The supply of Westside detached homes in August is down 5% from July (765 from 804) but up 4% compared to August 2017. Westside detached home sales this August were up 6% from July (52 to 55) and up 8% compared to 51 sales in August 2017. A typical July - August sales volume is 120 to 150 homes so 52 and 55 is very slow.
The decrease in supply and increase in demand has resulted in a decrease in Months of Supply (MOS) to 13.9, from 15.5 last month and 14.5 last year in August 2017. (Usually a balanced market is in the range between 4-5 & 6-7 MOS with prices rising below 4 MOS and falling above 7 MOS). With MOS decreasing, detached home prices have increased slightly (5%) to $3.491M from $3.323M on average and the median was up from $2.984M to $3.210M. This is a price drop of 22% on average & 17% on median from the highs in 2017. If demand stays low, MOS will stay high and we should see downward pressure on prices.
The highest sale price for a Westside detached home in August was $8.9M. The lowest price was $1.4M. Of those sales, 5 received the asking price or more and 50 sold below the asking price.
Westside apartment supply decreased 5% to 1126 units in August from 1192 in July. This is up 64% from the 687 listings we had in August 2017. Demand dropped 6% to 275 sales in August from 294 in July 2018 and this is down 32% from 406 sales in August 2017. MOS in August is 4.1 unchanged from July and up 241% from 1.7 last August 2017. The average & median prices increased 7% & 3% to $986K & $799K in August from $924K & $775K in July. Both average and median prices are down by 18% & 9% from the peak of $1.199M and $880K in January 2018.
Westside townhouse supply decreased slightly this August to 241 homes from 247 in July and that's up 54% from 156 in August 2017. Demand in August is down 21% to 38 units from 48 in July and down 32% from 56 sales last August 2017. With supply relatively unchanged and demand down the current MOS increased to 6.3 from 5.1 in July and 2.8 last year in August 2017. Average prices increased 6% to $1.494M from $1.405M in July and were down 9% from $1.637M last August 2017. Median prices increased 6% to $1.446M in August from $1.366M in July and this was down 13% from August 2017. As with apartments, townhouse prices are down (17%) from the peak prices last January.
Detached, Attached and Apartments on the westside are now all experiencing price reductions and while this is creating good buying opportunities, buyers are holding off in anticipation of further declines. This should exacerbate the decline and soften prices further.
When prices move up in the face of huge MOS like we have in the detached segment, I refer to the market as defying gravity and this speaks to the fact that sellers have the ability to wait for prices to recover and further have the conviction that they will recover. This is also part of the nature of the housing asset in that it provides a roof over the owner's head and it is usually the last asset they will sell in times of stress.
With westside apartments and townhomes now joining detached houses in their sales & price declines more attention will be paid to the continued negative effect of government policies and interest rate increases.
New mortgage seekers and current mortgage holders looking to increase their debt will have a mountain to climb to get approvals under the stress test requiring qualification at 2% over the posted rates. It will be interesting to see how lenders deal with existing mortgage holders who renew in the near future as they may have trouble re-qualifying under the new mortgage rules. The concern would be that some of those homeowners could be forced out of their homes. Other homeowners who bought long ago and are ready to make life changes are also selling and taking what the market will bear. This is showing us where the market price is and those sellers not prepared to accept those reduced numbers remain unsold.
There may be some difficult economic times upcoming as the governments try to redistribute home owners wealth and tax unrealized paper gains. It is hard to know when & what will trigger a recovery but Vancouver is still a great place to live so I think it is all about when and not if it will recover.
Click on the link at the top right for Westside Graphs.
Please call me at any time for a considered response to any and all of your real estate questions.
I hope you had a great summer!