A few times now the point has been brought up that buyers are better off waiting until the spring if they want to buy. The theory is that more listings will come on the market in the spring, and you won’t be fighting over the scraps that are left over by the winter.
It’s undeniably true that the spring brings more listings, as we can see by looking at the last 20 years of data.
Sure enough, inventory usually increases by some 50% from January to the peak in June. So most definitely you will have more to choose from as the spring market develops. If there is nothing at all you want to buy out there, then that’s really the only choice you have.
But does more inventory actually mean the market will be more relaxed? Well in the average year, the answer is no, and in fact quite the opposite is the case. January is usually when the market is slowest. There isn’t much inventory but there are even fewer sales, so the months of inventory reach a high point for the year. Every month after that generally shows the market getting more active, and tilted more towards sellers than buyers.
On average, the market drops from 7 months of inventory in January to only 5 in the spring. In other words, it goes from the high end of a balanced market to the edge of a sellers market. So unless this year is an exception (notable recent ones being 2010 and 2008), the market should heat up even further in the coming months. And given the absolute insanity of January, that is not going to be good for those looking to buy.
Spring will bring more choice but probably even more competition.
All this madness is not going unnoticed by the provincial government. The finance minister is promising a “double-barrelled” response to overheated housing markets in the budget coming February 16th. That is likely to come in the form of increased property transfer tax, because the best kind of crisis is one that can serve as an excuse for more taxes. And I’m sure that the people buying those $2.5 million dollar Vancouver crack shacks will suddenly back off at the prospect of an extra couple bills in tax. Luckily the measures – whatever they turn out to be – have been designed to be 100% ineffective from the start given that the dear minister doesn’t want to “degrade the equity of existing homeowners”.
In any case, when the state gets jumpy, times get interesting. This will be a spring to watch.