September was the 5th consecutive month that we had over 2,000 sales. If you want to put that into perspective, from November of 2018 through April of 2019 we did not go over 2,000 sales one time, which is really unusual as March and April are two of the busier months of the year.
What we are seeing now is that the market is not on fire, it is not taking off but is balancing itself out. Since the foreign Buyer’s tax came in over three years ago, the detached housing market has pretty much been a buyer’s market, except for the lower price points. Prices currently are not increasing and I am not saying the market is going great, but just that the market is now levelling off.
We are entering balanced market conditions. There are 3 types of markets, and it is based on the statistics. The statistics say that if more than 20% of the properties sell each month (1 out of every 5) that means it is a seller’s market. We have not seen many seller’s markets in the detached housing market for a few years now. If it is between 13% and 20% it is a balanced market. That means that there are an equal number of buyers and an equal number of sellers. If the sales are 12% or lower, it is considered a buyer’s market.
If it remains a seller’s market for an extended period of time, prices will rise. That is why we saw big increase in prices between 2013-2016. If it is a balanced market for an extended period of time prices will stay flat. That is what has happened to prices currently. They are not really declining like they were for the past few years where prices were slowly trickling down from August 2016 until the spring of this year. Now that we are entering balanced market territories they are flattening out. If sales are less than 12% for a continuous period of time, you will see prices decline and that is what we have been going through for the last couple of years.
So what is the outlook? The government has done everything it possibly could the last couple of years to slow the market down. They were worried that prices were out of control, and I can say from a realtor’s perspective it was scary for us too. Nobody wants the market to implode. What the provincial government did was to implement a Foreign Buyer’s Tax (which they raised after implementing) and they raised the Property Transfer Tax, Speculation Taxes, and added Mortgage Stress Tests. In Vancouver an empty home tax was also added! I do not know many other places that could survive that much taxation and not implode.
All the people that were saying “Vancouver is a bubble market it’s going to explode”, are now saying it is now levelling off and it didn’t implode. So why is that? It is because the Lower Mainland is landlocked and 40,000 new people come here every year. There are currently 2.8 million people and they say there is going to be 4 million people by 2040 and there is nowhere for them to live. That, in my opinion, is why this market is now stabilizing.
My outlook for the rest of the year until spring will be more balanced conditions. I do not know that we are going to ever really enter seller’s market territories unless there is a change in Provincial Government. The current Government does not have a great history with the Real Estate Markets being strong. If that doesn’t get some negative comments on my page I do not know what will (for all the supporters of the current government).