Today we are going to talk about and answer the question, has the Greater Vancouver Real Estate market hit the bottom and is it on the way back up?
The October sales statistics have come in and they have shown October as being the busiest month of the year. Over 2,800 sales were recorded in the Lower Mainland in October, which is a big (22%) increase over September. It is a 45% increase over last October. October has been the busiest month of the year, which is kind of unusual.
The usual business pattern in Greater Vancouver has spring being the busiest time, from March 1st to say June 15th. That is typically when you will see the most sales happen. Then it slows down in July and August, and is usually busy again through the fall.
The market pattern over the last 12 months has been completely different. We were in a buyers market from November 2018 to April of 2019. For 6 months it was a pretty strong buyers market. From May through to September it kind of shifted out to a balanced market territory where there is an equal amount of buyers and sellers. If October holds strong, we are in a seller’s market again in a majority of the markets in the Lower Mainland.
So, what is causing this turnaround? Well, I am not an economist, and quite frankly I am surprised that this market is coming back at this time of year. What we can attribute it to is firstly, population growth and secondly, a housing shortage. There are 40,000 people that come to the Lower Mainland each year. Just going back to Expo in 1986, the population of the Lower Mainland was about 1.4 million people. By 2000 it was 2 million people and today we are pretty close to 2.8 million people.
By 2040 they say there are going to be 4 million people here. The city is landlocked. You cannot go south because of the United States; you cannot go west because of the Pacific Ocean, and you can’t go north because of the mountains. That used to only leave going east, but there are not many building lots as far as Abbotsford as much of the available land has been developed. That is why you see a lot of construction going up in the air. We can all talk about how we don’t like it and that Vancouver is changing, but that is just the way it is.
One thing I have noticed about the sales on the Westside of Vancouver for the past several months is that 75-80% of them have been below 2.75 million. In October, almost 50% of the sales were over 4 million. Over 30 properties sold for over 4 million. We haven’t seen that since before 2016 when the foreign buyer’s tax came in. Does this mean that we’ve got some people from Hong Kong coming in and buying up these expensive homes? I don’t know, but that was the first thing that came to my mind.
Also, inventories are decreasing. So when there is less selection, typically that causes a little more of a swing in the prices. From November through April we saw prices continuing to come down. From May to September, we saw them kind of levelling out. In October we actually saw them starting to creep up in a few markets.
Pent up demand may be another reason why the markets are getting busier. People haven’t been scooping up real estate as they have in the previous years. Low mortgage rates could also be a reason. You can get a 5-year mortgage rate at 2.5% for a fixed rate today.
Where is the market is going for the next 6 months? it will be interesting to monitor and see if November comes back strong again (which is a month where it typically starts to ease down into the Christmas time).