The months of inventory index continues to stay near and below the 3 month mark for all home types on the Westside of Vancouver so upward price pressure has continued and should be expected to continue for several months to come.

Active listing volumes continued to drop for the seventh month in a row.  Sales volumes increased for detached homes though they decreased for the second month in a row for both apartments and attached homes.  The effect of the robust sales and falling active listing volumes has kept the Months of inventory index low (below 3 – see Months of Inventory graph).  The strong trend of low inventories and generally increasing prices has continued to defy most forecasts for this year.  Interest rates remain low and the general confidence of home buyers appears strong.  This strong market was started in large part by the sharp drop in prices last year and historically low interest rates.  These conditions helped pull more first time buyers into the market which in turn enabled existing owners to sell and “move up” to larger homes.  This domino effect still appears to be in action but will almost certainly have a short life span.  In particular, the lower average price on apartments over last month may be the writing on the wall for that segment of the market.  I still expect to see sales figures to fall over the next several months and for this falling demand to begin to push the Months of Inventory index up.  The unanswerable question is exactly when.

This is a prime seller’s market and I strongly urge those of you planning to sell property within the next several years to contact me and act now to capitalize on these excellent market conditions.  For those of you looking for principal residences, the historic low interest rates (likely to rise next year) make the cost of borrowing mortgage funds quite attractive.

By Sam Wyatt: Vancouver Realtor

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.

Vancouver's Real Estate Market has been hot this June 2009.  Active listing volumes dropped for a fifth month in a row for all product types.  Sales volumes increased for both apartments and attached listings for the fifth consecutive month but sales for detached homes were down from 232 to 200 for Vancouver west in June.  The effect of the sustained falling listing volumes and continued robust sales has put attached and held detached and apartment types below 3 months of inventory.  This strong 5 month trend has been fuelled by “pent up demand” (buyers who were waiting for the market to fall finally bought) and incredibly low interest rates.  What should be remembered is that from a historical perspective this is most likely a spike in a graph that the future will probably show as a falling market (Take a look at 1996 on the 1997 to present graph).  I do not expect this market to last for more than 6 months into the future.  For those of you who want to sell and missed last springs high points, consider this a second chance to sell at near the market high.

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 meant generally 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 precipitated downward price pressure.

By: Sam Wyatt, Vancouver Realtor

I am back from Everest and sad to report that I was unsuccessful in reaching the summit.  Although I had an army of people praying for good weather, a cyclone in the Bay of Bengal sent us a metre and a half of snow on us the night we started our push and threw in some heavy wind for good measure.  I missed the one weather window that the North side had this season by one day.  It was a disappointing experience to not get a chance to go to the summit but it is a fairly routine problem in the mountains and fortunately or unfortunately I will try again either next spring or in 2011. 

On the positive side, I am glad to report that the market has been quite robust while I have been away:

Sales volumes increased and active listings decreased three months in a row for all product types pushing the months of inventory index down to below 3 months for detached and apartments and below 4 months for attached homes.  This strong trend is likely a combination of both “pent up demand” (buyers who were waiting for the market to fall finally bought) and incredibly low interest rates.  With the bond market recovering and fixed term interest rates poised to continue to rise we can expect 3 more months of strong activity while buyers with held rates get their shopping done.  The strong trend is unusual in light of the larger recessionary market forces currently at play but certainly good news for Vancouver.  The months of inventory index suggests upward price pressure over the next several months and the average price chart shows that this has already been the case over the last three months.

Attached are links to the current Inventory and Average sales graphs for Vancouver West (May need to visit samwyatt.com for links to work)Vancouver West Inventory May 2009.pdf   Vancouver West Average Sale Prices May 2009.pdf.

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 meant generally 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 precipitated downward price pressure.

By Sam Wyatt, Vancouver BC Realtor.

It has been nice to see a change in the news about the Vancouver real estate market and some of the good news is well deserved.  Sales volumes have increased substantially (doubled) over last month’s but to put it into perspective, sales are still significantly lower than they where February 2008.  Here is a snapshot of what is happening.

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, 0-6 months of inventory has meant generally upward price pressure for the ensuing six months, 6-8 months of inventory meant a flat market with respect to pricing and over 8 months of inventory has precipitated downward price pressure.

February's sharp increase in sales coupled with tseveral months of down trending listing volumes has brought our “months of inventory” index down to below 8 in Vancouver's westside* for detached homes and apartments but only to just under 11 for attached homes.  As a result, and if this continues, we can reasonably expect to see prices decline far more slowly over the next six months than they have over the last six months.  Average prices have dropped (depending on what you use for the high and low points) about 20% since their high points in early 2008.  If the current inventory index continues at and below 8 it may foretell signs of a bottom and certainly an end to the sharp decline in prices. 

