MARKET UPDATE – We have seen many changes over the past 18 months in our Vancouver market. Beginning with the provincial governments introduction of the Foreign Home Buyers Tax 15 months ago to today there have been a number of fluctuations in the market place. While from October 2016 to April 2017 we witnessed a market stabilization, the provincial election results in May this year threw more uncertainty into our market and has resulted in a somewhat “Wait and See” approach to many who would have otherwise listed and sold and purchased a new home. This history is clearly reflected in the Median/Average Sales Price graphs below over the past 3 years.
We have seen this quietness (predominantly in the detached category) before, causing a buildup in market activity that suddenly lets loose causing an overwhelming market surge. The surge usually includes activity and prices. Have you ever seen in those water parks where there is this gigantic bucket about the size of a garden shed that slowly fills with water and after some time of slowly filling it all of a sudden tips and pours all the water out. The market demand is similar. If the demand is not satisfied over a period of time, such as after this long ‘wait and see’ period, the market all of a sudden will explode and surge back. This usually occurs after some positive news/signs spurting some activity which grows quickly into an explosion. Consumers see the explosion of activity and all jump in at once. This is what will happen in due course for detached homes. Perhaps this fall, perhaps next spring but it will happen. This is of course barring any further government intervention in our marketplace. That of course would be like stretching that big bucket to twice its size before it tips. Longer gap / larger explosion.
The interesting thing to note here is that contrary to the detached homes, the attached townhome and condo market is quite active with prices on the rise. This is mainly due to affordability and the fact that detached takes a much higher commitment level financially and time wise, particularly when a property is going to be extensively renovated or taken down for new construction. So for the first time in a long-time Vancouver is showing segregation between the detached and attached markets. The government intervention and consumer uncertainty has had much smaller impact on the attached market. This is evident when we break apart all three product types into individual data series as seen to the right.
If we look at the Sales-Active Listings Ratio we see even more clearly the differences. If the ratio is below 12% there is downward pressure on pricing, if it is between 12-20% the market is balanced, if the ratio is above 20% there is upward pressure on pricing.
As of the end of August, the Sales-Active Listings ratio is 16.3% for detached homes, 44.8% for townhouses, and 76.3% for condominiums.