What if I told you that more homes are sold in the summer than the fall?  

You’d probably call me crazy.  I recently made this statement and one Realtor called me a liar in front of my colleagues.  So, I looked at the numbers.  I took all of the detached housing sales on the west side of Vancouver and here’s what I found:

If we can agree that ‘summer’ is June, July and August and ‘fall’ is September, October and November, then for 8 of the last 9 years, summer has been busier than fall - in up and down markets.  Given that today’s market is widely considered to be slower than last year’s and buyers are much more hesitant than they have been in the past, coupled with the fact that many prospective buyers have yet to sell their home, I can easily suggest that fall will once again be slower than summer.  

But that’s just one small segment of the market.  What about the whole market?

Here are the MLS sales numbers for all product types on the west side of Vancouver - houses, condos and townhomescombined.  The results are a little bit different, but can you can see that once again for 8 of the last 9 years sales have been busier in the summer than they were in the fall.  The only difference is that when attached homes are included, the only fall that was better than summer was 2003 - which had an anomalous month in October 2003.  (If anyone knows why sales spiked, I would love to know.  I think it was a project released on MLS)

If you want to know more about sales in your area, I’d encourage you to talk to a local Realtor who will be able to offer insight about what the fall market means for your home.  

But what about prices?  I heard that prices are holding steady.

You are not wrong.  The real estate board has taken great pains to assure and calm the public that the Greater Vancouver real estate market is strong and stable - particularly after my last blog post received so much media attention suggesting that the current trend of high supply and low demand will lead to an adjustment of prices.  Unless someone can convince me otherwise, when it comes to short term pricing in the Vancouver market only two variables matter: Supply and Demand.  Since my last blog post, supply has remained relatively static and sales have been slower that at any time in the last 10 years (with the exception of the August prior to the 2008 crash).

As of September 16, 2012 there were 1014 homes for sale on the west side of Vancouver, down slightly from June’s 10 year high of 1078 available homes.  After peak sales volume in February, sales in every month in 2012 have been lower than the month that preceded it reaching a low of only 75 home sales in August - 46% lower than the 10 year August average and 55 homes less than August 2011.

We are only hearing anecdotal evidence of a busy fall market with new listings popping up, buyers coming to open houses again and some houses selling in multiple offers.  But the typical fall buzz has yet to be seen.  Many Realtors are struggling to get offers on listings.  In hopes of prices declining or another home coming on the market, many buyers are reluctant to write offers.  September is not proving to be the saving grace many thought it would be.

Time to Cash Out:

Is the Vancouver real estate market heading for another crash? 

*This version has been edited because it was deemed by some of my colleagues to be disrespectful to the industry of which I am a part.

I’m a REALTOR and I sold my own home 4 weeks ago.  It wasn’t too big or too small.  It’s only 6 years old and still feels new.  I sold because in 6 months my home will be worth less than it is today.  I think its time to cash out!  Let me explain.....

To ignore the truth doesn’t change the truth.  And so it is in the Vancouver real estate lately.  The facts are simple; real estate is easier to sell when prices are going up, realtors are happier when more houses are selling and open houses are more fun when buyers come to look.  However, the good times pass like the bad ones do.  I would suggest that good times have passed in the Vancouver real estate market, at least for the foreseeable future.       

Here is a great example of where the real estate industry loses the public trust.  The headline of the June 2012 Real Estate Board of Greater Vancouver Newsflash is “Greater Vancouver housing market favoured buyers in June”.  The opening line was a bit more accurate: “The number of residential property sales hit a 10-year low in Greater Vancouver for June, while prices remained relatively stable.”  But what does “relatively stable” mean in a market as hyper sensitive as Vancouver where real estate is a hobby, sport, profession, retirement plan and cocktail party conversation all rolled into one?  

The Greater Vancouver real estate market is anchored on the west side of Vancouver.  With its limited land supply and stunning views of English Bay and the north shore mountains, the west side of Vancouver from Main St. to UBC has always been a hot spot for Canadian real estate.  It has been 2 generations since owning a home on the west side of Vancouver made sense for an average income family and I doubt those days will ever return.  The west side housing market is a great bell weather for the rest of the lower mainland because it drives media headlines and experiences the largest swings.

Two key factors drive real estate activity - Supply and Demand.  These factors work together to determine volume and prices.  The equations looks like this:

Low supply + low demand = Prices are stable.

High supply + high demand = Prices are stable.

Low supply + high demand = Prices go up.

High supply + low demand = Prices go down.  

Remember, according to the real estate board of Greater Vancouver, prices in June remained “relatively stable”.  Stability is a result of low supply and low demand or high supply and high demand.  And in a dynamic real estate market such as Vancouver one month does not determine “stability”. 

Lets look at the numbers:

Supply

WEST SIDE MLS DETACHED LISTINGS 2003 - 2012 

There are only 4 months in the last 10 years where the number of available houses on the west side of Vancouver was higher than 1000 - September and October 2008 and May and June 2012.  

The truth of the supply side of the equation is: 

There are more sellers competing to sell their home on the west side of Vancouver now than at any time in the last 10 years! 

Demand

WEST SIDE MLS DETACHED SALES 2003 - 2012 

Demand for homes on the west side of Vancouver is falling.  In fact, it has been falling for 5 straight months.  Demand has actually been about 35% - 40% off of the 10 year average for 4 months now.  If this trend keeps up the number of sales in July will drop below 100 - which it has only done once in the last 10 years - July 2008 - which was just  4 months before the worst month ever which produced one of the sharpest price drops Vancouver has ever seen.

The truth of the demand side of the equation is:

Lowest June home sales on the west side of Vancouver in the last 10 years!

So the new equation looks like this:

   More sellers than ever 

+ Less sales than any previous June 

____________________________________

Today’s real estate market

As a REALTOR I can assure you people are still buying homes.  In fact, 2362 homes were sold in June in Greater Vancouver (Remember, this is the lowest number of sales in the Real Estate board of Greater Vancouver in 10 years).   There are all sorts of reasons people buy and sell homes - not just price.  Whether it is a newly married couple who want a place of their own, a lower income buyer taking advantage of mortgage rules before they change, growing families, empty nesters, downsizing seniors or people moving up and down the property ladder who don’t want to rent, there will always be sales.  Demand will never reach zero.     

Right now, supply is up.  Way up.  Demand is down and trending lower.  I hate to point out the obvious, but prices are a result of supply and demand.  In today’s real estate market, the equation looks like this: High supply + low demand = Lower prices.

There is still lots of opportunity to sell your home.  I’m just not sure how much longer it lasts.    Prices have started to fall but demand is nowhere near the levels it dropped to in fall 2008.  Different product types have different dynamics.  Condos, townhomes and luxury homes are all markets unto themselves.  But its the west side houses that make the news headlines.  If the media picks up on this story, you can be sure the rest of the market will follow the west side.  If you are on fence about selling your home, thinking of cashing out, nearing retirement or need your equity to buy your next home, now might be the right time to call a REALTOR.  Otherwise, I’d plan to hold on for another rough ride.   I think 2012 will be another one of those years where Summer is better than Fall.

Keith Roy is an award winning REALTOR at Macdonald Realty in Vancouver, BC.  He has been ranked in the top 10% of all Greater Vancouver REALTORS for the last 5 years.  Keith sold his own home 4 weeks ago based on these numbers.  Keith can be reached at homes@keithroy.com