As an interesting aside, the unprecedented low interest rates that are available at present are certainly having an influence on sales but what long term effect they may be having on forestalling a larger market drop is unknown to me.  This monetary policy will surely have some effect for better or worse in the long run.

Sam Wyatt, Vancouver Realtor.

*Downtown, Kitsilano, Fairview, Point Grey, Dunbar, Kerrisdale etc. 

The months of inventory index is up for Vancouver's Westside market for all home types.   The aggregate index including all home types jumped again from 14.34 months in October to 22.25 months in November.  In January it was at 4.55 months.  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, 0-6 months of inventory has meant generally upward price pressure for the ensuing six months, 6-8 months of inventory meant a flat market with respect to pricing and over 8 months of inventory has precipitated downward price pressure.  It is substantially up in spite of decreasing numbers of listings being added to the market over the last two months.  This is because sales have continued to plunge; partly due to seasonal norms and likely also due to the tide of uncertainty increasingly fueled by the media.  By Sam Wyatt, Vancouver Realtor.

 I have put together some statistics from the real estate board that I have found pivotal in determining what is going to happen in the market.  
     Please find attached three graphs:  Median Prices, Inventory for Vancouver ’s Westside and the 1977 to present pricing graph for Greater Vancouver.  The Inventory graph is one that I have developed and is not available from the Real Estate Board.
     “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, 0-6 months of inventory has meant generally upward price pressure for the ensuing six months, 6-8 months of inventory meant a flat market with respect to pricing and over 8 months of inventory has precipitated downward price pressure.

Westside Vancouver Housing Inventories Oct'08
Westside Vancouver Median Prices Oct'08
Average Prices Since 1977

The graphs show a few things:

1. Detached homes crossed to above 8 months of inventory in June, attached homes in July and apartments in August.

    

2. Detached homes have continued to increase inventories at a significantly higher rate than attached homes and apartments.

    

3. The median price on detached homes hit its high in February and has been somewhat erratic but generally falling since. Inventory has been steadily rising on attached and apartment homes since February.

    

4. The median price just took a sharp drop on attached homes (townhomes and ½ duplexes) in the last month.   

    

5. The 30 year graph shows that it takes about 7-10 years after a down market for prices to get back to the previous high point .

     What I expect the Inventory graph to show over the next few months is decreasing price pressure on all home types, but most significantly on detached homes.
     More simply put:  prices are going down but in a way that is consistent with past market cycles.  This will not be anything like the US subprime market meltdown.  If you are planning on selling a property in the next 5 years it is likely best to sell immediately to mitigate short term losses.  If you are planning to hold your property for the next 7 years or more then all is likely well.

British Columbia Real Estate Association’s (BCREA) spring Housing Forecast was released today.  In it, their Cheif economist, Cameron Muir, forcasts a move into a balanced market.  With listings up by 24% and sales volumes down 14% in the first quarter of 2008, he speculates that this trend should dampen the ferocious upward price pressure BC has experienced over the past few years due to a robust economy, low unemployment and intense migration.  BC's economy is forcast to outperform most of Canada at 2.5-2.9% growth year over year for 2008 and 2009.

Click here for the full BCREA report.

By Sam Wyatt, Vancouver Real Estate Agent.

Boxwood Green, built by Larc Developments in Fairview slopes is a beautiful redbrick townhome development on 6th Avenue.  The developer made some special additions including laminate windows along 6th avenue (super quiet), private gated 2 car garages for nearly every home and large outdoor spaces for every suite.  Boxwood Green is situated half a block from the Laurel Street overpass which is accessible without walking along 6th.  The tree-lined overpass crosses straight into the top of Charleston Park and its wonderful waterfall.  These homes are tremendous value with loads of space.  As the original developer's sales person I have intimate knowledge of this development.  Please feel free to contact me with any questions you might have.  By Sam Wyatt, Vancouver Real Estate Agent.

The Pomaria is the most recent addition to the North False Creek area in Vancouver.  Built by Qualex-Landamark  and one of Vancouver's few LEED certified residential buildings, the Pomaria is a cut above the usual.  Using Geothermal heating and cooling, the buildings heat and cooling costs will be substantially lower than the norm.  Many suites in the building boast incredible views of English Bay and the mountains.  This building is sure to be one of the long term sought after addresses.  By Sam Wyatt Vancouver Real Estate Agent.

Situated on West Hastings, a couple of doors down form the huge the Woodward's building redevelopment, the Paris Block will be 29 new homes within a 100-year-old 5-storey brick building. It's in a position to take advantage of the revitalization of the much anticipated Woodward's district.  Soon, there will be a new SFU campus, a major grocery store, and other large essential retailers within sight of The Paris Block.  Paris Block is a boutique loft development in Vancouver's Gastown district by Salient Developments.  This is quality product by a developer who cares about their reputation and it is going to see a huge price lift as Woodwards gets completed and the hundreds of new suites get occupied by savvy urbanites.  Visit their website: http://www.parisblock.com/.  By Sam Wyatt Vancouver Real Estate Agent.

