Back in February 2018 I penned a post titled “Vancouver’s Suburbs Hitting Peak Bidding Wars.” Condo inventory had plummeted, hitting a decade low and the number of condos being sold above the asking price reached a staggering 53%. The MLS benchmark price had recorded an eye watering year-over-year gain of 47%. It seemed nothing could stop the compelling story of ever rising prices in Vancouver’s growing suburban market.
What a difference 10 months can make. Since then the Fraser Valley condo market has come to a screeching halt. The sales to actives ratio has plummeted from 80% in February down to just 18% in December. The lowest reading for the month since December 2014.
The number of condo sales tumbled 44% year-over-year in December, and 50% when looking at just re-sale units (excludes pre-sales). While this drop may be perceived as over dramatic considering it’s coming off a record 2017, this sudden change in direction is akin to the Titanic pulling a sharp U-Turn.
This has allowed inventory levels to spike, with re-sale inventory rising 242% from last December. This marked the highest total for the month since December 2015.
As a result, buyers have more options and sellers are facing liquidity constraints. Since prices topped out earlier in the Spring, all price metrics are now showing a decline from the peak. The average sales price has registered a 10.5% drop, the median by 9.9%, the average price per square foot by 8.5% and the smoothed out MLS benchmark price (lagging indicator) suggests a 7.7% price decline since June.
Will the market perceive this as nothing but a short term pullback or perhaps the start of a greater unwind? With the mortgage stress test in full effect and policy makers intent to continue leaning against the housing market, it could be an interesting year ahead for the Fraser Valley condo market.