A 90 thousand price increase from November to December! How? The one word answer is, Pemberton. Pemberton’s average sales price doubled in value over the one month. November had an average sales price of $695,000 then boom, $1.340 million, however this was the only sale and hardly a trend.
Greater Vancouver’s December average sales price came in at $1,670,893. Which is actually up from the beginning of the year when January realized a sales price of $1,615,953. However if you subtract the doubling of Pemberton and add a normal sales price for Pemberton the Greater Vancouver average comes out to $1,580,714, which would have resulted with the average sales price remaining close knit with November’s sales price of $1,583,878.
The 2019 yearly average sales price for Greater Vancouver Detached market was finalized at $1.565 million. Signalling a drop of $115,000 from the 2018 average of $1.680 million.
Eitel Insights anticipates 2020 will be another down year for sales prices, we predict prices to test the $1.4 million threshold. At that point, all equity that had been gained over the previous 5 years will have been erased. Also when the market tests $1.4 million that will realize a 23% loss from the peak in 2017 of $1.830 million. If 1.4 Million does not hold as a bottom the market’s next echelon will be $1.275, then $1.225 million. That is as low as we could see Greater Vancouver falling to by 2021 which would signal a 31% price correction from the peak.
In 2015 the average sales price broke the $1.4 million price point. By 2017 prices had escalated to $1.830 million, signalling an increase in equity to every home owner of $430,000. With that kind of whipsaw to the market, we will see a lot of “need based selling” upcoming in 2020 and 2021.
The sales in 2019 broke out of the falling knife trend that had been established in 2016. Rather than the market rebound touted by the Real Estate Board and other analyst, the rationale for purchasing was simple… stress test mitigation. With multiple price test of $1.5 million signalling an 18% price correction from the peak the sidelined purchasers who had been effected by the stress test were able to purchase for the first time in years.
The sales range held firm in 2019 with 950 holding as the most sales in a given month, which is amazing given we started the year with only 344 sales. We anticipate the 2020 market to again test the 950 high water mark.
Noticeable in the chart is the drastic difference between our new reality compared with the scorching hot market that greater Vancouver had become accustomed to.
The inventory finished 2019 at the lowest levels since January 2016. With only 3527 active listing in December 2019.
The 2016 levels were based on incredible demand from local and foreign investment.
2019 however we see as merely seller’s fatigue. The market has been evolving to a buyers’ market over the past two years and the seller’s can feel the change. After remaining on the market for months and no offers we believe a majority of the sellers took the Holidays off. In the first half of 2020 the market will again experience a new crop of inventory that will hit the market and push levels back above 6000 active listings.
An example of why sellers have given up, the Days on Market is at the highest point over the previous 6 years. Long gone are the days when a listing would sell in one weekend with multiple offers. However sharp listings still do sell in a reasonable time, which was true in 2019. The unfortunate side of that statement is there are increasingly fewer sharp listings.
As this market continues to push lower the purchasers are keenly aware. They will bide their time and be rewarded with increased competition amongst the listings for their valuable time and consideration.
Condo Prices in 2019 were Down 7% compared to 2018. What is the Forecast for 2020?
December’s average sales price for Greater Vancouver Condo market came in at $667,875. Which resulted in the overall sales price for 2019 of $661,387. Which is $52,000 less than the 2018 average total ($713,258).
2019 prices had multiple tests to the middle threshold of the current market cycle. Prices were in a 20 thousand dollar price band for most of the year, between $640,000 and $660,000. In the 4th quarter of 2019 prices produced a divergent trend which will likely be resolved with a significant price move in the first quarter of 2020.
We forecast further price losses in 2020, with prices likely breaking downward out of the current divergent trend. That will result in some volatile price movement, with a high probability of seeing prices test the $600,000 threshold.
Ultimately before the market settles at the bottom. Eitel Insights forecasts that the Greater Vancouver Condo market will test the $525,000 threshold. Which would signal a price correction of 30% from the peak..
The sales have been much better in 2019 compared to 2018, as is evident in the chart. This V shape reaction is hardly cause for celebration. As we have said before “picking yourself up off the floor doesn’t mean you will win the fight.”
Other analysts have touted the 88% increase to December’s year over year sales. True enough but what they conveniently leave out is that December 2018 was amongst the worst on record in the past 15 years. So beating that mark is less than impressive in our books.
Inventory during the 2nd quarter of 2019 was at the highest levels since 2015 with 5900 active listings. During the 4th quarter the inventory negatively broke out of the staunch uptrend, and fell quite precipitously.
We do expect the market to put in a higher low than was previously low recorded in December 2017; which would instigate a conservative longer term uptrend. With the abundance of inventory through presold units beginning to complete in 2020 and beyond. Eitel Insights anticipates the 2020 inventory will surpass the 2019 levels.
Notably we believe the lack of inventory during the 4th quarter of 2019 is due to seller’s fatigue. Many of the listings had been taken the property off the market to consider how to proceed in this new environment.
As backing to our thought process that the inventory has been disappearing due to seller’s frustration, rather than any ravenous demand. The Days on Market has continually risen over the past few years and even while the sales have rebounded, the days to sell a property on average is still rising.
This data is not all properties listed, only the sold properties. Indicating the cream of the crop takes well over one month to achieve an accepted offer.
Not all markets are created equal, while some fall, other rise. Become an Eitel Insights client and receive Actionable Intelligence on Real Estate across Canada, visit our website. www.eitelinsights.com
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