The first data of 2020 is in; the averages sales price for Greater Vancouver is down $80,000 from the previous month, and down $40,000 year over year. No sense for optimism from where we sit.

The price point is in the middle of the current market threshold. After a successful defense during 2019 of 1.5 million, Eitel Insights anticipates the next test of 1.5 million will break through and prices will indeed test he 1.4 million threshold. Previously established in 2015. At that point all equity gained over the previous 5 years will be erased.

Sales are significantly lower than a quarter ago. Of course, there is a seasonal factor at play and the 444 sales were higher than the previous January when only 344 detached homes sold.

We feel a need to point out what occurred during 2018 and 2019 for the sales activity. In 2018 the stress test was introduced which diminished purchasing ability by 20%. That forced a major segment of buyers to the sidelines. In 2019 prices had indeed dropped to 1.5 million which is 18% from the peak in prices. Basically nullifying the stress test for the first time. It took the market dropping 18% for purchasing to begin. The 2 year backlog of buyers meant pent up demand that was finally able to release in 2019.

The current prospective purchasers are in a wait and see mode. We anticipate the sales numbers to again jump once the market reaches stress test mitigation. The Market sentiment will also begin to turn further negative as the introduction of the need based seller becomes prevalent in 2020.

The Inventory numbers have hit their lows and will begin to rebound during the upcoming spring and summer markets. Eitel Insights forecasts the detached inventory will again return above the 6000+ active listings by the beginning of the 2020 school year. Current inventory levels in January were 3947 the lowest amount since February 2016.

The notion that the demand has eroded the inventory is a fallacy. The inventory had dried up due to seller’s fatigue. Much of the inventory had a listing that was at expiration and rather than relist they took the 4^th quarter off. After that time off, still with a need to sell, propelled  on by the hyped sales numbers reported by the board the inventory will be loaded soon enough.

We advise to the sellers who will be in that need based situation begin to sell now before onslaught of similar stories hit the market. Need based selling will become necessary in 2020, propelling the market lower in price. Simultaneously the buyer’s trepidation will skyrocket. The only way to mitigate their pessimism will be time. Which is not something every seller will be able to afford in the upcoming market.

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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A divergent trend has begun to establish itself in the Greater Vancouver Condo Market. Beginning in June 2019 prices were at $643,471 which bounced off our technical line and began a minor uptrend that propelled the market higher peaking in September 2019 with prices reaching $673,220. The November data produced and average sales price of $670,811 indicating a lower high than the previous high in September. This trend will be resolved with a clear and concise winner, Eitel Insights anticipates seeing the Greater Vancouver Condo average sales prices take another leg lower in 2020 and beyond.

Overall the market is down 11% from the peak in 2018, and while year over year is only down 3% that is after this recent rally that began when prices were down close to 7% from the November 2018 sales price.

Sales numbers have been touted as a sign of strength by the Real Estate Board, however the chart above in our opinion does not share their sentiment. Yes, November sales are up 400 year over year. However they conveniently don’t mention that last year was one of the worst on record. Sales will not dissipate to nothing there is always a segment of demand in Greater Vancouver. Need based purchasers, however we anticipate the inventory will drastically jump higher over the upcoming two years and that will disarm any potential rebound believed to be occurring by optimists.

The inventory has seemingly taken the 4^th quarter of 2019 off, after realizing an aggressive growth trend for the past 2 years. However the new monthly listed inventory is only lower by 300 properties on a year over year basis, and the overall inventory is lower by 800 properties. We attribute this to fatigue on part of sellers that haven’t been able to achieve a sales after remaining on the market for a lengthy period of time and simply removing the listing for the Holiday Season.

Eitel Insights sees a great imbalance currently taking hold in the Condo Market. As evidenced by the chart below which is the average days on market. Currently to achieve a property takes on average 44 days which is continually climbing higher. Indicating a real imbalance of “listed properties” versus “sellable properties”.

I will leave you with this analogy for the Greater Vancouver Condo market. Picking yourself up off the floor doesn’t mean you will win the fight. Again Real Estate cycles exist, we point out where we are in any given cycle across Canada. Here in Vancouver the market still needs to go lower before the cycle has been filled and the market can again see prices increase.  For an individual report please visit www.eitelinsights.com

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B-20 what? Never heard of him. Canadians are in a rush to take out mortgage credit once again. Bank of Canada (BoC) data shows a major jump in borrowing. The increase is some of the highest growth for mortgage debt, and is primed to explode even higher.

Canadian Mortgage Debt Grows At The Fastest Rate In Over A Year

Canadian mortgage debt held by institutional lenders made a huge leap. There was $1.61 trillion in mortgage debt outstanding in October, up 0.56% from a month before. That brings the balance outstanding 4.5% higher, when compared to the same month last year. This is both a new record for the dollar amount, and a multi-month high for growth….CLICK for complete article

Prices for Greater Vancouver are apparently headed higher in 2020. So says the Real Estate Board, unfortunately their forecasting track record is suspect to say the least. We cannot seem to recall a time when the GVREB had a negative forecast.

Prices in fact are down 7% from November 2018 or $120,000 dollar lower on an average sales price basis. Other marketing companies have recently come out with their “forecasts”…. maybe, just maybe they have an ulterior motive, rather than being objective market analysts. I remember another analyst saying “if you have a 20 year forecast you can buy now” so that portfolio is down $120,000, good thing for the long term outlook.

Eitel Insights clients and followers have been rewarded with lower prices and more inventory which is exactly what we forecasted, when the market was at the peak. Actionable Intelligence is our motto and those who have taken advantage of our analytical approach have saved time and money. Equally importantly a great night’s sleep. Not all markets in Greater Vancouver are created equal some areas are closer to the bottom while the majority still have significant percentage losses to come.

The time to invest is on the horizon however not at our feet yet. 2020 will experience need based selling as prices dip to 1.4 Million testing the current market cycle’s previously established prices. At the 1.4 Million price point the market will have correct a total of 23% from the peak. Indicated in our chart. Not to mention prices will be back down the 2015 level, indicating all gains over the previous 5 years will have been erased.

Sales ran like a scared cat from the near term high in sales indicated by the chart. One noticeable trend is there is an uptrend that has been established. We anticipate see the seasonal fall off over the next few months. Of course the buyers are still feeling the relief of the stress test mitigation. However patience is a virtue and those purchasers willing to wait will be rewarded with stiffer competition amongst sellers in 2020 and 2021.

The inventory came in at 4957 active listings which has broken out of the technical uptrend that had propelled the market higher since Feb 2016. The interesting factor with the inventory is, properties that were newly listed in November were 1,070 and the sales were 834. Indicating the newly listed properties that are appropriately priced are likely the ones receiving the acceptable offers. Properties that have been on the market for months are continuing to sit there, this is best exemplified by the chart below which shows the average days on market to before a sale is achieved. The days on market currently sits at 57 which would be lowering in the market was truly bottoming. 2020 will see the inventory tick back up and surpass the 7000 active listings that the market experienced in the summer of 2018. Largely due to the need based selling upcoming.

Money saved is money earned. Since our initial forecast that the Greater Vancouver Market had indeed topped out and prices would begin to trend lower. The market has realized a $360,000 price loss. For an individual report please visit www.eitelinsights.com

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