The Greater Vancouver real estate sales stats for November continue to show a weak market. The numbers improved slightly in October, but back down in November.
In November, sales dropped 42.5% year over year. This number was 43.5% in September and 34.9% in October. Sales were 34.7% below the 10-year average for November. In September it was 36.1% and in October it was 26.8% below the 10-year average.
The inventory in November has climbed to 40.7% higher than last November even as new listings are slower. For example, this November’s new listings are 15.8% below last November. The slowing sales are showing its effects in higher inventory and lower prices.
The sales-to-active listing ratio for September, October and November are as follows.
For detached homes – 7.8%, 10.3%, 8.9%.
For townhomes – 14.0%, 17.3%, 14.7%.
For apartments – 17.6%, 20.6%, 17.6%.
The key takeaways are that the market is not improving and prices are dropping in all segments.
For detached homes the benchmark price has dropped 6.5% in the past 12 months. In the past 3 months, it has lost 3.9%.
For townhomes the benchmark price has maintained an increase of 2.6% in the past 12 months; however, in the last 3 months, the price has dropped 3.3%.
For condos, the benchmark price has maintained a 2.3% increase in the past 12 months but has lost 4% in the last 3 months.
The market should not change until the spring when people will once again ponder if this is the time to get in.
The November Canadian and US job numbers were strong. Canada’s number were a bit stronger. It posted 94,100 new jobs in November, the largest one month gain on record (since 1976). The unemployment rate of 5.8% is also lowest on record. However, Wage gains for permanent workers were 1.5%, the slowest in more than a year. This compares to 3.1% year-over-year wage growth in the U.S.
Regardless, strong job numbers support the real estate market. This means people who already have a home will continue to have the ability to pay for their mortgages and people who are looking for a home have the ability to save some money. The weak wage growth is actually good for the real estate market because it lowers inflation numbers. The Bank of Canada and all central banks alike avoid inflation like the plague and will raise interest rates until they feel that inflation is under control.
The current down trend and volatility in the stock market may give an insight on future interest rate moves. The stock market is reacting to the inversion of the yield curve on US Treasuries. This is when shorter 2 to 3-year bonds has higher interest rates than longer 5 to 10-year bonds. This means bond professionals believe that an economic slowdown is in the near future. Rather than buying short term bonds that might mature to much lower rates, they are locking in longer term bonds for security reasons. Bond traders are not flawless prognosticators but 4 of the 5 times when this happened, a recession followed within one to two years. Along with the US jobs number that were lower than expected though strong, many are thinking this is the peak and that US interest rate hikes will slow or stop. This will translate to slower rate increases for Canada as well. A bit of good news for variable rate mortgage holders.
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