October numbers are out and the market is undeniably still very strong. Record low inventory and months of inventory for October lowest in 20 years. But the list of records isn’t quite as long as we’ve seen in the past few months. Sales are strong but at 735 they are the same as last year, and lower than 2009, 1992, and 1991.
So why did the weekly numbers predict 800 sales and we only hit 735? Because the last week of October 2015 had a strong sales surge that we didn’t see this year. I predict that from November to well into next year, every month will have fewer sales than a year ago. That’s not to say we won’t have an active market, but it’s quite unlikely we’ll be able to match this year’s outperformance with the headwinds of the mortgage and other regulatory changes.
Prices are still rising, albeit more gradually. With such low inventory, it will take a big reversal and a doubling of inventory before prices have a chance of coming down.
Unfortunately new listings are not picking up at all. The opposite in fact, they have been trending downward for 9 years! When are people going to start listing their places again?
The sales/list ratio has also flatlined for the last few months which breaks a 3.5 year rising trend. That said it is flatlining at the incredibly high level of 80% so we have likely just reached the maximum that can be sustained.
Barrister asks “Do you know if the ratio of condo to SFH has remained about the same?” and the answer is yes. While the percentage of single family sales are a down a couple percent from this time last year, there is no big shift to condos despite how expensive anything detached has become.
The other thing to consider is that the sales we are seeing are sales that happened in some cases a couple weeks ago as they are registered as sales with the real estate board. As we get into November, we will start to see the sales that actually took place after the mortgage changes take effect.
As Chris points out, market sentiment is also a huge driver of continued buying behaviour and thus price appreciation. One study calculated that about 30% of the price appreciation during the USA’s housing bubble could be attributed to the positive feedback loop of increasing prices. If Vancouver continues to deteriorate like it is (detached months of inventory in strong buyers market territory) and starts hitting the news with big price declines, that could dampen the mood of Victoria buyers and sellers as well. Countering that is the assessment notices that will be arriving in people’s mailboxes in a couple months and showing massive gains. It’s going to be interesting.