. Our answer is always “we don’t know in the short term”. As we can see from the graph above that ratio dropped suddenly at the 2nd half of 2016 and jumped up sharply at the beginning of 2017. It was only half an year in between that the supply and demand changed direction and then changed again.

If we look at the HPI price over the past 10 years, we see that the price has dropped to around the level in June/July 2017 which is still higher than at the peak of the market in 2016. For seller’s I think it is still a good time to sell because the price is still as good as back in summer 2017 when the ratio was at its most recent height.

People generally want to buy at the bottom and sell at the peak of any given market but as we can see above, the tide can change very quickly and selling anywhere near the peak is good enough for me.

As for buyers, when the price bottom out in January 2017, it never went below the price in May 2016 when the price was still rising steadily. I don’t think the price will ever go back to the level 10 or even 5 years go when the average home price for all property types in Metro Vancouver was about $600,000.

Even during the world financial crisis in 2008-2009, the price bottom out at $500,000 which was still higher than merely 4 years earlier in 2005 at $400,000. So for the longer run (5 years and more), real estate prices generally go up. So for buyers, it is usually better to buy earlier than later if you are buying and holding on to the property long term and the numbers make sense for your particular financial situation.

For the February stats package from the Real Estate Board, click here.