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Real Estate Activity Picked Up as Price Decreases

 

This summer, real estate activity increased as compared to the first half of 2019.

“Home sales returned to more historically normal levels in July and August compared to what we saw in the first six months of the year,” said REBGV President Ashley Smith.

Buyer activity had increased, although sale is still below the 10-year aveage.

The sales-to-active listings ratio for August 2019 is 16.7%, a slight decrease from the 18% in July 2019 in Metro Vancouver. The ratio is in the balanced market range. For a breakdown of ratios for different property types, please see the table below:

The ratio also varies in different areas in Metro Vancouver. For example, we are seeing the condos in Brentwood are sold fairly quickly if priced well.

For condos, the sales-to-active listings ratio for both July and August 2019 had surpassed the 20% market.

According to analysts, if the ratio surpasses 20% for several months, we often see an upward pressure in price.

Sales of condo increased 8.9% in August 2019 compared to the same month last year. The benchmark price of condo decreased 7.4% from same month year to $771,000. Although sales went up, inventory was also up, making sales-to-active listings ratio lower as compared to the heated seller’s market a few years ago (hence the lowering in price).

Condominium remained in higher buyer demand as compared to other property types due to its lower price point.

Buyers still benefit from the low interest rates, increased inventory and reduced prices in this balanced market.

On September 4, 2019, Bank of Canada left the benchmark interest rate unchanged at 1.75% as trade war between China and the US was doing more damage on Global economy than forecasted in July 2019.

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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.

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Canadian Mortgage and Housing Corporation’s outlook on the housing market

CMHC has released its latest Housing Market Outlook which is released annually at the beginning of the fourth quarter and looks ahead over the next two years.

In general CMHC sees a stable, but slowing housing market.

Housing starts are expected to decline over the next two years as the economy strengthens and the Bank of Canada withdraws stimulus – that is, interest rates continue to rise.

CMHC is forecasting posted, 5-year mortgage rates of 4.9% to 5.7% next year and 5.2% to 6.2% in 2019.  That is an increase of as much as 160 bps over the time horizon of the outlook.

Existing home sales are forecast to drop.  This should be no surprise given the record setting pace of sales through 2016 and early 2017.  As well, the pace of price increases is expected to slow down.

CMHC predicts the national average price for a home should fall somewhere between $494,000 and $511,000 this year.  In 2019 the range is expected to be between $499,000 and $524,500.

CMHC is also forecasting ongoing growth for GDP, employment and immigration.  But the agency expects consumer spending to decline as interest rates increase.

To download the report, click here

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October 2017 home sales were 15% above the 10-year October sales average.

Sales-to-active listings ratio for September 2017 was 33.1% for all property types

Sales-to-active listings ratio for different property types:

  • 16.8% for detached homes (balanced supply and demand)
  • 44.8% for townhomes (seller’s market – upward pressure on price)
  • 66% for apartments (seller’s market – upward pressure on price)

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REBGV president Jill Oudil reported: “Conditions continue to vary significantly based on property type. The detached home market is well supplied with homes for sale, which is relieving pressure on prices. It remains a much different story in the townhouse and apartment markets. Buyers of these properties continue to have limited supply to choose from and are seeing upward pressure on prices.”

“The growth in our provincial economy and job market is contributing to today’s demand,” Oudil said. “The federal government’s announcement of plans to tighten mortgage requirements for the seventh time in the last eight years also helped spur activity in the short term. Many buyers are trying to enter the market before the changes are in place.”

Click here for full report

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October 2017 Real Estate Market Update

Home buyer demand continues to differ based on housing type

Click on the above to read the News Release from the Real Estate Board of Greater Vancouver. Summary below:

  • August 2017 home sales were 20% higher than the 10-year August sales average.
  • September 2017 home sales were 13% above the 10-year September sales average.
  • Sales-to-active listings ratio for August 2017 was 35% for all property types
  • Sales-to-active listings ratio for September 2017 was 30% for all property types
  • Sales-to-active listings ratio for September 2017:
    • 14.6% detached homes (balanced market – slowed upward pressure on price)
    • 42.3% for townhomes (seller’s market – upward pressure on price)
    • 60.4% for apartments (seller’s market – upward pressure on price)

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Buyer demand continues for Townhomes and Apartment condos. We find the demand for single family home is still there, especially for homes that were well priced.

Since it’s rapid increase this January, we are seeing the Sales-to-Active ratios (for all property types) started to decrease after reaching its peak so far this year in May 2017 (see graph below).

The HPI benchmark price for all property types in Greater Vancouver continued to rise, although at a slower rate, since the ratio remained in the seller’s market.

According to First National Financial LP “Market watchers appear to be taking the same “wait-and-see” approach to interest rate hikes as the Bank of Canada” Read full article here. Summary below:

  • Economic data that support further interest rate increase:
    • Employment numbers show 10th straight month for gains
    • Wage growth popped up by 2.2% in September after months of sluggish growth. Hourly average wage reaching $26.36.
  • The two key factors that support “wait-and-see” approach:
    • July GDP was flat which forecast a slowing for 2nd half of the year
    • Household debt remained a concern and a determining factor in future rate increase.

The August GDP numbers will come out at the end of this month and they will help determine if there is a trend.

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Market activity picks up in May

Real Estate Board of Greater Vancouver released their monthly stats report today click here to read.

Home sale last month (May 2017) is reaching the “all-time record sales number” of May 2016 and an 23% increase from April 2017 (see infographic below).

“While sales are inching closer to the record-breaking pace of 2016, the market itself looks different. Sales last year were driven by demand for single-family homes. This year, it’s clear that townhomes and condominiums are leading the way,” said Jill Oudil, president of the Real Estate Board of Greater Vancouver (REBGV).

She said first-time home buyers and people who are downsizing from single family houses are both competing for condos and townhomes while the numbers of homes available for sale remained low.

This is pushing the sales-to-actives ratio for condominium to 95%, meaning almost all (95%) of condos listed are sold. The days a property remains on the market remains low. Buyers have to take action right away or risk losing out. It is often looking at the property today and make offer this or the next evening, often with little or no subjects. We are seeing sold price almost $30,000 to $100,000 above asking price for condos!

Single family houses are also returning to sellers market from buyers market at the end of last year with sales-to-actives ratio reaching 31% last month.
The sales-to-actives ratio for townhomes remain strong at 76%.
All property types are now in sellers market. AGAIN.