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.