The Vancouver home sales market was extremely active - hot - for the 1st half 2016 and it was constantly in the News and top of mind for Buyers and Sellers throughout the City, and beyond. After the July 25 announcement on the 15% Non-Resident Buyer Tax by the BC Government, the market has also been top of mind and constantly in the news - for the opposite reason. 2016 is shaping up to be the Dr. Jekyll/Mr. Hyde of Vancouver Real Estate markets, and looks unlike anything we have seen for a long time, maybe ever. The records of Sale and Listing activity (for Detached homes) over the past 6 months tells the story. By applying the crude, but useful “Rule of Thumb” analysis whereby the # of Active Listings at month’s end divided by the # of Sales = a “Number of Months’ Supply” we can gauge the direction and state of the market. Generally 6 months supply is considered a “balanced market”: less than 6 months supply indicates a Sellers’ market, more than 6 months supply is trending towards a Buyers’ market.
Vancouver East: March 2016 saw 207 sales from a total of 361 listings, or 1.7 Months’ supply - an intensely strong Seller’s market, with very similar numbers to those of March 2015. End of June saw 163 sales from 522 listings - a still strong 3.2 months supply, but compared to June 2015, sales were down by 26% and listings were up by 56%. July had 117 sales - down 21% from 2015 & finished with 572 listings - up 61% from July 2015. The market was clearly softening, and trending in favour of Buyers. On July 25th, the BC Government announced the 15% Foreign Buyers tax.
Vancouver West: March had 219 sales, comparable to 2015, but from a total of 541 listings compared to 739 in March 2015, so a stronger market at the beginning of 2016. June 2016 had 152 sales on 591 listings compared to 236 sales on 630 listings in 2015, so the market was showing definite signs of slowdown. At the end of July, there had been 108 sales on 607 listings - 5.6 months’ supply, or a Balanced market. This, again, is the time at which the BC Government introduced the 15% Foreign Buyers’ tax.
In the midst of this softening market, the tax caused real estate sales to come to a virtual standstill in Vancouver. Despite foreign buyers’ participation being minor in most sectors of the Vancouver Market, the tax caused a drop in confidence by local Buyers. Media headlines screaming “80% Drop In Vancouver Home Sales” indicates the caution and confusion. BUT: “Where does the Market go next? What other surprises does Christy Clark have up her sleeve? Will prices collapse?” have been the questions, and Buyers have been taking a wait and see approach.
This has resulted in a significant drop in sales, while inventories have roughly doubled - at least in the Detached home sector. The end of October found sales to be 50% of 2015’s in Vancouver West, while # of listings remained the same. In East Vancouver, sales were less than 50% of 2015 levels, while the # of listings was up 90%. This is showing up in the “Average Price/Unit” numbers which are declining back towards 2015 levels. The “# of Month Supply” ratios have flipped from early in the year, and now indicate a strong Buyers market.
At the end of October, things are settling down somewhat as Buyers continue to look, and offers continue to be made - but more slowly, and at lower prices. Vancouver residents are very astute, and have a level of confidence in long term values here. The Vancouver fundamentals have not changed by the tax: There is still a very limited supply of land, still an affluent ownership base with strong equity, still a strong economy with favourable interest rates, and still a City perceived as one of the most desirable and livable in the world. The Vancouver Real Estate market is adjusting. If prices pull back, that was foreseeable & inevitable, as they had advanced far - and too rapidly. A re-set is healthy for any market, and while things may be a bit slower now, confidence and optimism is reasonable, moving forward. The rest of this year, and into the beginning of 2017 will be “interesting times for Vancouver Real Estate!”
If you are looking to sell or buy real estate or wish to discuss further any topic on Real Estate, please contact Bob Bracken at 604-220-2035 cell, 604-263-2823 office, or email@example.com email.
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