On the one side we have crazy hot market conditions with residential inventory the lowest it has ever been in any recorded July. On the other hand we have a regulatory environment that is becoming increasingly hostile with every passing day. So far the seesaw is still planted to the ground with the market conditions dominating, but the government continues to pile on weight to the other side. Thing is when you pile it on in big chunks some pretty sudden things can happen to the market.
As for that inventory, we have to go back to 2003 to see anything similar. That July there were 1710 active residential listings. By December that had dropped to 1092. A similar decline from current levels would put us below 1000 active listings. Once you take into account that the population has grown by 10% since then it’s even more insane.
Prices are doing some interesting things. Now I firmly do not believe in the possibility of price plateaus in a hot market. I have never seen it happen and I haven’t seen any convincing rationale that would explain how it could happen. That said, after a quantum leap in the spring, detached house prices have been quite boring at more or less the same levels. While I usually post the moving average, here is the raw data so you can make your own decision.
You can see that between July 2015 and Feb 2016 one could have made the argument that prices were flat as well. Until they weren’t. Given the propensity of average and medians to make large jumps, I predict we will see another large jump this year or early next unless the market turns around before then.
As can be expected, the core sees the most gains while the westshore and our islands within the island lose out.
One thing that could get us out of this market is a flood of listings, but even there we aren’t really hitting the marks. New listings have drifted downward since 2008 and it seems there aren’t many people out there eager to cash in their chips.
Expect sales to continue to decline until we hit the October bump so people can put their Christmas trees in their new houses.
What is going to be absolutely fascinating is whether the chaos on the other side of the ferry buffet makes its way over here. Yes we have very few foreign buyers here, but it’s all a connected chain. The foreign buyers stop buying, the local Vancouver owners can’t sell, which means they can’t come over here in as great of numbers. What compounds all this is emotion. Once public sentiment turns negative it won’t turn back on a dime. There might be just as much gnashing of teeth and frustrated appeals to reason on the way down as there was on the way up.