Vancouver Real Estate Report - September 2013
Typical discounted fixed 5 year term mortgage rates have jumped about 1% in the past two months from 2.79% to 3.69%. We have had much better sales volumes this spring and summer than I had anticipated so the effect of the continuing rise in rates will be interesting to watch. The best variable rates are at about 2.6% and many people are choosing to take variable rates as the spread between fixed and variable rates grows. This may well put those with variable mortgages in a tight position in the coming years when those rates inevitably rise.
In July, Months of Inventory (MOI) for Vancouver real estate rose again to 6.98 months and inched down to 6.56 for detached homes. It rose progressively to 5.14 in July and 5.74 in August for attached homes. Apartments fell to 4.60 in July but jumped to over 5 months in August. The MOI this year to date has stayed generally within the so called "balanced" market spectrum between about 5 and 8 months of inventory. The trend from January until now has been a steady reduction in the MOI from of December when detached homes' MOI was over 14 months. However, the long term trends in both sales volumes and active listing volumes since spring of 2011 continue to suggest to me that we will see the MOI rise to a new peak in December or January.
Sales volumes peaked in May but they did not drop off as precipitately in July and August as they often have. I attribute the strong sales volumes in July and August to the interest rate increases that happened between June and August. Buyers with held interest rates as low as 2.79% are eager to spend the banks' money before their rates expire in September.
Active listings volumes peaked in April (June for Attached homes). Typically we will see a little increase in listings in September. 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 the summer was pretty stable due to the good sales activity. MOI numbers remained close to the balanced market spectrum in which prices generally remain static.
In spite of good volumes of sales this summer, I expect to see downward price pressure to resume - particularly on detached homes.
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