REBGV 2019 Review

Yearly New Listings hit some significant low this year and is by far the story of 2019 in REBGV.  This had a direct impact on negative total inventory change year-over-year.  This is now 3 consecutive years of New Listings decrease on a yearly basis.  As you can see, this is not a common occurrence.  It should rebound next year but it's not clear to what extent.

Annual sales beat out last year's low and finished ahead of 2008, 2012 and 2018 during the recent times.  It is widely expected that sales will increase next year given the recent rise in sales and SAL ratio during the latter half of 2019.

Year-end total inventory dropped year-over-year which is a surprise given how 2019 started in the beginning.  It took a turn during the summer and continued to drop during the latter half of the year.  With both sales and new listings expected to be higher in 2020 compared to 2019, it will be interesting to see which direction TI will go.

REBGV November, 2019: Sales

Sales remained strong through November keeping the monthly sales above the 10-year average for 2 months in a row.  Is this just a result of falling prices?  Not too long ago, we had some incredibly low sales during March and April of 2019.  The price difference between now and then among different housing types are 0-2%.  Thus, it doesn't appear that falling prices are exactly responsible for this.  If so, then what are we to expect if the interest rate is to drop as expected in early 2020?  Only time will tell...

The total inventory continues to plummet under the burden of yet another low new listings month in the setting of recovering sales.  REBGV has lost almost 2,000 inventory year-over-year despite the record breaking new project completions.  The Total Inventory is now headed toward 8,500 by the end of December.  Total Inventory tells only half the story but if there is a price increase next year, one could have looked at this worrisome sign as a major red flag.  At any given time, sub-9,000 Total Inventory is a strong indicator of a seller's market to come.

It is now 10 months in a row of low new listings.  I previously predicted the new listings to start picking up against 10-year average by this month but I am amazed at the seller resilience at this point.  We are headed for decades low in annual New Listings total which will come out early next month.  The kind of impact this has had on the total inventory is regrettable.  

This is truly a disappointing graph.  I expected the MOI to recover in November and December but strong sales continued on despite the cold weather and has kept the MOI near buyer's market level.  Four days into December, it appears that the sales will remain strong again keeping the MOI between 4-5 months for the month of December.

There you have it.  De-listings falling under 10-year average after staying above 10-year average for a year.  This is as a result of higher than expected sales.  Sales exceeded de-listings 2 months in a row which is generally an indicator of price increases to come. I am about to barf...

REBGV: November, 2019 Total Inventory Projections

This is hardly what many have expected during a sizzling 12-month period of record high housing completions in Greater Vancouver.  But it became evident when New Listings continued to struggle all year that this could very much happen.  We are now seeing about 2,000 inventory drop year-over-year.  What the market has shown this year is the ability to absorb the record high housing constructions and completions.  With Total Inventory expected to tank under 10,000 for the first time since April, 2018, there is trepidation building among the potential buyers as to whether they may have missed the bottom.  I personally do not believe this and I do not expect a price recovery soon.  But the low Total Inventory adds a level of intrigue in a market that is in a transition period.

REBGV November, 2019: Sales Projections

Sales projections show that total sales in October appear to be a blip in the radar.  The general trend over the last 5 months does not show sales recovery but stability.  The sales over the last 5 months remain well within the typical 10-year norm and I do not expect any major change to this trend in December or January.  February sales will be key in determining what kind of spring we should expect to see.

Annual Total Sales Projection: 2019 Sales expected to exceed 2018 Sales.

REBGV October 2019 Projections

Sales are rising to possibly one of the best months of 2019.  It is very rare for October sales to be the year's best sales month (see chart above) and it certainly hasn't happened in recent times.  It is a remarkable turn of events since April and speaks to the drop in prices and seller expectations over the last several months. While sales are being completed under asking in most cases, continued uptick in sales will eventually provide some stability to prices in the near future.  It appears that the annual sales total will be roughly the same as 2018 which was a very low annual sales year.

For the first time since January 2018, we will see a negative change in year-over-year Total Inventory.  Up until April of 2019, it was difficult to see this happening so quickly (including myself).  Rather than seeing sellers panic, we instead saw a very resilient homeowner group that has chosen to stay-put and wait out the market.

For those of you looking to see into the future, one should compare the TI trend between years 2013 and 2019.  Years 2013 and 2019 are both years following a bear market. The changes in TI month-over-month in 2013 and 2019 have been virtually the same this year.  If this continues, one can expect the TI to drop under 9,500 by the end of the year.

It is very possible that the TI trend in 2020 may follow the trend in 2014.  This is assuming that the Justin Trudeau's Liberal government doesn't go ahead with changing the mortgage rules to favour the sellers and increase buyer frenzy.

