As reported last month, Vancouver detached sales had their worst January dating back to 1990. This same phenomenon repeated in February. The city of Vancouver recorded just 98 sales, a 24.6% decline from last year and the lowest total we have on record. Yes we will see more sales in March as the spring market gets underway, however that is a normal seasonal uptrend and unfortunately is likely nothing to get too excited about.
The bump in sales expected for the spring market is likely to be crowded out by an increase in new listings and quite frankly an overwhelming build in inventory. As of the end of February there is 14 months of inventory for sale, well above a healthy balanced market of 4-6 months of inventory.
As a result, sellers are having to slowly and surely lower their prices (remember the analogy of a cruise ship turning). The price correction in Vancouver’s detached housing market has been a slow bleed, it has been nearly three years since prices peaked out in the spring of 2016. There are economic/housing studies which illustrate sales volumes peak two full years before prices start to fall, and Vancouver seems to be a real life example of this psychological phenomenon in which sellers stubbornly anchor to peak prices. In the psychology realm this behaviour is known as an “anchoring bias” and is part of the reason price corrections can be long and drawn out as we are witnessing today. The official home price index now suggests Vancouver detached home prices have fallen 11.5% year-over-year, although the reality is prices have fallen significantly more, particularly for more expensive homes on the West Side which have dropped closer to 30% from peak valuations.