Detached Homes Above 1.5 Million Take Brunt of the Blow

It’s been just over 7 months since the foreign buyers tax was implemented. The results are mixed, opinions vary. Yep, despite sales plummeting more than 57% a consensus has not yet been reached.

Meanwhile, as the detached market deteriorates (arguably the highest concentration of foreign capital) the condo market remains red hot. A Spring Time Inferno has ensued, with more than 50% of condos selling over asking price in some areas. Mostly consisting of first time buyers armed with interest free loans from Christy Clark and local investors bankrolled by profit hungry banks.

Despite all the noise and finger pointing, some interesting data is emerging.

Tracking REBGV (Greater Vancouver) detached house sales 7 months before and 7 months after the foreign buyers tax shows the biggest correction has come from homes above 1.5 million.

The Sales/actives ratio, which is key indicator of the health of a market, shows that home sales above 1.5 million have seen a 49% drop peak to trough in their sales/actives ratio, while homes below 1 million dropped 37% peak to trough.

Further, the change in inventory year over year has also increased the most for more expensive homes compared. As highlighted in the chart below, inventory for homes between $1.5-2 million has increased the most, a 47% jump year over year. Inventory for homes under $1 million have decreased by 22%.

It appears most of the damage has been done to homes above the $1.5 million dollar range. While anything below that still attracts significant demand with a sales/active ratio indicative of a sellers market (anything above 20%).

With that being said, sales have still plopped at all price points.
REBGV Detached Homes less than $1 million- sales down 57%
REBGV Detached Homes from $1-1.5 million- sales down 54%
REBGV Detached Homes from $1.5-2 million- sales down 57%
REBGV Detached Homes $2 million and above- sales down 62%

The big question remains, can new listings and inventory keep pace with falling sales moving forward.

 

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