June 20 Market Update

Weekly stats update courtesy of the VREB via Marko Juras.

June 2016
June
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187 460 725
910
New Listings 226 570 853
1346
Active Listings 2354 2362 2340
4003
Sales to New Listings  83% 81% 85%
68%
Sales Projection 1102 1127
Months of Inventory

4.4

So much for the slowdown.  Sale to new listings ratio is back up, and sales per day up a bit as well while inventory has ticked down to the lowest level since February of 2006 .   Can you believe in June of 2012 we had just shy of 5200 listings out there?   This is actually about as low as we’ve ever seen it in June, but as the fall comes expect it to drop even more.  In the hot market of the mid 2000s we had December inventory down by another 35% from similar levels in June.

Affordability Update

Last time we looked at affordability, it was still pretty tame.   But of course with the big jump in prices, these things change quickly.

Taking the 2016 price as the average of the last 3 months ($750k), let’s redo the graph.

aff1

Just in the last few months, mortgage payments have jumped a lot relative to income, going from a relative low to middle of the road.   Consider this is happening while mortgage rates have continued to move down.     I don’t think that rates are going up anytime soon, but I don’t think there is nearly as much headroom in this rally as previous ones.

aff2

For SFH affordability, we seem to move in a band that moves up slowly over time which makes sense in a densifying city.   In the past we’ve had dropping mortgage rates that helped sustain price booms, but unless the market completely detaches from local buyers, I can’t see that happening this time around.

June 13 Market Update

Weekly stats update courtesy of the VREB.  Thanks to Just Jack and Marko Juras for sending stats.

June 2016
June
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187 460
910
New Listings 226 570
1346
Active Listings 2354 2362
4003
Sales to New Listings  83% 81%
68%
Sales Projection 1102
Months of Inventory

4.4

A few signs are starting to appear that our hot market is slowing down.   Inventory is up for the first time after 6 straight weeks of drops.   Sales/list is weakening again this week, and we are running only about 21% ahead of last year’s sales pace, rather than the 40+% we’ve been seeing.  The market is still incredibly hot but there might be a bit of buyer fatigue setting in.

The (not so) remarkable increase in condo sales

May condo sales increased to 379 from 293 in April.  That’s an increase of some 30% and seems pretty significant.   Is it a shift to condos as prices of detached houses move out of reach of local buyers?  Is it a lack of inventory forcing people into alternatives?   Is it a wave of retirees downsizing into condos?  A run on AirBnB investments?

Or nothing.  It’s always good to take a step back and make sure we’re not getting all excited about that much noise.   One way to take a look is whether the breakdown between single family, condos, and townhouse is out of normal ranges (I’m leaving out manufactured homes).

The percentage of single family home sales bounces around between 55-65% and May was nothing at all unusual from that perspective.  While it was a relatively big shift from April, those things periodically happen.   But let’s look at the raw numbers instead.

Aside from the staggering increase in sales this year, it does seem a bit unusual that detached sales have dropped off this early in the year.  May and June is when we normally see the largest number of detached sales and a more gradual dropoff after that.  Looking back further, we see the pattern stays constant.

The only other year that doesn’t fall this pattern is 2010, when the market last topped out.  Now I wouldn’t jump to any conclusions based on this one month, but something to keep an eye on.  I’d say the most likely explanation is a lack of inventory pushing down sales because there just isn’t enough out there to buy.  What do you think?

June 6 Market Update

Weekly stats update courtesy of the VREB.  Thanks to Just Jack for sending these while Marko is on vacation.

June 2016
June
 2015
Wk 1 Wk 2 Wk 3 Wk 4
Unconditional Sales 187
910
New Listings 226
1346
Active Listings 2354
4003
Sales to New Listings  83%
68%
Sales Projection
Months of Inventory

4.4

Start of the month is where we see a jump in new listings, but we are still at a high sales/list.   However months of inventory is taking a tick upwards, and sales/day are still down at the same level as last week.   This could be either the start of the fall slowdown or just a symptom of inventory getting down to such low levels that there isn’t much left to buy.