I would like to start off by wishing everyone well during these tough times. Stay safe and stay home! I would also like to thank our health care workers during this tough time who risk their lives everyday to keep us all safe!
As you are all well aware, we are now entering into a period in real estate market that won't be mirrored by any stats in recent times. The initial March sales data was strong with total sales heading toward 3,000+ for the month of March with a SAL ratio of whopping 30%. But the sales have been halted in the latter half of the month as social distancing measures closed down open houses and hindered real estate transactions. With the government reporting that the current social distancing measures will carry on for the entire month of April, we should see a jaw-dropping drop in sales to about 1,000-1,300 in April.
Growth in total inventory was also halted by the Covid-19 pandemic with TI actually trending negative during the latter half of March. This trend should continue into April and we could be seeing TI under 9,000 by the end of April. We are very likely to see a month-to-month Total Inventory decline in April for the first time in 11 years with TI falling dangerously low. With realtors reporting that up to 50-70% of current inventory not being viewable at this time due to the fear of Covid-19 spread, it is quite possible that the current true available TI count may be much lower under 5,000 which is unimaginably low for a population of 1.7 million+ in the REBGV territory.
New Listings were heading for high 4,000s in the first half of April but they have significantly dropped off as sellers are unable to hold open houses. I also suspect that there are many sellers who don't want visitors entering their homes during the Covid-19 pandemic. This has led to a significant drop off in New Listings which is exacerbating what has already been a low New Listings streak that has lasted for over a year. We are going to see all kinds of records being broken in the upcoming April in terms of Sales and New Listings but I suspect that nothing will be as impressive as the drop in New Listings in the upcoming month. It will likely be off-the-chart at around 2,500-3,500.
With so much going on right now with both sales and new listings plummeting, it may make more sense to look at the MOI rather than the individual sales and new listings data. MOI has finally crossed that line under 4. However, this will be very short-lived as sales will plummet in April due to Covid-19. We will see a significant bounce up in MOI in April well within the balanced territory.
Having said the above, I don't believe that MOI can be interpreted to say that either the seller or the buyer has an advantage at this time. Low transaction periods are tricky and the current pandemic situation is even more complex. We see low transaction in December every year and the MOI in December is hardly useful in telling us what kind of market we are likely headed for in the spring time.
What we do know is that the market was certainly headed toward the seller's market prior to the pandemic. As to whether this will resume when the world begins to turn again is anybody's guess at this point. A bear can point to permanent job losses, business closures and bankruptcies but a bull can point to cheap mortgage and delay in housing constructions which is already trailing behind GVA population increase.
MOI 1-4 months: Seller's Market
MOI 4-5 months: Seller's Market (but price increase expected to be similar to annual inflation)
MOI 5-7.5 months: Balanced Market
MOI > 7.5 months: Buyer's Market
De-listing data is staying below 10-year average and will remain low in upcoming April due to the sheer lack of inventory in the market right now. The DEAL Ratio (Delisting/Expiration to Active Listing Ratio) is typically around 11-15% in April so we should see expirations around 1,100-1,500 this month.
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