Tag Archives: sales to active ratio

Metro Vancouver Real Estate Market Stabilizes 

After a slow start at the first half of 2019, the real estate market in Greater Vancouver seemed to be picking up in the summer. In October, home sales were 9.8% above the 10-year October sales average.

In November, home sales dropped to 4% below the 10-year November sales average as the holiday season is approaching.

If we look at supply and demand, the sales-to-active-ratio for all property types had increased enough in October to push the single family house market in Metro Vancouver from a buyer’s market at the beginning of the year to a balanced market since October 2019. For both townhomes and condominiums, the market had returned to seller’s market from a balanced market although the prices were not as high as last year.

The implementation of the speculation tax, the more stringent mortgage stress test, restriction on farmland build-able square footage and continued tightening of money coming out of China were the many government and international factors that held off buyers at the sidelines at the beginning of this year. As a result, we see home prices drop about 10% across the board. The big banks started to market promotional interest rates to attract buyers.

Since summer 2019, we see buyers coming back into the real estate market.

“Home buyers have more confidence today than we saw in the first half of the year,” says Ashley Smith, REBGV president. “With prices edging down over the last year and interest rates remaining low, hopeful home buyers are becoming more active this fall.”

Another interesting trend we see is that the home price index for condominium is in line with single family houses in 2019 (see graph below). The condo market has been so hot for so long while the detached home market has been slow for several years. As a result, the price of condo is catching up to the price of single family home. It might be a great opportunity for condo owners to upgrade to single family houses. Or simply a great time to buy detached homes. For example, someone with a condo in Vancouver may be able to sell it and buy a single family home in the suburbs like Richmond or Burnaby.


Click on the links below to see some predictions for the coming year in real estate:

B.C. housing market to stabilize in 2020, accelerate in 2021: federal report

Home sales across B.C. to rise 10.9% in 2020: forecast

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.

The Top 6 Things That Will Impact Fall Real Estate in Canada

The Decrease in The Bank of Canada’s Mortgage Stress Test is Great News

 

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!

March 2019 Real Estate Market Update

The Real Estate Board of Greater Vancouver released a stats report saying that March 2019 home sales were 46% below the 10-year March sales average and was the lowest total for the month in three decades.

Home sale is the number of transactions that took place in a month.

March 2019: Total 1727 home sales
March 2018: Total 2517 home sales
February 2019: Total 1484 home sales

Although sales in March was down from March last year or any month of March since 1986, home sales were up 16.4% from February 2019.

Below is a graph of homes sales in Greater Vancouver since 2005.

The number of home sales go up and down every year as activities pick up in the Spring and cool down as year end approaches. We can see that home sales are picking up a little bit since the beginning of this year.

The sales number does not take into consideration of inventory. The sales to actives ratio is calculated by dividing home sales number by the number of active listings on the market in order to measure the balance of supply and demand.

For example, in March 2019 in Greater Vancouver for all property types, the sales to active ratio is:

1,727 home sales / 12,774 active listings = 0.135 or 13.5%

In another word,

12,774 active listings / 1,727 home sales = 7.4 months of inventory available

Some statisticians say that it is considered a buyer’s market when there are more than 6 months of inventory available in a give time. A balanced market has 4-6 months of inventory available and it’s a seller’s market when there’s less than 4 month’s inventory available.

From the graph below, we see the sales to active ratio since 2005 for the same time frame as the sales number graph above. We have not see such a strong seller’s market as the one we experienced in 2016 in ten years. The best buyer’s market was during the world financial crisis in 2009 (data available from 2005).

Sales to active listing ratio for March 2019 in Greater Vancouver fro the following property types:


Sources: Real Estate Board of Greater Vancouver

REBGV president Ashley Smith said “Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced. For three years, governments at all levels have imposed new taxes and borrowing requirements on to the housing market.”

“What policymakers are failing to recognize is that demand-side measures don’t eliminate demand, they sideline potential home buyers in the short term. That demand is ultimately satisfied down the line because shelter needs don’t go away. Using public policy to delay local demand in the housing market just feeds disruptive cycles that have been so well-documented in our region.”

To read the March 2019 stats report from the Real Estate Board, click here.

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.

Real Estate Market Activity Slows

Although buyers still had to compete for condos last month, we are seeing less people coming through open houses and less number of offers in each multiple offer situation. There are signs that the market is slowing down.

“High prices, new tax announcements, rising interest rates, and stricter mortgage requirements are among the factors affecting home buyer and seller activity today.” Phil Moore, REBGV president said in the statistics report released last week.

The sales-to-active ratios for March 2018:

  • For all property types, the ratio was 30% (up 2%, still in seller’s market)
  • For detached home, the ratio was 14% (up 1%, entering balanced market)
  • For townhomes, the ratio was 40% (up 2%, still in seller’s market)
  • For condos, the ratio was 62% (up 2%, still in seller’s market)

Although there were less demand from buyers and a 30% decrease in home sales in March 2018 compared to a year ago, the Sales-to-Active Ratios were still increasing across all property types.

Phil Moore explained “Even with lower demand, upward pressure on prices will continue as long as the supply of homes for sale remains low. Last month was the quietest March for new home listings since 2009 and the total inventory, particularly in the condo and townhome segments, of homes for sale remains well below historical norms.”

Read REBGV’s March 2018 Market Highlight’s here

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.