Around 6 months ago, Vancouver was dubbed as North America’s “hottest” real estate market, where some home prices were increasing by literally $1000/day. Open houses had line-ups within minutes of opening and listings received multiple bids over asking.
In an effort to appease the disgruntled home-buying electorate who were being forced to move to the suburbs, both the BC and federal governments brought in a number of measures to address the soaring housing costs.
It looks like these measures have worked to cool the market somewhat, and there is consensus among realtors that we are currently entering the fourth month in a consecutive buyers market.
Buyers are waiting for prices to drop further and sellers are waiting for a rebound in the market. Inventory levels are now climbing up to “normal” levels, but the sales are not there.
Statistics released by the REBGV for September and October have shown that sales are down from similar periods last year, but prices are not dropping as dramatically as the statistics show. So why is this happening?
To understand the relationship between supply and demand, the sales-to-active-listing ratio is used. In March of this year, the ratio was a whopping 70.3%. In September and October it dropped to 24.4%. When the ratio drops below the 12% mark for a number of months, there is downward pressure on market prices. When the ratio exceeds 20% for a number of months, there is upward pressure on market prices.
The average price of a home in Vancouver was $600,000 in 2006 and has jumped to around $1.4 million in 2016. Many of the current homeowners who have put their home on the market have seen a large increase in the value of their home in the past few years. So many have dug in and are not in a big rush to sell if they don’t get near their asking price.
BC still has a strong economy and better growth than most of Canada. There are more people migrating into BC than to other provinces in Canada. These people need to live somewhere. So it looks like that this situation will not change for the foreseeable future.
One thing that everyone agrees about is that there is uncertainty in our current market:
- What will be the full-blown fallout from the new mortgage rules, which could be a trigger or catalyst for far reaching implications for the housing market?
- The 15% foreign buyers tax which has forced many potential foreign buyers to look East and South – for how long?
- The aftermath of the Trump election – how will it affect us in Canada in the next few years?
If you are currently looking into selling your home, contact us or call us on 604 913 1000 and we will put you in touch with one of our real estate professionals who will get you a very competitive price. Remember, we have been in the real estate business for over 27 years.