In January, the sales and listings activity for detached homes on the Westside remained below the long-term averages.
Compared to the 10-year average, the supply of detached homes decreased by 2%, while apartments increased by 27%, and townhomes increased by 22%.
Similarly, demand, when compared to the 10-year average, decreased by 34% for detached homes, apartments decreased by 19%, and townhomes decreased by 39%.
In January, the westside Detached Home median price is down 27.4% from the peak in August 2023. The Apartment median price decreased by 6% from the peak in January 2018, and the Attached Home median price declined by 12% from the peak in February 2022.
The spring market often starts off undersupplied and this year is no different with inventory struggling to keep pace with demand. The ratio of demand to supply known as “months of supply”. MOS, is a driver of prices with a high MOS causing prices to decline and a low MOS causing prices to rise.
Our supply of homes usually increases Feb. through June and the demand which is still well below the 10 year average should also peak during that time.
In January, the MOS, for westside detached homes, is 11.9 months which is too high to sustain prices. The question is whether demand in February will increase to the point where MOS drops and prices start to increase.
New listings are starting to come onto the market too however and while the 2024 forecast is calling for a 2-3% increase in prices by the year end, that will depend on increases in demand exceeding increases in supply.
Greater MOS inclines prices to fall and lower MOS inclines prices to rise.
February supply & demand numbers will help us see if the early signs of price strength continue or are merely a blip in the data.
The seasonal market cycle is; quiet in Dec & January, busy February through June, slowing down in July & August and picking up a little in October. So now is the time to prepare for a spring sale.
Rate cuts if they come will encourage buying but we are also further into the mortgage renewal cycle and many owners who purchased with favourable rates are now coming into renewals at much higher rates. For those owners unable to access funds from other sources to pay down their mortgages, the question is whether they will be forced to sell, increasing supply and what that will do to MOS & prices?
The fact that prices are as strong as they are given the market forces arrayed against buyers is amazing and supports the idea that the Vancouver market defies gravity!
Happy Valentine's Day! 🏹💘🐻🍓🌸🎀