The Vine is a great New Development by McLean Courtenay in Kitsilano Vancouver, Canada. The Vine is centrally located in Kitsilano near Arbutus Walk, Kits Beach, Connaught Park, Vanier Park, Kits Community Centre and Granville Island.  The development is comprised of three towers with a total of 133 suites.  It is located between Vine and Yew streets with street addresses at 2228 Broadway, 2268 Broadway and 2288 Broadway.  The Vine represents a new breed of quality concrete developments in Kitsilano including new townhome development Viridian Green.  The Vine is  close to some of Vancouver’s best shopping, dining and entertainment on Broadway & West 4th Ave.  The Vine's contemporary brick and glass accents are complemented  by exceptional upper level views to the ocean and mountains.   For more information on the development including floor Plans, Strata Plan, assignment properties, MLS Real Estate Board Listings, Google Maps and developer details, please contact Sam Wyatt - Vancouver Realtor.

     The prices for Vancouver housing both for re-sale and new construction continued to push up by double digit percentages in 2007 in spite of the doom and gloom seen south of the boarder.  Housing starts are up for 2007 and were at the highest levels since 1994 for Vancouver .  Volumes of sales were also up in the re-sale market by about 13% according to the CMHC Housing Now January 2008 report.  Immigration both inter-provincial and international has also continued to provide substantial growth in  Vancouver ' s population.  The CMHC ' s Rental Market Report for Vancouver issued in late 2007 shows extremely low vacancy rates and increased rental rates in both purpose built and "secondary" rental markets.  The secondary market actually comprises 25% more accommodation than the so called "primary" market.  The secondary market is mostly comprised of apartments owned by individuals who rent them out.  The CMHC report shows private condominium rental vacancy rates at 0.2% in 2007.  Mortgage rates are still historically on the low side and forecast to marginally decrease over the short term.  All of these statistics point to a continued strong demand for homes.  There are several mitigating factors that would suggest however that we may be starting to hit the ceiling in terms of pricing and that volumes of sales will begin to fall.  
     The first factor and most cited over the last several years is affordability.  In late 2007, Vancouver ’s affordability as measured by the CMHC (the % of household income needed to service a 25-yr amortized mortgage with 25% down) creped above the 75% mark and is the highest it has been since 1990.  Most first time buyers can not afford to purchase a home – either they need higher than average down payments or higher than average incomes to be in the running. 
     The next factor relates to speculators.  New construction and the “pre-sale” market has long been an attractive way for “investor” (read ‘flipper’) buyers to make substantial gains.  By putting down between 5-20% of a purchase price, waiting 2 years and garnering  price lift from between 20-40% over the two year period, many of these “investors” multiplied their down payments many time over upon the sale of their properties.  What appears to be happening now is that the combination of the number of people flipping their property immediately after closing and the diminishing affordability of those properties is creating an increased number of listings and longer turn over time at freshly completed new developments.   Case in point, the Tapestry building by renowned builder Concert Properties presently has over 30 active listings.  The Vine in Kistilano and the Pomaria in Downtown False Creek North have now cooled down respectively to 8 and 10 active listings.  By Sam Wyatt Vancouver Real Estate Agent.
     The third factor is the US economy and the real and perceived threats that it poses for Vancouver ’s real estate market.  The perceived threat is that the mortgage crises that spawned the downward spiralling housing markets in the United States will happen here.  This is an unfounded fear.  The reality is that there is an extremely small percentage of loans in Vancouver that are “B” graded or “Sub Prime”.  There is a substantially lower risk here of home owners being unable to pay their mortgage and so a wholesale sell off here is far from likely.  The real threat from the floundering US economy and its corresponding weak dollar is that as a whole, the US purchases the vast majority of Canadian exports and Vancouver and BC’s economy do depend on those sales.  In particular, the forest sector is beginning to suffer along with the film and television industry in BC.  Although these losses will likely be comparatively small in the overall picture, the cumulative long term effect of less robust sales will be a diminishing of the “Wealth Effect”.  People’s sense of financial stability may be affected by the imagined risks as well as the real risks of market sell offs and job losses. 
    Ultimately the economic outlook for Vancouver appears to be good and we can reasonably expect the market to remain stable and strong but it seems likely that as increased listings coupled with lower sales, affordability, and the perception of lower future returns grow, that more people will choose to “play it safe” and pull their money out of speculating with presales and renovation flips.  With lower certainty, we are likely to see a decreasing volume of sales and much slower price growth over the next coming years.