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.

Olympic Village Condo Sales per Sq Ft

Olympic Village Condo prices have dropped from the peak in the high $1,100s to high $1,000s per sq ft over the past year.

There has been a some flurry of sales activity recently in the 1-bedroom sales in Olympic village as prices are declining from the peak during the summer of last year.  The sales have generally ranged around $1,000 -$1,200 per sq ft as opposed to it being $1,080 - $1,300 per sq ft last year.

Sales activity in 2-bedrooms has been more modest so far this year but the drop in prices is becoming more noticeable over the last 2 months.

REBGV May 2019 Sale to Active Listing Ratio by Different Dwelling Types

Detached Housing: Returned to balanced market territory for the first time in 12 months
Attached Housing: At the border of Balanced market and Seller's market.  Highest SAL Ratio since July, 2018
Condos: Rose over 20% for the first time since October, 2018

REBGV May 2019 Total Inventory

The sudden loss of momentum in Total Inventory (TI) is most certainly disappointing to the buyers who were hoping for a 2008- or 2012-like TI increase.  It looks more likely that it will follow the trajectory of 2011 (purple line) for the next few months.  The sudden change in direction is due to following combination of events:

1. Continued record-high De-listings
2. Mediocre New Listings
3. More than anticipated month-to-month rise in Sales

REBGV May 2019 De-Listings

Although there were significant changes in May with respect to Sales, Total Inventory, Sale-to-listing ratio and Months of Inventory, the one data that didn't buck the trend was De-listings.  De-listings remained at 10-year high for 3 months in a row and remained in the top 3 since 2008 for 8 consecutive months.

De-listings data is an enigmatic data in that it is generally very high during a buyer's market but a high value has the reciprocal effect of reducing the Total Inventory.  In turn, this makes the SAL ratio and Months of Inventory look more favourable to sellers.

In theory, higher De-listings in a buyer's market should lead to higher New Listings as many that are de-listed are re-listed.  For example, high De-listings and New listings were seen in 2008.  However, high De-listings didn't lead to higher New Listings in 2012 nor is it showing up this year in 2019.