Vancouver Real Estate Update - June 2011
The months of inventory index for Westside apartments upwardly breached 4 Months of Inventory (MOV). This resulted from both fewer sales and more new listings coming on to the market. The attached MOV reached 3.9 and detached homes sit at 2.63. The month of May gave us a chance to breathe as ultra low inventories in the detached market eased with more homes being listed. May marks the fifth consecutive month that the number of active listings rose for detached homes. There were 599 detached Westside homes for sale in May. In spite of the increased inventory the average price of a detached home rose to over $2.4m - yet another all time high!
We are experiencing a "Top Down" market where upward price pressure is being created from demand for the most expensive real estate. Buyers who were looking to buy a detached home might have been priced out of that market and chose to buy a 1/2 duplex; buyers who wanted a 1/2 duplex may have been forced into buying a townhome, townhome buyers into a 3 bedroom apartment - all the way down to a first time studio buyer who decided that they would rent or move to a different market. Because the supply is much greater at the bottom of the market (studios and 1 bedroom apartments), it is seeing the lowest price increases and lower relative demand. I speculate that when this market begins to fall it will be the apartment market that suffers first.
A recent BC Business article claims that 2 houses are being demolished each day in Vancouver. Some of these are being built as new detached homes but most of them are becoming multi-family dwellings. This means that every day there are fewer and fewer detached homes in Vancouver West with more and more people who want them. Similarly, every day there are more and more apartments and attached homes with relatively fewer interested buyers.
It remains to be seen how long the Chinese buying influence will continue in Vancouver and if the glut of new apartment building will be sustainable. It is certainly a good time to sell but the apartment and detached market may have a more limited horizon.
Remember that: “Months of Inventory” 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 that may benefit from my services.
- SAM WYATT, Vancouver Realtor