Nearly 300% More Homes Sold with Record Low Inventory

No matter how you slice it, this has been a highly unusual year for the real estate industry and for the world.  The pandemic has caused a massive shift in how people think about their home, travel, and how they envision spending time in the future.  For most people, this means increasing the size of their living space, which for many has also become their working space.

The most dramatic number to talk about this month is the 283% increase in the number of homes sold compared to April 2020. It is important to note that April last year was a very soft month for the real estate industry since it was right in the middle of the first lockdown.  Many home buyers initially took a “wait and see attitude” before returning to the market in full force in June.  However, even taking this into account, the current sales volume is historically unprecedented and is not showing any signs of letting up, just yet.

Our internal research also shows us that prices are significantly higher in all product categories compared to last year, even compared to last month.  As recently as a couple of months ago, price growth had been limited to single-family homes and townhomes. Condo pricing had fallen as buyers expressed a preference for their “own front door.”  However, that shift created a price gap that condos are now rapidly increasing to fill.

The number one question that we get is “how long is this going to continue for?”

There is no question that the pace of price increases is not sustainable in the long term. At a minimum, a plateau is sure to come at some point.  Having said that, with inventory slowly increasing, but still down by nearly 40% compared to last year, we need to see a lot more homes listed for sale, at all price levels, before the market levels.  Currently, this inventory shortage is causing nearly two thirds of all single-family homes and more than one third of all condos to sell over the asking price in competitive bids.  Ultra-low mortgage rates are also helping to fuel higher selling prices, enabling buyers to pay more for a home but still end up with a lower monthly payment.

Keep that seat belt on. It’s sure to be an interesting next couple of months.

If you would like to discuss these ideas in more depth, please feel free to give Karl Leong or Mark Roozendaal a call.  We are here to help you make sense of this changing market.

For even more timely updates follow the Preferred Homes Team on facebook or Instagram, and look for our “60 Second Market Snapshot” video released every Tuesday morning.
 
Please consider referring your friends, family, and colleagues our way.  Virtually all of our business comes from referrals and we sure appreciate your help.  In fact, we wouldn’t be in business without you!

In all market segments - houses, condos, and townhomes - prices are on the rise, inventory is incredibly low, and most properties are selling over the asking price. Where three to six months of inventory was historically quite normal, our internal research shows that the inventory of available houses has dropped to a record of low of 21 days of supply this week. Condos are not far behind with only one month of supply. Both of these inventory numbers are still dropping which points to further challenging times ahead for first time buyers and for those hoping to sell one property and buy another. Low interest rates, covid induced demand, and an overall shortage of properties for our growing population are all to blame.

While the single-family home market has been making all the news for rising prices over the last year during our pandemic, condos initially saw falling prices as buyers displayed a strong preference for their own front door. However, as we have mentioned over the last quarter, condos have been rebounding. Condo pricing is now clearly moving higher, with almost one in three condos selling over asking in competitive bids. A condo buyer could benefit significantly by making a purchase sooner rather than later.

For single family home buyers, even though the statistics make it look nearly impossible to secure a home at a “reasonable” price, there may be some respite on the horizon. It’s too early to call it a trend, but last week a smaller percentage of homes sold over the asking price than the week before. It’s a small change so far, but one that we will be watching very closely.

For house sellers, the current market continues to provide outstanding opportunities to sell a property for top dollar, especially for properties that may be challenging to sell in a more balanced market. If you are considering selling this spring, our advice would be to get on the market sooner rather than later. If a slight cooling trend does develop, the market advantage that sellers currently enjoy could quickly wane.

If you would like to discuss these ideas in more depth, please feel free to give Karl Leong or Mark Roozendaal a call. We are here to help you make sense of this changing market.

For even more timely updates follow the Preferred Homes Team on facebook and look for our “60 Second Market Snapshot” video every Tuesday morning.

Please consider referring your friends, family, and colleagues our way. Virtually all of our business comes from referrals and we sure appreciate your help. In fact, we wouldn’t be in business without you!

Our local real estate market continues to favour sellers with a shortage of inventory and plenty of multiple offers. Even with a potential mortgage interest rate hike on the horizon, demand is continuing unabated.

Single family homes continue to lead the market with more than half of all homes selling over the asking price. In the under $1M price range, more two thirds of all homes sell over the asking price. Another important statistic that we track internally is how many months of inventory is available. That figure is shockingly low at 0.9 months, meaning that during each month more than the total number of homes available will sell. To put this in perspective, in the past it was normal to have 6-8 months of inventory available. No wonder buyers are having such a tough time finding a home! Prices are on the rise as well. Although the Home Price Index calculates that prices are up 10.8% from last year, in many areas of Greater Victoria that increase is closer to 14-17%.

The condo market is also picking up steam. Over the last year, as single family home prices moved sharply upwards, condos were left behind and a pricing spread developed. Now, buyers who feel that house prices are out of reach are turning their thoughts to the benefits of condo life, causing this market segment to accelerate. Our internal research shows that the absorption rate for condos has doubled in the last two months, multiple offers situations have increased, and pricing has started to rebound from the dip created by the pandemic. The condo market is still a bargain compared to houses, but may not stay that way for long. If you are considering a condo, now may be the best time to make a purchase.

Looking to the future, we are watching bond yields very closely since they have a direct effect on fixed term mortgage rates. Those yields are now at a fifty-two-week high and this has already started to push mortgage interest rates up. Although variable rate mortgages are not directly affected, if you are considering a fixed rate mortgage, now would be a good time to call your lender to lock in your rate.

If you would like to discuss these ideas in more depth, please feel free to give Karl Leong or Mark Roozendaal a call.  We are here to help you make sense of this changing market.
 


Do you find our monthly updates valuable and informative?  If so, please consider referring your friends, family, and colleagues our way.  Virtually all of our business comes from referrals and we sure appreciate your help.  In fact, we wouldn’t be in business without you!

CMHC has released their rental market report for Canada. Rent rates in Victoria are up 3.3%.  Combined with capital appreciation, investing in rental properties continues to be a sold bet. 

Click here to read the full report.

As we continue into 2021, the robust market that we experienced through most of 2020 continues unabated.  Record low interest rates and a serious shortage of inventory is creating an increasing number of multiple offer situations, especially on single family homes. 

However, condos are also starting to feel the heat.  As house prices rise out of reach for many buyers, our internal research is now showing a rapid increase in competition for condos, especially in the last week.  We expect this trend to continue and intensify rapidly.  Consider this fair warning to condo buyers to act quickly.

How you feel about these market conditions clearly depends on whether you are a buyer or a seller. For sellers, there is an immense opportunity right now to sell at the highest prices that we have seen, especially for difficult to sell homes.   Inventory could eventually build and moderate demand, but until that happens, there is a great short term opportunity. 

For buyers, the market is extremely frustrating, and often heartbreaking, as dream homes receive multiple offers, often without conditions.  Although it can be tempting to simply give up, working hard to secure a home before prices rise further could end up being the winning move.  Buyers are strongly encouraged to make sure that their financing pre-approval is in perfect shape and to consider conducting a building inspection prior to writing an offer.  With so much competition for each home, a strong offer with few or no conditions often wins the prize. 

Although this market may feel unprecedented, it really isn’t.  As recent as the spring of 2017 we experienced similar low inventory levels with an even higher percentage of multiple offers.  Whether buying, selling, or both, you can rely on our experience to guide you these market conditions.