In the first five months of 2021, our local real estate market has seen sales volume more than double from the same period last year. At the same time, prices are up by at least 20%. However, as we are experiencing record selling prices, record sales volume, and record low inventory levels, a lot of people are wondering how long this can continue.
Our internal research tells us that in the single-family home market we may have already passed the peak of the market. Compared to previous weeks, sales volume is down, inventory is up, and there are fewer multiple offers this week than last. The change is slight, but it is starting to look like a trend. Studying the condo market, we see much the same type of pattern.
However, even with growing inventory, the level of pent up demand is still pushing prices higher. In fact, inventory is so low, down nearly 40% from last year’s already low level, that it will likely take months for any balance to return to the market.
Many point to the brand-new, enhanced stress test as a powerful tool to shape the market. Yes, it will slightly reduce the buying power of some home shoppers. However, from our experience, it will make little difference in demand and will instead just push the affected buyers into a slightly lower price range.
What the market truly needs is an increase in the housing supply. Unfortunately, this is largely controlled by the municipalities and is never a quick fix.
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.
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