Condos Remain Red Hot, Townhouse Inventory Scarce
Once again the three markets have never been more segmented. Detached sales plopped 57% year over year (February 2017 Detached Market Report) however that hasn’t stopped the condo market from hitting record high prices while keeping the townhouse market stable with low levels of inventory. Let’s break it down.
Condo Sales
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Sales fell across the board year over year, however this is likely more a result of record low inventory available keeping buyers locked out of the market and limiting the overall number of sales. With that being said it’s something I’ll continue to monitor. REBGV condo sales fell 28% year over year, but remain 14% above the 10 year average for February.
New Listings
Vancouver East- 162
Vancouver West- 454
Richmond- 205
Burnaby- 199
REBGV- 1604
If you think we had low inventory last year this year is shaping up to be even worse. New listings for condos are down 28% year over year for REBGV. Dating back to 2005 this was the fewest number of new listings for REBGV of any February on record. To get an idea of just how low the overall inventory here’s how it looks. Sellers are not selling, perhaps in fear of getting stuck in a vicious buyers market or making moves in an uncertain market.
Sales/Actives Ratio
Vancouver East- 61%
Vancouver West- 54%
Richmond- 59%
Burnaby- 50%
REBGV- 57%
The sales/actives ratio is up from January 2017 condo/townhouse market report. The numbers indicate a strong sellers market (Anything above 20%). This trend will continue unless there is a huge uptick in new listings.
Months of Inventory
Vancouver East- 1.6
Vancouver West- 1.86
Richmond- 1.7
Burnaby- 2
REBGV- 1.76
Once again, painfully low inventory levels. Despite record housing starts in 2015 and 2016 much that construction is not yet completed. It will take a change in sellers psychology to reverse the unwillingness to sell.
Condo Prices
As always, condo prices will vary by area. However in general, condo prices have made strides in the new year and prices are hitting all time highs. We witnessed about a 5% decline in condo prices during the fall and winter months, but with inventory remaining at record low levels, combined with an uptick in sales (seasonal) it has created more bidding wars and prices are being driven up as a result.
Summary
At this rate, condo prices will continue to rise. Inventory is far too low, sellers are hesitant to sell and although buyer demand has slipped there is simply not enough listings at the moment. This is resulting in multiple offers and quick sales (Median days on market hit new low of 9 days).
Townhouses
Last month it looked like townhouses would face further pressures to correct. This was based on sales falling 31%, and new listings and inventory rising year over year. However, February numbers suggest that might not happen right away. Sales fell again year over year, inventory is up, but new listings dropped.
Townhouse Sales
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Townhouse sales fell across the board from last February. Just like last month, REBGV townhouse sales were down 30% year over year. REBGV townhouse sales were 6% below the 10 year average for February. As you can see from the sales numbers this is more than a minor hiccup.
New Listings
Vancouver East- 44
Vancouver West- 60
Richmond- 95
Burnaby- 46
REBGV- 509
Last month new listings had increased by 2.4%. In February they took a big step backwards. REBGV townhouse listings fell by 17% compared to last year. Obviously with new listings dropping this keeps inventory levels quite flat. With that being said, inventory levels still followed an upwards trend. They remain at low levels and so there is a huge importance on new listings regaining momentum in the spring.
Sales/Actives Ratio
Vancouver East- 36%
Vancouver West- 30%
Richmond- 37%
Burnaby- 47%
REBGV- 43%
Sales/actives ratio saw an upwards swing in February. Mostly due to a drop in new listings than an uptick in sales. Townhouses are in a sellers market, as indicated by any sales/actives ratio above 20%.
Months of Inventory
Vancouver East- 2.8
Vancouver West- 3.4
Richmond- 2.7
Burnaby- 2.2
REBGV- 2.3
Months of inventory also indicates a sellers market. Once again, a change from January where some markets where in what’s considered a balanced market with 4-6 months of inventory. This is how quickly things can change in the Vancouver real estate market. One month of slow new listings and inventory levels get pushed back down to danger territory.
Prices
The average and median sales prices vary by area. For example, the average sale price for Richmond townhouses fell but in Vancouver it spiked. To keep things simple, i’ve highlighted the average sales price for REBGV townhouses below.
Summary
It seems like the townhouse market could go any direction at this point. Will they follow the declining detached market or will they get pushed up the surging condo market. Your guess is as good as mine. Sales are down, inventory is up so clearly some of the demand has been lost. However, because inventory is still so low, any month with a shortage of new listings puts pressure on the townhouse market and that is what we saw in February. This will ultimately come down to what sellers decide to do. Sell or hold put?
