Another month another record run of sales. This will be the last sales acceleration before we start to wind down for the fall, but with inventory dropping for weeks now, we are entering into completely uncharted territory. Residential months of inventory is down to 1.5 which is lower than it has ever been.
Looking at the price trend, it’s not surprising that prices are going parabolic. Teakwood listed for $700k going for over a million, and Torquay being flipped after 8 months for a $400,000 uplift. These sales are the exceptions that get talked about, but the medians for the market as a whole are also heading up. As always, the key is to look at the trend as a whole and not get lost in the minutiae of month to month variations in medians and averages.
We can look at the price velocity of the graph above, and see that both for market conditions and prices, velocity is accelerating. This means that the rate of price gains is accelerating, as well as the rate that market conditions are tightening.
Taking the derivative again to get acceleration over the last quarter, we see that even there we are continuing to accelerate monthly gains.
How much are detached prices up? Depends on how you measure as usual, but about 15%.
The VREB still doesn’t really know what to think about the current market. Mike Nugent, their president, said: “There are influences in the marketplace that we do not fully understand yet, like the impact of out-of-town buyers and millenials moving into the market, and the seemingly sudden international attention our island city has started to receive. And some folks may be buying now because they are concerned that the market is going to continue to increase in value.”
I have definitely seen the people panicking about the market and trying to grab what they can before it moves out of reach. Looking at open houses and what drives up to a million dollar house, these are not wealthy out of towners in Bentleys. It’s ordinary people with ordinary cars, ordinary families, and dreams of owning a house. Fewer of those are coming true, with detached sales in May actually down 9% over April.
What are those ordinary people doing with house prices off the hook? They’re going into condos. Back in March I said there was still a brief opportunity in condos before the disease spread to there, and sure enough, there has been a huge increase in condo sales in May while prices have regained the peak of 2010. More on this later.
What’s next for the market? I think we are done with breaking monthly records for the year, but whether that means it will be any less competitive, I’m not sure.
Edit: For those who missed it in the comments, this Vice video posted by Hawk on Vancouver real estate is worth a watch. Remember the site crackshackormansion? Seems positively quaint now to imagine a vancouver house selling for a mere million dollars.