Are we done breaking records yet? I’m tired of it anyway, so it’s a good thing that we are slowly returning to a more normal state of affairs in Victoria.
Single family homes are gradually slowing down, although I wouldn’t go so far as saying that we can tell whether that slowdown is part of a longer term trend or just a pullback to a more sustainable level. As SFH prices moved out of reach, activity has concentrated on condos, which are more active than this time last year, with a full third of condos going over ask.
In single family homes, I have to backpedal from my somewhat alarmist post mid month that Gordon Head sales had ground to a halt. They recovered somewhat from 3 to 13 sales, which is still off significantly from previous years, but not “off a cliff” as previously described.
The entire core is definitely cooling for single family homes. July months of inventory up from 1.9 last year to 2.8 now, and median days to sell increasing from 10 to 16 days. The westshore is also turning around, with months of inventory up from last year. The VREB says there is a “strong focus on the lower priced end of the market” which is to say “pay no attention to the fact that average prices for detached properties are not increasing”.
In fact finally we can see that the whole market is carving out a bottom in terms of activity and is slowing down by all measures even on the rolling 12 month which tends to lag a bit.
The market summary still considers the market to be “ludicrously hot” because months of inventory remains below 2, but this will be the last month of that for quite a while. I will update it to take better account of the current deceleration in the market for next month.
The only record to be broken this July is in how many properties are for sale, where we saw the lowest ever recorded for a July. Quite possibly it will be the last month of record low inventory as the trend from last year catches up.
Sales are now down pretty sharply, back to 2015 levels but still above average for July. New listings remain a problem, since they’re lower than they’ve been since July 2005.
Sales to list continues to decline on a yearly basis. We’re not getting a full picture of this though, because sales are constrained by lacking inventory. If inventory increases we’ll see what the true level of demand is in the market.
Days to sell is a bit of an earlier indicator, and we can tell that while detached houses are taking longer to sell, condos are still moving pretty quickly.
The question now is, how long will the hot market persist? In the last runup, market activity reached it’s most frantic in 2004 and started cooling down after that. However that didn’t mean the runup was even close to being over. There was another 3 years of very strong price gains after the market pulled back a bit. So just because we are backing off the frenzy doesn’t necessarily mean it’s going to flatten out soon without an external trigger. Of course the difference is that while percentage gains are similar, the absolute dollars that prices are rising this time are much higher so the runup could be shorter. Also the risk of such a trigger is increasing (increasing rates, B20 rules, new NDP policy, etc) but fundamentally that kind of intervention is even less predictable than the market left to its own devices.