Vancouver Real Estate Statistics - December 2017
Super low active listing volumes for apartments continues to be the news in Vancouver's real estate market statistics. There have been more Westside houses for sale than apartments for the past four consecutive months. The past 2 years' low active listing volumes for apartments and attached homes has put significant upward pressure on pricing. Detached active listing volumes have been more typical. The other significant news is the new federal regulations for "stress testing" mortgages whether they are insured loans or not. More on that at the end of this stats report.
Sales volumes for apartments and attached homes have been about average while detached home sales have been slower.
We can best observe the change in pricing by looking at the median price per square foot of the three product types. The gap is continuing to close between apartments and houses.
The Real Estate Board of Greater Vancouver's Westside HPI price (the price of a "typical" home) shows house prices starting to moderate.
The below average active listing volumes and typical sales volumes for apartments have months of inventory (MOI) at less than 2 for 10 consecutive months. The average active listing volumes and less than typical sale volumes for detached homes has seen the MOI over 8 (buyer's market) in 5 of the last 11 months. Only once since January (It was 3.13 in May) has MOI slipped below 5 into a seller's market for houses.
If the trend continues we should expect apartment prices to continue to rise and house prices to begin to slowly fall. The wildcard will be what effect the Office of the Superintendent of Financial Institution's (OSFI) new mortgage regulations will have in the new year. The new rules require that all mortgages be stressed tested against the Bank of Canada's rate or 2% higher than the actual lending rate (whichever is higher). The effect of the rule will be to erode purchasing power - in some cases by as much as 20%. The rules come into effect January 1 2018 and most federally regulated lenders have interpreted the rules to require that an active purchase and sale contract be in place before the year's end with the lender to qualify under the old rules. Allegedly, TD Bank is interpreting things a little differently and is applying the old rules to any held rate until that rate hold's expiry. Based on most lenders' cut-off rules we will probably have a busier than typical sales volumes month in December as buyer's try to purchase something before the rules take effect. OSFI's rules do not apply to provincially regulated Credit Unions and the Financial Institutions Commission (FICOM) which regulates Credit Unions has thus far said that it will not be adopting similar rules. I suspect that the result will be a very slow January and February but that the spring of 2018 market for apartments may remain robust.
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") for the ensuing six months, 5-8 months of inventory has indicated a flat market ("Balanced Market") with respect to pricing and over 8 months of inventory has, for the most part, precipitated downward price pressure ("Buyer's Market").