Low Inventory Continues to Keep Upwards Pressure on Prices
If you read last months report (Vancouver Real Estate Condo & Townhouse Report March 2017) you would have recognized the upwards trend on prices. Yes, prices are back on the upswing amidst historically low inventory levels. So although the overall number of buyers has dwindled from one year ago, prices refuse to budge thanks to a decline in new listings. In this monthly report i’ll breakdown sales, inventory, and prices by area.
REBGV condo sales dropped off by 18% year over year for the month of April. Despite the drop year over year, sales were still 26% above the 10 year average. The big story here is that despite sales falling, prices are going up because inventory has become even more scarce. As you’ll see in the chart below, sales have dropped in every area but are still well above normal levels.
Condo New Listings/ Inventory
The big story remains the drop off in new listings. Condo sellers are holding firm amidst a housing crisis. There’s almost a sense that one needs to hunker down and hold onto their home. If you sell you’ll have to compete to buy another home or enter the nearly as competitive rental market. REBGV new listings dropped 16% year over year, and 20% below the 10 year average for April.
With new listings dropping this is keeping inventory extremely tight. REBGV condo inventory fell 36% year over year and the current 2137 active listings are the lowest on record.
Condo Sales/Actives Ratio
The sales/actives ratio which is a key indicator of demand levels in relation to active listings shows just how heated the market has gotten. It’s trending upwards, and in some cases is even higher than last year. REBGV condos set a new record, 81% sales/actives ratio.
Vancouver East- 76%
Vancouver West- 69%
Prices continue to trend upwards. The average sales price for condos are up about 20% year over year in each area.
With condo prices increasing about 20% year over year there’s no question it’s unsustainable. Due to inventory levels plummeting to unhealthy levels buyers are stuck competing at just about every listing. First time buyers and local investors are dominating the market right now, and there’s no question a fear of missing out is still the prevailing sentiment. With the sales/actives ratio as high as it is it seems unlikely the condo market will cool anytime soon.
The townhouse market appears to be a bit of a mixed bag. Red hot in certain areas, while a little soft in others. Of course it also depends on price point and location. A good looking townhouse in a desirable area is selling quickly and likely in multiple offers. Prices do appear to be on the upswing.
As you will see in the chart below, sales vary by area. Up in some areas, down in others. For the most part they appear to be trending above the 10 year average.
Townhouse New Listings/ Inventory
New listings for townhouses continue to trend well below normal levels. Although they fell by 4% for REBGV, they are up quite a bit in other areas, Richmond new listings were up by 21%, Vancouver East by 37%. Here’s how it looks.
Perhaps the most encouraging sign is that townhouse inventory is on the rise. Inventory climbed by double digits in all areas, except for REBGV. Inventory climbed by just 8.5% for REBGV year over year.
Townhouse Sales to Actives Ratio
Vancouver East- 91%
Vancouver West- 50%
The sales/actives ratio highlights that it’s still very much a sellers market. The trend is up, which is also a seasonal move.
Townhouse prices went through their cool down but appear to be trending upwards once again. This should be expected when the sales/actives ratio is as high as it is, which once again tends to increase during the busy spring market.
Townhouses are definitely not as hot as condos. However, with inventory still below historical levels this continues to put an upwards pressure on prices. Townhouse buyers will have to move quickly on new listings when they hit the market. Sellers can expect a quick sale that has a 39% likelihood of selling over asking price.