I have spoken for several months now about the struggling Total Inventory since May due to extremely low New Listings.  This trend continues on for another month but don't be surprised if this  comes to an end soon.  All trends come to an end and we may now start to see New Listings come back up to normal levels (or possibly higher).  It is hard to draw any trends from what happens in November or December as they are dead months for new listings (see chart above) but one can expect the new listings to rise in the new year as many sellers return to the market.

With the MOI now safely under 7 months for 4 months in a row, it is safe to say that we are no longer in the buyer's market.  One may point to the fact that the prices are still on a decline which is true for many of the sales currently.  For an experienced investor, one may take advantage of a situation like this where discounts may be readily available across the city at a time when the MOI is recovering into the balanced territory.

Seller's Market: Under 4 months

Balanced Market: 4-7 months

Buyer's Market: Over 7 months

De-listings for this month will break the typical October trend and fall.  This is fairly unusual for October and has only occurred twice (2011 and 2017) since 2008.  This is due to the higher-than-expected sales for October, 2019.

September, 2019: REBGV Data

As my projections from middle of the month was spot on, I will not be reposting the official end-of-the-month REBGV charts.  Please see below for the mid-month September projections.

REBGV September 2019 Projections

Sales projections show that the sales are now back to the typical 10-year average.  It is worth noting that it was a remarkable run from February 2018 to June, 2019 as it stands as one of the longest buyer's market period that the Vancouver market has seen in the last couple of decades.  It has caused a significant ~10% drop through Greater Vancouver with the west side experiencing greater drops and the east side experiencing less.  

Total Inventory is expected to stay level this month much like many other years that were balanced years.  It is now almost at the same level as a year ago which is a fairly significant statement given the record number of housing completions over the last 12 months.  It is expected that we will see a reduction in year-over-year TI for the first time in October, 2019 since January, 2018.

Nothing has been more disappointing to watch than the New Listings as it continues to struggle 4 months in a row.  This is having a significant impact on the Total Inventory without any doubt.

The MOI is projected to inch lower in September in what will be known as the largest month-over-month decrease in MOI for the month of September.  MOI typically increases month-to-month in September as it has lower number of business days than August.

Buyer's Market: > 7 months
Balanced Market: 4-7 months
Seller's Market: < 4 months

August 2019: REBGV Data

As my projections from middle of the month was spot on, I will not be reposting the official end-of-the-month REBGV charts.  Please see below for the mid-month August projections.

REBGV August, 2019: Projections

Sales will trend down this month as oscillating sales continue for 4 months in a row.  But there are signs that the wide variations are about to come to an end and that we are more likely to see a flat sales trend as we head into the fall season.  One can expect the sales to remain low for the rest of the year in the low 2000's for the next 3 months.

TI will trend down again for 3rd month in a row.  September is the last chance for a TI rise before the end of the month.  Should it fail to rise in September, TI increase that we've enjoyed for the past 1.5 years will come to an end.  This is surprising given the all-time record broken this past year for New Housing Completions.

New listings are under the 10-year average for 7 months in a row and will end up at a 9-year low for August.  This is exactly the reason why TI continues to drop despite low sales.

MOI is virtually at even with years 2013 and 2018.   Nothing interesting about this chart for August but will September bring the kind of rise we saw in 2018 or will it land in the balanced territory again?

Buyer's market > 7 months
Balanced market 4-7 months
Seller's market < 4 months

It looks like record de-listings that we were seeing earlier this year is now coming to an end.  But will some of these come back in September at lower prices?  I hope so...  If we don't see some New Listings recovery in September, we will have to wait until next year and that is a long way to go.

REBGV July, 2019: De-Listings

De-listings have been above 10-year average for the last 16 months but it seems to have had minimal impact on new listings so far.  Only time will tell when the new listings will eventually pick up from record high de-listings seen over the course of last 16 months.

REBGV July, 2019: Months of Inventory

Months of Inventory (MOI) has dropped under last year's value.  This is the first YoY drop in Months of Inventory since January of 2018.  However, this could be short-lived as sales typically drop in August and it could increase MOI back to the positive territory YoY in August.

Recent observation of the Vancouver market has shown us the following:
MOI under 4 months = seller's market
MOI between 4-7 months = balanced market
MOI over 7 months = buyer's market

This is a new adjustment.  I previously followed REBGV's suggestion that the balanced territory is between 5-8 months (SAL between 12-20%) but recent data suggests that the balanced market is more between 4-7 months (SAL between 14-25%).

