A 20% CORRECTION FOR METRO VANCOUVER??? #VanRe October 2016
Are property prices in Metro Vancouver really due for a 20% correction?
Despite the steady decline in sales volume over the past several months - sales prices have largely stayed strong because of the historically low levels of inventory. When you compare year over year sales to the highest October sales number on record, a 40% decline in sales wasn't really as significant as the media made it out to be. If you look at the 10 year average, sales were down 15%, offset by new listings at 9.5% below the 10 year average - leaving the the sales-to-active listings ratio virtually unchanged for the month.
Job numbers were good, but analysts question the sustainability of the created jobs sighting part time employment as the driving factor. Economic output was weak, and growth isn't forecasted now until the later half of 2017-2018. The overnight rate didn't change in October and it's unlikely to change again in December. Even with TD initially raising their rates, and the Royal Bank following suit (as will the other major lenders) due to changes in lender risk sharing - rates will still remain low and money will stay cheap.
The City of Vancouver approved the 1% vacancy tax this week. Critics of the tax dispute the effects it will have on the rental market due to concerns of the administration's ability to execute and enforce it effectively.
- Sales totalled 2,233 in October, a decrease of 38.8% year over year and a decrease of 0.9% from September. 15% BELOW the 10 year average.
- Supply was DOWN 4.5% from October 2015, and DOWN 2.3% from September.
- Sales-to-active listings ratio of 24.4%, up from 24.1% in September.
- FIRST MONTH THERE HASN'T BEEN A DOUBLE DIGIT DOWNWARD CHANGE - STILL A SELLER'S MARKET, BUT ALMOST BALANCED.
If there is much of a correction before next spring, I don't think you'll see more then 10% overall. Real Estate sales are still setting records in other parts of the country. To be specific, I don't think there will be much of a correction at all in the attached market at approximately $750k and less, while you'll see larger corrections in detached properties priced at $1.5m and greater. In some parts of the city, detached properties are seeing pricing corrections of over $500k and 90 days on market. Whether you're buying or selling, your due diligence should include more then just the last 90days of sales. Happy to help!