The madness continues. And one might argue that it is getting worse. Inventory continues to be extremely low. The total number of homes currently listed for sale in Metro Vancouver is 6,742. That is a 19.3% decrease from February of last year.
But last February’s inventory was already 21.2% below the 10-year February average.
At the same time, sales are 26.9% above the 10-year February average. This combination has pushed the sales-to-listings ratios for various property types up by more than 10% from last month and this has resulted in a jump in prices. For detached homes the ratio is 34.9% and this corresponds to a monthly increase to the benchmark price of 4.7%, a total increase of 25% in the last 12 months. For apartments the ratio is 62.2%. This is reflected in a monthly price increase of 4.1% and an annual price increase of 15.9%. The ratio for attached homes is 64.3%, resulting in a monthly price increase of 5.9% and an annual price increase of 27.2%.
This ratio is said to indicate upward pricing pressure when it is above 20% for several months. In fact these ratios have been well above 20% for over a year. As prices are unaffordable in Metro Vancouver, more and more people are in a frenzy to buy in the Fraser Valley. And you can see people taking advantage of this by reselling their homes within a 12 month period and profiting from a 25% to 70% increase. We are talking about profits of $300,000 to $600,000 in 4 to 12 months. This type of activity feeds upon itself until you see shacks selling for over a million in Chilliwack. The benchmark price for a detached home in Mission is now 1.25M, up 52.4% from last year. Seems like only yesterday when we were having this conversation about houses in East Van. You need to get speculators out of the market, they only drive prices up for end users.
With the increase in the central bank interest rate starting to rise and the record inflation numbers, it is within the possibility that we can head into a recession. For someone still trying to flip properties, they might just get it in the neck.
Other than the increase in the Bank of Canada’s overnight rate, which was increased from 0.25% to 0.50% on Wednesday, there does not seem to be anything effective that can curb the increase in house prices. The Liberals just recently voted down their own campaign promise of a 2 year ban on foreign purchases of residential property. And the BC government’s commitment to have a cooling off period seems off the mark to me. It is easy to criticize. I don’t have a solution. At least they are trying, right?
