Just about every news source that reports on the heavily-spotlighted Vancouver real estate market has been notifying the public that real estate sales are down in 2017. As a buyer, if you've been reading these headlines, surely your hope has been restored that you'll soon see yourself in a nice and affordable home.
And then you start your home search and the main report your REALTOR® brings back to you is that the home you want will need a strong subject-free offer to give you the best chance against the competing offers. Of course, this is only if you can locate a property that meets your budget and needs. So if home sales have dipped, why is it still so hard to get into the market?
Well, while the media reports are accurate, what they don't explain is that Metro Vancouver is currently a very split market:
Detached: single family houses, multi family houses
Attached: condominiums, townhouses
Half-duplexes fall somewhere in the middle, but for the purpose of this, we'll consider them part of the detached sector.
Now that we've split the market into two segments, let's look at one of the most important indicators of the market pace:
Sales to Active Listing Ratio: how many homes sell in a given time period in relation to how many listings are on the market.
Example: 500 homes are on the market. 50 of them sell in October. 50/500 = a 10% Sales to Active Listing Ratio. The Real Estate Board of Greater Vancouver offers this number on a monthly basis. That's great, but how do we know what this number means?
- 0 - 12% = Buyer's Market: there is more supply of homes than buyers looking, sustained over time resulting in downward pressure on pricing if sustained over time
- 12 - 20% = Balanced Market: the amount of buyers and sellers are aligned, resulting in prices rising at a similar rate to inflation
- 21% or higher: Seller's Market: demand from home buyers exceeds the amount of listings on market, sustained over time, causing upward pressure on pricing if sustained over time.
Time for the big reveal!
Combining the two things we learned about today, let's understand why no matter how many reports tell you that the market is slowing down, you are still struggling to buy real estate.
Sales to Active Listings Ratio %
The graph above demonstrates two key takeaways. The detached market has been hovering between a balanced market and buyers market for the past 7 months. The attached market on the other hand, has been operating at nearly double the pace of a balanced market.
Okay, enough data already, what does this mean in real words? It means that if you're trying to get into the market as a first timer or with a budget under the million dollar mark, you're in the thick of a seller's market. Based on the lack of sub-million dollar detached homes, you are participating among great demand to buy an attached property. If it's any consolation, supply was even lower and demand even higher at this time last year. Regardless, the sustained sales to active listing ratio above 20% is causing prices to rise in the attached market, continuing to make it challenging for those looking to buy.
On a brighter note, the data also shows that the detached market is trending more towards a buyers market. If this keeps up for awhile, we'll see the price gap between attached and detached homes shrink. With a smaller jump from one to the other, those looking to size up may find it to be realistic in the coming months after losing hope throughout 2015 and 2016.
There you have it! Despite the challenges, finding a desirable home in Metro Vancouver is still certainly possible. It may require flexibility and open-mindedness to explore options that are not in your original consideration set. However, with some leniency in criteria, the payoff is two-fold. Buying a home in Greater Vancouver enables you to live in one of the greatest cities in the world. As well, you will own an asset in one of the best performing markets.
If you have been thinking of buying or selling your home, call me to help guide you and experience outstanding service to deliver excellent results.
All the best,