As we discovered in our last post, one swallow does not make a summer, March 2019 was more likely to be related to February 2019 in the sales to active listing ratio (which determines price changes) than to March months of other years. In other words, despite common belief that the real estate in Vancouver would pick up in the spring, that was not the case. March sales were the lowest they have been in 33 years, and inventory is picking up. This table summarizes the sales and listing numbers:
As seen, sales are down 31% with respect to 2018, and 47% with respect to the 10 year average. Inventory is up 52% with respect to 2018, and it is just 3% below the 10 year average. These plots from https://vured.blogspot.com help put things in perspective:
I could retrieve (thanks to Brian Segall for posting these in the MVHC FB group) the sales number from the last 23 years to put things into context (blue is low, red is high):
|Mar2019 – Ave||1345|
|# of SDs from the mean||1.5|
This means that the sales were almost half of what the 23 year average is (1.5 standard deviations below the mean, which in a normal distribution would be at the very tail of the probability density function). Sales were low by all means (pun intended).
The following plot shows the House Price Index Benchmark as of March 2019 for the region (assuming that inflation for 2019 is the same as for 2018):
As seen, the price continues to decelerate quickly. If we normalize as a percentage of the maximum index, we can identify the peak and size of correction so far:
According to the benchmark, prices for detached houses peaked in August 2017, and for strata in June 2018. We should remember that the benchmark is a rolling average and hence a lagging indicator, so the price declines we see in March reflect changes from a few months ago. The actual drop right now is probably greater.
April so far
Realtor Paul Boenisch posts daily sales and inventory numbers in vancouvercondo.info. As of April 12, the projected sales and SAL are the following:
April does not look very different to March. Lower sales, higher inventory. Prices will most likely follow their trend down in April.
When sales were low in February, people blamed the snow. People thought that spring would be different. March did bring a warmest day in 123 years, and was one of the driest on record, but still real estate sales remained very cold. The REBGV blames government intervention, but as I discussed in a previous blog post, this is just part of the equation. We are very late in a credit cycle, and it will probably unfold as it has in other credit cycles.