According to the Canadian Mortgage and Housing Corporation (CMHC), a sales-to-new listings ratio below 0.40 is associated with a sellers’ market. In simpler terms, if fewer than 40 homes are sold for every 100 homes that are newly listed for sale over a specific time period and geographical area, then a real estate market for that area during that time period can be described as being a buyers’ market.
According to statistics data taken from the Multiple Listing service, Vancouver neighbourhoods that have been experiencing buyers’ markets for first 3 months of 2012 are listed in Table 1 below.
- With regards to the detached home market, many neighbourhoods experiencing buyers’ market conditions are seeing still seeing year-over-year increases in median home prices. Median prices for attached homes in neighbourhoods experiencing buyers’ market conditions are more likely to have decreased year-over-year – especially in neighbourhoods on the West side of Vancouver.
- Of the 13 neighbourhoods in Vancouver experiencing buyer’s markets in detached homes, 10 of those neighbourhoods are located on Vancouver’s West side. Of the 9 neighbourhoods in Vancouver experiencing buyers’ markets in attached homes, 8 of those neighbourhoods are located on Vancouver’s West side.
As mentioned in our previous post outlining the hottest neighbourhoods in Vancouver from January to March 2012, affordability is likely the key reason why the real estate market on the West side of Vancouver has stalled this year. With median detached and attached home prices in many neighbourhoods still increasing year-over-year, current home prices in neighbourhoods with buyers’ market conditions may reflect the limits of what people are willing to pay for a home in these neighbourhoods. As a result, there has been more activity in the East side of Vancouver between January and March of 2012 and some East Vancouver neighbourhoods have had sellers’ market conditions and double-digit percentage increases in home prices year-over-year.
Prices in buyers’ markets may stall or fall. However, a complete crash of the real estate market seems unlikely. With interest rates still low and owners still able to maintain their mortgages, the likelihood of a sudden surge of mortgage defaults is unlikely.
- If your home has been sitting on the market for a while with no interest, your home is likely overpriced with regards to what your local real estate market will support. Speak with your realtor immediately to drop your list price to be more in line with what has been selling recently.
- If you are planning to sell your home, make sure you check market conditions in your neighbourhood and price your home accordingly.
For buyers, newer listings tend to reflect the current market conditions better. A realtor can provide you with automatic updates and new listings that are emailed to you if you are interested.