Vancouver Real Estate Statistics - October 2018
Months of Inventory (MOI*) reached more than 20 months for detached Westside homes in September. This is the highest it has been since the credit crisis in 2008. Moreover, MOI has been in double digits for 11 of the past 14 months. Contrast this to the Credit Crisis where MOI was in double digits for only 7 months. MOI rose also for attached homes and apartments to more than 8 and 6 months respectively.
Sales volumes fell for all home types in the Vancouver Westside market. Notably, Apartment monthly sales volumes fell to only 208 sales, the lowest since January 2013.
Active listings rose across all product types. In the case of apartments, the Westside active listing volumes have not been this high since September 2015.
By all measures, Vancouver residential real estate prices are falling. Average sale prices for houses are down 30% from their October 2017 high point - back to late 2015 prices! Attached homes are down about 12% in September and Apartments almost 20%.
The Real Estate Board of Greater Vancouver's HPI price (sale price of a "typical" home) has house prices at mid 2016 levels - down about 10% from their high point.
Median price per square foot says house prices have fallen back to early 2016 numbers.
Based on current MOI levels, it is likely that we will continue to see sale prices fall for all home types. The dramatic MOI level for houses means we will probably see even lower sales volumes in October.
It is presently difficult to see what might turn falling prices around. In 2009 and 2012 (other recent market downturns), Vancouver's real estate market became the unintended beneficiary of US monetary policy. Then, huge amounts of liquidity were pumped into the world economy by the US Federal Reserve who created new money supply by buying back treasury bills and other assets simply by creating credits on the member banks' accounts at the Reserve. Tens of billions of dollars a month were added to the money supply. The result was lots of money and low interest rates which helped fuel Vancouver's market. No such policy will be coming this time.
I suspect that the principal factor in the present decline in prices is a result of the new mortgage qualifiaction rules that came into effect in January 2018. These rules require that borrowers qualify for interest rates at 2% higher than their actual borrowing rate. I estimate the effect of this change in the market should be about 20% of price. IE: A home worth $1m should likely be worth $800k under the new rules. Of course, nothing is ever so clear. Markets generally over react and we might see prices fall by 40% or more from their 2017/2018 high points before rising back up to about 20% off.
By Sam Wyatt - Vancouver Realtor
*Months of Inventory (MOI) is a measure derived from the number of active listings during a given month divided by the number of sales that month. It indicates the theoretical length of time it would take to sell all of the properties on the market if nothing changed. Historically, 0-5 months of inventory has generally implied upward price pressure ("Seller's Market"), 5-8 months of inventory has indicated a flat market with respect to pricing ("Balanced Market") and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").