June 2016 Stats review

The latest stats for June 2016 show a slow down in detached sales in Vancouver proper over the past dew months. The most appropriate gauge of market “speed” is the sales to active listings ratio. This ratio shows how many homes that were listed, actually sold in any particular month. It’s a pretty simple ratio. If 300 listings were on the market in a particular month, and 150 listings sold, the ratio is 50%, simple. In theory, anything over 20% is considered a sellers market. To put it in perspective, in the past 24 months, we have seen ratios approaching 100% and in the past 6 months, over 100%. For example, in Port Moody, the attached listings to sales ratio for June 2016 was 137%. This extremely tight market condition creates sharp price increases. In contrast, the detached ratio for Coquitlam in June 2016 was a respectable 54%, nowhere near the 90% it reached in March 2016.

Aside from anecdotal evidence showing market speed, these numbers are the best evidence of how busy things are. Granted, the numbers, published monthly are somewhat stale the moment they come out, they are very useful in determining market trends.

It’s a fairly accepted theory that market speed has traveled in waves outward from the city of Vancouver. The wave hit the Tri city area in December 2015. December is typically the time when active listings are at their lowest point in the year, who wants their house listed for sale over the holidays? So in December, a wave of buying activity hits Coquitlam and Port Moody. Prices are increasing rapidly. In March of 2016, the wave hits Port Coquitlam. Prices in Poco rise sharply. 60 days later the wave hits Maple Ridge. This is more or less how price increases happened in the past 7 months. In June 2016 the ratio in Vancouver East was 33%. Inventory of active listings has been rising over the past 3 months in Vancouver East and sales have been decreasing. Falling ratios in Vancouver East has caused prices there to moderate. So what happens to prices when sales ratios fall? In my opinion, prices fall from their most recent level. So if sales ratios in Vancouver East continue to be at 30%, prices will stay relatively stable but of of their highs. According to my wave theory, slowdowns also travel outwards. This is born out by the fact that Port Coquitlam ratios are down and Maple Ridge numbers are still sky high.

Here is a chart showing ratios for the Tri City area:

Sales to Active Listings Ratios

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The above table shows that the attached market in Port Moody, Coquitlam and Port Coquitlam continues to be very hot. It also shows that the detached market is moderating but still could not be called a balanced market.