Nearly identical to September, this October saw a 46% year-over-year increase in sales activity in Greater Vancouver. This is now four months of consecutive increases in sales volume on an annual basis.
What’s driving the uptick in buying? Locals are being encouraged to come off the sidelines with lower prices and lower mortgage rates too.
Affordability challenges are, however, ever present, as are high debt loads. It’s unclear how locals can push price is much higher without the easing of access to credit or new inflows foreign capital.
Price declines are still present but easing and should fade in 2020 all things being equal. The rise in sales activity has arrested the price declines. We went from record low sales earlier this year to October punching in 10% above the 10 year average.
Despite activity levels, investors and home flippers are still on the sidelines with home flipping activity at near record lows with so much volatility and uncertainty in today’s market.
The detached market remains structurally below normal as these homes remain unaffordable for most local residents. It’s hard to see a return to peak levels without a mass exodus of capital flight from overseas. Between 1 and 1.5 million is technically a sellers market right now. Over 2 million, the options are plentiful, as it is a buyers market with less than 1 in 10 homes selling. The price declines are concentrated in the higher end. The pace of declines is easing across the board as the number of new listings is down 17% from last year with 5.8 months of inventory currently available. This is indicative of a balance market. To summarize, it’s soft in the high end but inventory needs to grow to see further price declines.
Condo sales volume went up 41% year-over-year following an unusually week October 2018. If we adjust for these big fluctuations, we see sales this month up slightly from the 10 year average suggesting a healthy condo market. Prices are down 5.8% year-over-year as measured by the MLS benchmark price of a condo and down 4.3% from last year, when measured by the average price per square foot. Recent months has shown signs of stabilization with the easing of price declines attributed to a decline in inventory. At the end of October, there was just 3.4 months of inventory as new listings declined and sales rose. There needs to be five months of inventory or more for prices to decline. Overall, condo prices are relatively flat with multiple offers emerging in the lower end.
Will the Trudeau government follow through on their campaign promises? These include a proposed 1.0% nationwide empty homes/speculation tax and the expansion of the first time homebuyers incentive to increase eligibility to maximum purchase price of $790,000.
At the end of October there was just 2.7 months of inventory for sale for home for sale in Greater Vancouver below $790,000. Adding more demand in the form of government subsidized loans will only benefit the seller in the form of higher prices. This could also provide a boost to property developers, as investors, a key factor in driving sales at presale centres, have been unwilling to return as of late.
Stability has returned but cautious optimism is warranted.