BREAKING DOWN THE “NORMAL” MARKET.
A CLOSER LOOK:It is important to contrast our market activity to not just the last 3 years of increased activity, but rather a longer period of time to see how close (or far) from "normal" we are performing. A decade is a pretty good amount of time to make such measure.
10 YEAR LISTINGS (above): The above graph shows listing counts for each year for the past decade. A few immediate items stand out: 2018 inventory certainly has climbed, it's gone up 33% from our low of 8,089 listings the year prior. That being said, we are still 25% below the 10 year average of 17,055 units on market. Perhaps what really we are witnessing, is a return to average, which might be a far better indicator of what can be considered as "normal".
10 YEAR SALES (above): The above graph shows sales counts for each year for the past decade. A few immediate items stand out: 2018 counts saw the lowest count since 2012, at a 29% drop from the year prior, and a 27% drop below the 10 year average. The shift below average occured mid-way through the year at the same time that prices peaked. So why so many sales less? As a result of the many changes mentioned earlier, a good portion of buyers in the later part of 2018 have decided to "feel the market out" and are taking longer before making a decision to buy. Others have simply been priced out of the Westside market and have moved on to more affordable areas such as East Vancouver, Burnaby and New West. The result... a drop in sales.
TYING THE TWO TOGETHER (above): Basic Econ 101 tells us that an increase in inventory (supply) and a drop in sales (demand) will result in downward pressure on activity and eventually, prices. Where the turnover rate a year ago was 40% (a strong seller's market), it now sits at 14% (a balanced market). The good news - we have been in a balanced market for several months now - which might be a telling sign of us having entered a soft landing. The turnover rate is an important figure to continue watching as a measure of market direction and health.