Last January I was sitting in the same place typing up a similar yearly update to my clients. My prediction for 2015 was due to basic supply and demand principles that were… increased Demand in Vancouver due to liveability off the charts and an increasing number of global eyes on our city coupled with relatively fixed/limited supply would increase prices… what I didn’t predict was the level of price growth we saw in 2015!
The Supply of homes through 2015 was roughly average for the last 10 years (or even slightly below), the kicker is number of sales on the Real Estate Board of Greater Vancouver was the highest recorded EVER. The result of limited supply and increased demand was increasing prices and a heavy seller’s market. Price increases were in the 14% to 24% range in 2015 depending on the property type and specific location.
Vancouver West Single Family 1 year % change in Benchmark Price went up 24% to a staggering $2,579,200
Vancouver West Townhouse 1 year % change in Benchmark Price went up 18.7% to a $897,400
Vancouver West Condo 1 year % change in Benchmark Price went up 18.1% to a staggering $765,700
In December 2015 we saw a Sales to Active ratio of nearly 50%... that is slightly nuts. A healthy balanced market is somewhere around 18%... below that you have a buyer’s market, and above that you have a seller’s market. 50% is needless to say an extremely strong Sellers market. If you were thinking about listing a place for sale, I would highly consider doing it soon. I actually (knock on wood – Subject Removal today) sold my current principle residence today. I was able to secure a presale home roughly 1.5 years ago that will be completing in a few months. With the gains in both properties it made sense to sell our current home and get our principle residence tax exemption on the gain and move to the other home and hopefully cash on that tax free gain one day. If anyone wants to chat about listing, buying or future planning with your properties I would be happy to meet for a beer or coffee anytime to discuss it all.
What I expect to see in 2016 is more of the same at a reduced rate. Supply and Demand are still the driving forces of the market - some people get confused and talk about other items… but it all plays back to supply and demand. Supply (much like last year and ever year in Vancouver due to geography etc) is relatively fixed… sure they are ramping up as many housing projects as they can, but those projects are in areas maybe where density is changing and less dense projects are coming down, or in areas further out, or in some smaller transitional neighbourhoods (South East False Creek Flats). There overall is just not that much ability for new supply or urban sprawl in all directions. Demand will remain high: as of now our weakening dollar is putting everything on sale for non-resident buyers, Interest rates will stay at historical lows, and people just want to live here. I hope in the immediate future more people will be listing homes to cash in on the busy market as Supply is at unhealthy low levels… but the biggest problem I am hearing from potential home sellers is where will I move to next in this hot market?