The Greater Vancouver condo market was responsible for most of the rebound in the July sales figures. Condo sales increased 15.2% year-over-year and were nearly in line with the ten year average (just shy by 3.9%) for the month of July. We believe falling mortgage rates, and relatively easy access to credit are responsible for the increased purchasing activity. Yes there is a mortgage stress test but banks are still eager to lend, as seen in the mortgage rate wars this year, and borrowers are still credit worthy (fully employed).
However, buyers are still bargain hunting and looking for deals. Overpriced and or less desirable condos are not selling. Units in a poor location, or in a poorly run strata building are sitting for long periods of time. Condos that are priced sharply are still moving quickly, albeit at lower prices. This is reflected in the benchmark price of a condo which fell again in July, dropping 8.8% from last year. We also saw the average price per square foot drop 6.8% from last year.
Condo inventory continued to build off a low base from last year, increasing 30% year-over-year. Inventory still remains low from a historical perspective and that should help ease price declines. This is particularly the case when looking at months of inventory which accounts for total inventory divided by the number of sales. In July, the months of inventory ticked lower to 4.5 months, which is indicative of a balanced market.
Sometimes one metric or one chart does not tell the whole picture, and we are certainly getting conflicting messages here. On one hand you have rising sales, yet on the other hand you have rising inventory and falling prices. So what is the true state of the Greater Vancouver condo market? Overall it remains soft, prices are still inching lower, although the rebound in sales and low inventory levels suggests prices could very well stabilize in the coming months ahead. However, when we back out further, there are still significant headwinds which will likely impact the market further such as the record number of condos under construction that are coming due, along with the slowing economic backdrop.