REBGV July 2019: New Listings

New Listings again remained low for the month of July and was the lowest since 2010.  There has been record-setting number of de-listings seen since late 2018 and for it to not translate to re-listings in a huge manner in 2019 so far is certainly disappointing.  The sellers appear to be in the holding pattern but how long could this possibly continue?  With 2 days in the record books in August, the August New Listings number again appears to be heading south...  More to come...

REBGV July, 2019: Total Inventory

Flashback to April, there was every indication to believe that we were headed for a 2008-like TI increase with record breaking low sales occurring at that time.  You will see from this chart that the TI was nearly identical in April between 2008 and 2019.  But rather than following the '08 trend, there is now a ~5k difference in inventory between this year and 2008.

With another drop of 400 inventory on the 1st day of August due to month-end expirations, the TI is heading toward mid-13k (without empty lots) by the end of August.  If this trend continues, there is a good chance that this year's TI will be at parity with last year's TI by October or November.

I previously predicted that the TI would peak in September this year as this was a buyer's market but it appears that I will be wrong on that prediction.  Now, it seems very unlikely that September's TI will top June's peak for this year.

REBGV July, 2019: Total Sales

We have not seen such month-to-month variations in sales that we've been seeing over the last 3-4 months in recent history.  As to what is causing this fluctuation is unclear aside from June having less business days than May or July in 2019.  Even taking this account, the fluctuations are still quite pronounced.

A political interference can cause abrupt changes to the market but there has been no recent political policy change that was designed to affect the Vancouver market.  The recent announcement by the Federal government to aid first-time home buyers are designed to help first-time buyers buy into housing under a certain price limit that is too low to affect the Vancouver market.

At this point, it's not clear what the real trend is.  Is the Vancouver market returning to balanced territory or is July a fluke?  What will happen in August and how does it influence the market going into the fall?

What we do know from the past 10 years is that the sales dropped month-to-month in August 9 out of 10 times.  The infamous 2017 was the only year when we saw an incline month-to-month but it was a very small increase.  One can easily deduce here that the sales will likely fall to 2,000-2,300 range in August.  With TI expected to drop in August to mid-13k (without empty lots), we can expect the SAL ratio to be in the 14-17% (balanced territory) in August.

REBGV July, 2019 Projections: Months of Inventory

This month's MOI will be very close to last year's MOI in July.  This marks the first time that year-over-year change in MOI has been this even since February, 2018.

REBGV July, 2019 Projections: New Listings

New Listings are expected to remain flat month-over-month which is not unexpected as July has 2 additional reporting days in comparison to June.  Similar event occurred in July, 2013 which also had 2 additional reporting days in July versus June.

REBGV July, 2019 Projections: Total Inventory

Total Inventory is expected to fall this month which is the first month-to-month drop for the month of July since July, 2015.  This virtually guarantees that the TI will drop again in August as a month-to-month reduction in July always leads to another month-to-month drop in August.

REBGV July, 2019 Projections: Total Sales

Sales are doing better than expected in July on a month-over-month basis. July will mark the first month since January of 2018 where we are expected to a year-over-year increase in sales in REBGV.

June, 2019 CMHC Housing Data

Housing starts are up another 3,489 in June, 2019 which is more than 2,000 more than during the same period last year.  Overall, housing starts continue to outperform last year's number year-to-date by more than 3,000 and is heading toward high 20k which would be record-breaking.

On this chart, you can see that single detached house starts are relatively low in comparison to last year and it appears to be well-below historical norm.  In fact, we are probably looking at a 20-year low.  Meanwhile, apartment/condo sector continues to see explosion of new builds.  June number is particularly impressive at 2,902.

                                        

Housing completions have increased for the month of June but it is still trailing housing completions year-to-date compared to last year.  One can expect to see further increase in housing completions as some of the record high constructions come to an end.

                                        

Under construction number continues to rise and is now at 44,789 which is a record high.   Although there are numerous developers who have decided to stop building, there are many who are going ahead obviously across Greater Vancouver.  At one point, we should expect to see construction numbers decline but the true effect of the excess apartment/condo constructions should be felt for several years to come.

REBGV June, 2019: Months of Inventory

Given that the MOI is heavily influenced by sales, it isn't a surprise that the MOI has jumped back up in June as sales struggled again in June.  It is anticipated that the MOI will stay very flat in July as both sales and TI are expected to remain very similar to June numbers.

