This is an excerpt from The monthly Saretsky Report. You can subscribe for Free Here.
Condo sales increased 50% from November 2018 levels, once again, weak base effects played a huge roll. Condo sales remain well below the frenzied levels during 2015-2017, but are just slightly above ten year averages. What we are seeing is a much more local market. People are still struggling with unaffordability and so condos remain the only option for many buyers.
Similar to the detached market, new listings are plunging, falling 17% from last year. Again, we believe holding power and perhaps a renewed sense of confidence in the Vancouver market is keeping sellers, and for that matter investors, from selling their units. Is this sustainable? We believe it is not, given there are a record number of new apartment units under construction.
There are over 36,000 units under construction and are expected to complete over the next couple of years. However, as it stands today, new listings remain quite low. With condo sales bouncing higher and new listings falling, the months of inventory has remained stable at 3.4 months of supply.
Anything below 4 months is considered a market that favours the seller and tends to apply upwards pressure on prices. As it stands today, the MLS home price index, which is a lagging indicator, is not showing price increases for condos. However, in four of the past five months we have seen the average sold price per square foot edge slightly higher. Further, with the sales to actives ratio sitting at 30% (indicative of a sellers market) this is pointing towards higher prices in the near term. Again, this does not mean we are entering a new bull market but we could still see some price growth coming. Once again, this is assuming all else stays the same! More on that later.
In summary, the condo market has bounced back to life and looks strong, particularly for anything that resembles affordability. Affordability is the name of the game in the Vancouver housing market today