Well it had to happen sometime. After a completely unprecedented 45 consecutive months of year over year sales increases, we finally see our first decrease with January’s 478 sales which is down 11% over last year.
Expect all of this year to be in the red given it will next to impossible to match last year. Be it the high prices or the lack of inventory, we won’t be seeing sales numbers like last year’s for a long time.
Market conditions, however, continue to stay at record hot levels. As usual, I like to use the 12 month average of both prices and months of inventory numbers because not only does it smooth out the notoriously jumpy monthly price figures (average up $79,000 in November, down $103,000 in December, up $55,000 in January) but it also flattens the seasonality in the months of inventory and shows whether the market is heating up or cooling down.
For example, months of inventory has been increasing from a low of 1.5 last May to 2.3 now, but that doesn’t mean the market is cooling down. Remember that months of inventory exhibits seasonal patterns, being lowest in March/April/May, and highest in December/January. So our current level of 2.3 should be seen as the high water mark and should drop quickly as the spring arrives. Looking at the 12 month trailing average shows we are still setting new records for market conditions.
That said, these are overall market conditions and we have seen that for single family homes it is actually significantly less active this year compared to last January. Is it the high prices driving people into condos and townhouses? Sure seems that way with only 49% of sales being single family detached, the lowest reading in several years.
That is perhaps not overly surprising given we are still seeing detached prices up 15-20% year over year depending on how you measure.
By the way it’s getting quite lonely among the cities with strong increases. Vancouver has been moderating rapidly and there are no signs of anything turning positive there soon. That leaves only Hamilton and Toronto at double digits going strong with the rest of the country wallowing in various states of despondence.
How much longer can we ride in that company?