< 5 Months of Inventory = Seller's Market
5-8 Months of Inventory = Balanced Market
> 8 Months of Inventory = Buyer's Market

My Predictions for July: 6.0-7.5

REBGV June 2019: Total Sales

Low sales continue to march into June.  That is now 4 consecutive months of 10-year lows.  Don't be surprised to see a slight month-to-month increase in July as July just so happens to have 2 more business days than June (a 10% difference compared to June, 2018 which is not an insignificant difference).

My Prediction for July: 2,000 - 2,400

REBGV June 2019: New Listings and De-listings

While low 'Total Sales' is the story of the year, low 'New Listings' is the story of the month.  New Listings took a surprising nosedive in June which is known to be one of the higher New Listings months of the year.  

This does not bode well for the next 2 months as there has never been a month-to-month increase in New Listings in July and August since 2008.  This means July's New Listings could be in the 4,300-4,700 range and August's New Listings in the 3,800-4,300 range.

My Prediction for July: 4,600 - 4,950

De-Listings have come off of 10-year highs for the first time since February.  Time will soon tell if record-high de-listings over the last 3 months eventually start to effect the New Listings number which has bottomed out during the month of June.

De-listings will increase month-over-month in July before decreasing month-over-month in August as it occurs in almost all of the other years.  It is expected that the total number of de-listings will add up to 4,800 - 5,300 during the next 2 months.  As New Listings are expected to be around 8k to 9k during the next 2 months, Total Sales during the next 2 months will need to be under 3,500 for us to see an increase in Total Inventory.  Barring any surprises, the total sales should be around 3,500 to 4,000 during the next 2 months which will mean that the Total Inventory will be more-or-less stable over the next 2 months.

My Prediction for July: 2,600 - 2,800

REBGV June 2019: Total Inventory

Total Inventory continues to follow the trend of 2011.  Not so long ago, the TI trend appeared to follow that of 2008 but a sudden decrease in New Listings put a halt in the TI growth over the last 2 months.  Nevertheless, the TI is expected to increase again in July albeit by a small amount like in 2011.

My Prediction for July: 15,000 - 15,500

REBGV June Projections

The sales continue to remain low this year.  It is now expected to be the 4th month in a row of record lows dating back to 2008 as seen above in the chart.

New Listings are particularly low so far this month and it appears to be beating last year's low New Listings number.

The overall impact on the TI is an uptick so far with projected TI to be around mid-15,000.

Total Inventory Changes

There are some significant changes to Total Inventory year-over-year.  Out of all the impressive changes, the most notable appears to be the doubling of condo inventory in Burnaby and North Vancouver.

On the detached side of things, the west end of the city has seen some reduction in total inventory where as the other areas toward the east are seeing increases year-over-year.  As for the attached and condo listings, you can see that the increase in total inventory is consistent from top to bottom except for a couple of minor exceptions.

*** Correction: July 10, 2019 is meant to be June 10, 2019

HPI Changes between Vancouver, REBGV and FVREB

If there was ever a chart that shows migration of population out of the city to the Fraser Valley, this is it.  As affordable housing becomes scarce in the city, relatively cheaper condos in Fraser Valley has seen an explosion of price increase since 2014.  And while all other HPI's are taking a hit in Vancouver, Fraser Valley condos are still beating odds and rising in prices after a precipitous drop during the latter half of 2018.

Here is the data on the "missing middle."   Townhomes and other attached properties have seen roughly a similar movement of the HPI across Vancouver to Fraser Valley.   This means that the percentage gain of your property as a townhome homeowner regardless of whether you own one in Vancouver or in Langley has seen similar gains since 2014.

Vancouver townhome owner may have seen a larger gain leading to October 2016 but the gap has closed again to 2014 levels.

Price Changes between Vancouver and Fraser Valley

After a couple of years of relative stability in prices in 2012-2014, there was a meteoric rise in detached properties particularly in Vancouver.  This is a chart that shows the rise and fall of Vancouver West detached properties over the last 5 years.

The detached properties in the rest of REBGV and in FVREB domain followed suit but only to a lesser degree leading to a large gap in HPI during the summer of 2016.

Since then, the subsequent decline in Vancouver West detached prices has led to reduction in the difference between the HPI between Vancouver and FVREB.  So far, the FVREB detached property prices are staying stable over the past 1.5 years but it will likely follow REBGV's downward pattern in a few months.

REBGV May 2019 New Listings & Sales

New Listings struggled in the month of May and finished with the 3rd lowest since 2008.  It has also gotten off to a slow start to June during this first week.  So far, June New Listings is expected to be in the low 5000's.

Sales have taken an unexpected hike in May, 2019.  So far, it does appear that May Sales won't be beat by any other subsequent months coming up this year as June sales are expected to fall month-over-month.  The current projection for June Sales is in the low 2000's.