Vancouver Real Estate Report - July 2013
The big news in the last couple of weeks has been the sudden rise in fixed mortgage rates. So far the effect has not been felt. In June, Months of Inventory (MOI) rose to 6.37 months for Vancouver detached homes. It also slightly rose to 4.84 for attached homes and fell to 4.79 for apartments.
The MOI this past spring stayed close to the so called "balanced" market spectrum between 5 and 8 months of inventory. The trends in both sales volumes and active listing volumes suggest that we will see the MOI rise during the later half of this year.
Sales volumes were good this spring but certainly nothing like those of 2007, 2009, 2010 or 2011. The Canada Day long weekend definitely felt like the end of the spring market; it was the first weekend since February that I have been able to get some weekend time with my family!
Five year fixed term rates went from the lowest typical discounted rate of 2.79% up to 3.19% and most folks are getting rates of 3.39%! Especially for large mortgages ($1m+), this change, though small, will ultimately have a chilling effect on the market. The sense of volatility that it creates may move more people into the 10 year rates which can still be had at 3.99%. The result is higher costs of ownership. I continue to anticipate lower sales volumes going forward for 2013.
Unlike sales volumes, active listings often don't peak until late summer or fall. The low points for active listing volumes have been moving progressively higher since the credit crisis in 2008 and it seems unlikely that we will see a dramatic reversal in this trend.
Pricing through June was stable for detached homes and attached homes. MOI numbers rose in June but stayed close to the balanced market spectrum in which prices are generally stable.
The MOI is reminiscent of last year's buoyant spring market which was followed by a very slow rest of the year and falling prices. In spite of good volumes of sales in June, I would caution against thinking that prices might start upward in earnest. Falling prices is the trend and I expect it to continue - particularly on detached homes.
SELLERS: DO NOT HESITATE TO CALL ME FOR A PROPERTY EVALUATION. Time has run out on the spring market.
BUYERS: Active listing volumes have stayed high and if you have and interest rate held, it is a nice time to be shopping for a home. BE SURE TO TALK TO YOUR MORTGAGE BROKER TO HOLD A RATE AS VOLATILITY SHOULD BE EXPECTED MOVING FORWARD. Please call me if you would like a referal to a good broker.
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 VancouverRealtor