There’s no doubt we're into a changing market. But some markets remain very strong, while others are without a doubt softening. It's only by drilling down into the details that we can see what's happening where.
A useful stat to provide context is months of inventory (MOI). This is simply the number of active listings in a particular market divided by the number of sales in the past month. For example, one day last week 799 detached homes were listed as active in East Vancouver (yes, 799!). 94 detached homes sold in April, giving us an MOI of 9.5 months. This tells us that if no other homes - NONE! - came on the market, it would take 9.5 months of real estate activity given today's demand/supply situation to exhaust the current inventory of homes for sale.
5-6 months of inventory is generally considered a balanced market: Just the right amount of inventory to keep buyers and sellers happy, and prices more or less stable. Anything more than 6 months is considered a buyer's market; anything less than 5 month's a seller's market. What exactly is a “healthy” or “balanced” MOI number is open to debate; however, it’s obvious that the lower the number the more active the market; the higher the number, the slower the market.
We can see East Vancouver's 9.5 months is high into buyer's market territory. However, if we break that market down further, we find a balanced market for homes under $1.7m (5.6 MOI), contrasted with a strong buyer's market for homes above $1.7m (12.8 MOI).
We find a similar situation for North Van detached homes. There's a healthy seller's market for homes up to $2m (4.4 MOI), compared with homes above $2m (10.5 MOI). West Vancouver tells a much more dramatic story:
|
Selling Price |
# Sold (April2018) |
# of Active Listings (8May2018) |
Months of Inventory |
|
< $2.5 |
11 |
75 |
6.8 |
|
$2.5 – $4m |
10 |
201 |
20.1 |
|
$4 – $6m |
6 |
139 |
23.2 |
|
> $6m |
5 |
117 |
23.4 |
And here's Vancouver west side detached:
|
List Price |
# Sold (April2018) |
# of Active Listings (16May2018) |
Months of Inventory |
|
< $2.5 |
22 |
81 |
3.7 |
|
$2.5 – $4m |
34 |
307 |
9.0 |
|
$4 – $6m |
9 |
238 |
26.4 |
|
> $6m |
5 |
221 |
44.2 |
The attached market (condos/townhouses/half-duplexes) also shows variability. Downtown attached homes less than $1 million are selling strongly, reflected in their average 13 days on market and 2.6 MOI. The story is different for those above $1m: 24 days on average to sell, with a 7.9 MOI. Kitsilano is quite a contrast, however, with overall Kits attached at a healthy 2.9 MOI, selling in just 14 days. And attached < $1m is at 1.5 MOI; a strong seller's market indeed.
The numbers above are just a few examples. I could create the same numbers for any Greater Vancouver sub-market... as part of a much more extensive analysis of course! As always, keep in mind that "the market" consists of many "micro-markets". It takes much more drilling down to get to the real value for your current or future property. A true “market” might be just houses on your block, or houses on your block renovated or with suites, or two level, or bungalow. Or it could be just two-bdrm condos between 800-950 sq ft, but under $1M within a two block area, 10-20 years old, renovated and on the quiet side; and often it’s comes down to the exact floorplan in the exact building! There are almost as many “markets” as there are homes. Suffice to say, your individual home value and market enthusiasm story will vary greatly. We need to drill down many layers for your relevant numbers, at the exact time you're ready to sell or buy.
MOI is a good tool to compare broad markets, and to gauge changes over time. But it's important to remember that a relatively high MOI doesn't mean your home won't sell, or that you'll need to sell at a much lower price point. In most cases, however, you should expect to have your home on the market longer than even just two or three months ago. The average length of time to sell those 12.8 MOI East Van homes, for example? 34 days. Not long compared to many other North American markets, but certainly longer than we're used to here.
If MOI (and therefore time to sell) continues to increase across markets, expect price reductions to be commonplace. I've been advising my clients who are thinking of selling to get their homes on the market sooner rather than later, and, in most cases, expect to have their homes on the market a little longer. And of course I'll strive to keep to my historic 14-day average!