Wednesday, August 1, 2012

As we enter August, the heat rises on a stagnating Vancouver market

As July comes to a close and we enter the dog days of summer, let's recall our post about the seasons of real estate last week.
Summer, with its high humidity, roasting temperatures and long hours of daylight; this sense of seasonal freedom translates into cottage escapes, playtime, reunions, weddings, and beers/barbecues.

And, when it is summer leisure versus business, leisure usually wins - with good reason: we spend all winter dreaming of those lazy days of summer. With this pleasant distraction present for buyers, the business of purchasing property diminishes dramatically. In fact, the demand during summer for real estate can be so limited, many realtors will dissuade their clients from listing or recommend they postpone coming to market until autumn. As a result, the only properties which do come to market tend to be either relocations or changes in household status (the arrival of a newborn, co-habitation or divorce).
For real estate in Vancouver, Spring was a bust: sales tanked, listings exploded.

Summer has seen sales continue to tank.  But instead of the usual concurrent dramatic drop in listings, properties continue to be put on the market - albeit at much slower pace.

As we enter the first day of August (traditionally an extremely high day of listings expirations), we are only 370 listings ahead of last month's first day total.

You may recall that the first day of last month saw a massive number of listings expirations, a total of over 900 listings melted from the total as some property owners choose to remove themselves from the market for summer.

Thus it is conceivable that when today is all said and done - and the results are in - we could see our first month-over-month decline in total listings this year.

Even if this happens, the unavoidable fact remains... each and every sales day this year has seen more listings come onto the market that there have been sales for that day.

Plus, consider these two points (click on image to enlarge):

The seasonal declines in listings are expected. The fact is that there have been far less expirations than there should be for a normal month of July. Far from being a harbinger of a market that may be recovering, the mere fact total listings have not plunged from their levels going into Summer is evidence that the bear conditions march onward.

The large number of listings that have been pulled from the market for Summer have simply been absorbed, the horrible sales rate unable to dent the huge year long buildup in listings.

The dog days of Summer are here. The heat is rising. And the real market pressure about to begin.


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  1. The inventory numbers are really irrelevant. What is more important is how many serious buyers there are versus serious sellers; this is what will determine what pressures the market down. I expect in the coming months the market will flesh out the people trying to cash out but don't need to sell versus the people that need to because they are taking sustained losses and/or are over-leveraged.

  2. I've voiced this elsewhere, and I recognize it's a touch paranoid, but does anyone else have the impression that inventory and sales numbers seem to move, um, strangely? By this I mean: end of July sales were at 50-odd then shot up to 106 inside 2 days; re: inventory, things never seem to get beyond a certain # before whoops a load are expired/withdrawn and the total stack of inventory decreases...

    1. Checkout Vancouverpricedrop blog. His post tonight shows the number of recycled (pulled and reposted) listings.

    2. The large number of expired listings are not all that surprising. If you look back 3 months ago there were huge numbers of listings coming onto the market. As JR says, there are a lot being pulled and re-listed but there are also a large number who follow the usual trend and opt not to realist for the summer. The fall market will be the real indicator of things to come.