The theme of this report is context. Case in point with the detached housing market. August detached housing sales surged 25% year-over-year. That makes for a great headline and if you didn’t have any context you would assume the detached market was booming. However when we contextualize this movement we can see that detached sales despite the large uptick year-over-year, sales are actually still below the 10 year average. In fact, detached sales were 21% below the 10 year average for August, and even further below the 19 year average below.
Which brings us to our next point. We actually believe that this is a structural problem. Detached home sales have been falling ever since 2015, as prices are simply out of reach for most local buyers. Despite prices falling anywhere between 15% and 35% (high end luxury segment), and mortgage rates hovering near record lows, sales remain weak. The logical conclusion seems to be that we will slowly see the death of the single-family home as more of these homes get redeveloped into condos and townhomes in the future.
Detached prices remain soft, with both the average and median sales price showing a 4% decline year-over-year. Further the MLS benchmark shows a decline of 9.7% year-over-year. However most of this weakness is concentrated at the higher end of the market where price pressures are significant. Prices for entry-level single-family homes, particularly those with basement suites a.k.a. Mortgage helpers have stabilized as local buyers attempt to squeeze in to that segment of the market.
Price stabilization has been cushioned through a decline in overall inventory for sale. Detached inventory dropped 11% year-over-year and new listings dropped by 10% year-over-year. In essence, what we are seeing is a slight increase in sales combined with fewer new listings and a drop in overall inventory as disgruntled sellers choose to take their home off the market during these soft selling conditions. Months of inventory, which is a strong indication of market conditions, shows 8.4 months of inventory for sale, this is basically unchanged from last month and still indicates a buyer’s market.