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How’s the market? Number crunching tells the story

Blog by Robert Matthews | October 28th, 2019

My July e-news noted two ways of gauging real estate activity: Days on market, and the sales to listing ratio. Today we'll delve into months of inventory (MOI). This is simply the number of active listings in a particular market, or preferably a precise sub-market, on a given day divided by the number of sales in that market/sub-market the previous month.

For example, on Oct 21, 582 detached homes were listed as active in East Vancouver. 98 detached homes sold in September, giving us an MOI of 5.93 months. This tells us that if no other homes - none - came on the market, it would technically take six months of real estate activity given today's demand/supply situation to exhaust the current inventory of homes for sale, assuming every home sold.

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 months 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.

Currently, we can see East Vancouver's 5.93 months is right in the middle; a balanced market. However, if we break that market down further, we find a sellers market for homes under $1.5m (2.83 MOI), contrasted with a strong buyer's market for homes above $1.5m (12 MOI).

We find a similar situation for North Van detached homes. There's a healthy seller's market for homes up to $1.6m (2.26 MOI), compared with homes above $1.6m (8.5 MOI) . West Vancouver tells a much more dramatic story:

 Selling Price

# Sold
(Sept 2019)  

# of Active Listings
    (21 Oct 2019)

Months of Inventory


     < $2m




 $2 – $3.5m








And here's Vancouver west side detached:

 Selling Price

# Sold
(Sept 2019)

# of Active Listings
(21 Oct 2019)

Months of Inventory

    < $2.5




 $2.5 – $4m




$4 – $6m




The attached market (condos/townhouses/half-duplexes) also shows some variability, but in general is well balanced, even moving into a strong seller's market at some price points. Vancouver west side attached homes < $1 million are selling strongly, reflected in their average 3.63 MOI. A little longer for those above $1m with an MOI of 6.42; however still pretty well balanced. East side Vancouver attached is showing a MOI of 2.6 < $800k, and 4.3 from $800k-$1.6M.

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 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.

No matter what the calculations, the outcome is only as good as the quality of the factors and numbers used. MOI assumes that all properties listed will eventually sell. But that's a large assumption, and in this market especially can be unrealistic. A surprising number of properties never sell. They languish for months and months with no price reductions, or minimal reductions. Obviously the sellers have their own motivations. These "stale" listings, however, do skew the MOI to the high side.

We know properties marketed properly by a professional Realtor and priced appropriately for today's market should still sell relatively quickly. No calculation is perfect. But if you use all three calculations together -- MOI, days on market and sales to listing ratio -- as well as other specific property factors, you should have a good sense of the anticipated real estate activity in your particular sub-market.  

A successful sale at top dollar is dependent on many factors; two critical ones being, as discussed, price appropriateness and the listing Realtor. Price the property too high, for yester-years market, and you'll likely end up on the disappointing side of the numbers. Price it appropriately for today, and enlist a long-term, professional Realtor with a history of successful results and you'll likely have a quick and happy outcome. My historic average time to a successful sale is measured in days, 14 to be exact, not months! I'll always strive for this outcome for all my clients.