It seems like a month or two ago the regular message was “The market is down”, “Inventory remains sky high” or “Homes are coming down another 10%.”
But the truth of the matter now is quite different. Although prices are not skyrocketing, property is moving and it is moving FAST! One point we have touched on, but not really spoken of tooooo much is Inventory.
Inventory is having a major impact on the market right now. Levels are low compared to demand, which brings us around to the age old phrase ‘Supply & Demand’.This is not necessarily the case across the entire board however, luxury is still taking a hit, yes product is now moving more, but it certainly has not picked up in the way the rest of the market has.
But if you are playing in the right ranges, you are in for a tough time - First time home buyers or developers to name just a couple. Take a look at the below comparison between new listings to market in December 2018 vs December 2019 for Vancouver:
Immediately we see in 2018, new listings were coming to market, but demand was not keeping up with the new supply. In 2019, it is abundantly clear supply increased in almost every factor, yet demand, again in almost every factor, swallowed that up whole and then some. This leaves hungry buyers out there waiting for a property type to come available so they can pounce. Of course it’s typically not just one buyer waiting … Now some will argue this is only information on new listings, however the differences between the numbers are clear indicators of the market overall.
As an example, we attended an open house this weekend at 206 1420 E 8th Avenue (not our listing). Over 100 groups came through the open houses that weekend, and when we submitted an offer we were in competition with 13 others. It ended up selling for $50,000 above asking price and subject free. Don’t get me wrong, it was a nice unit and a nice renovation, but nothing out of the ordinary and in a 40+ year old building.
This is not a one off example either. We are currently going through something similar on a home priced $1.8M, nothing special about the home at all, but the activity level is astonishing and currently in multiple offers. Or take a developer client we have looking in the inner city. We carried out some sales data research before starting and found everything we would have been interested in was gone in a week or two. Speaking to the agents they had a HUGE level of activity on these homes as well.
The interesting thing to note is the lack of opportunity too. It’s not like these homes are selling and we have 5 or 6 others to choose from. No, it’s quite common to have zero, or maybe just one other choice. Then what do you think happens when everyone is vying for that one available option….. ?!
I’m sure you’ve heard talk of all the new pre-sales completing this year and flooding the market with product, therefore supply outweighs demand, bringing the market back down. In theory this is all well and good and yes, we’re sure this will have an impact on the market, however if you are a first time buyer with a budget of $650,000. There can be thousands of $1,000,000 apartments come to market, but that won’t make a difference to your situation.
Also what about houses? ‘The Arc’, ‘Vancouver House’ and ‘The Amazing Brentwood’ are all either completed or coming soon, but if you do not want a condo and are looking at entry level houses, you won’t be paying attention to that market. It remains to be seen if the supply coming is great enough to reverse the current market trends …. Once again that crystal ball would be pretty great to have right now.
Speak to your REALTOR and ask them what they are finding if you are thinking about buying or selling, if they are regularly active they will be telling you the same thing, we are sure of it! Surprisingly, we all do talk to one another about what they are finding too. Shocking I know!
Thanks for reading along this week! Congratulations to Android Master for winning the giveaway of AirPods. We’re keeping the giving spirit open to all. If you fancy referring us a friend, colleague, family member or whoever you want, you’ll get a $500 Visa gift card when they purchase or sell!
Until next week,