January 2012: Months of Invenetory Still High
The Months of Inventory (MOI) metric for all West side Vancouver home types rose again in January. The Detached MOI remains over 9 months, Attached surged to 8.98 and Apartments jumped to 7.1. This is a very disturbing trend that indicates a falling market over the next 6 months. This inventory is building in spite of the lowest fixed mortgage rates in history.
Listings grew month over month from December but sales volumes did not meet the pace. In January we had 796 active detached homes for sale on the West side but only 86 sales. Compare that to January 2011 where we had 402 listings but 134 sales. Last month I said that if things continue like this then the market will be in for tough times. Over nine months of inventory a second month in a row does not bode well.
Some of you may be saying to yourself that you've heard this before and the market went up anyway so why worry now. Take a look at the January 2008 to present Months of Inventory graph and ask yourself if you feel lucky.
If you need or want to sell a property in the next couple of years, I strongly urge you to sell now. Be aware that it takes time for pricing to fall to match the inventory levels because sale prices are established based on previous sales comparables and although far fewer sales are taking place the ones that sell are getting close to previous sales values. Don't be fooled into trying to list high and negotiate down in this kind of market and don't wait to sell until after the media starts publishing the bad news. Many listings have been stagnating while sharply priced homes are still selling fast - this is crucial to maximize your profit from a sale.
Remember that 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 for the ensuing six months, 5-8 months of inventory meant a flat market with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure.Do not hesitate to call me if you have any questions and please pass this and my contact information along to any friends or family who might benefit from my services.
By Sam Wyatt - Vancouver Realtor