Detached Sales Jump 47% in September as Prices Slip Further

Steve Saretsky -

Detached sales bounced 47.5% year-over-year in September. The large increase comes off weak base effects, as September 2018 was the slowest year for detached home sales in over two decades. When we extrapolate further out, we can see that detached house sales this year were still 19% below the ten year average.

In essence, sales volumes are finally increasing after several years of sellers trying to hold out. Most seller needs to go through the psychological and emotional process of trying their initial listing price, before eventually reducing their price. This sometimes takes a year or two and requires changing Realtors multiple times before coming to the unfortunate conclusion that their house is worth as much as they had hoped. As we can see, sellers are taking lower prices with the MLS benchmark price of a detached home dropping 8.6% year-over-year.

Greater Vancouver detached house prices
Greater Vancouver detached home prices per the MLS benchmark

However, not all sellers are capitulating and heading for the exits. In fact, new listings remain low. We are seeing more sellers pull their listing off the market out of frustration, and opting to wait it out for better times. In fact, the 12 month average for new listings has plummeted to lows even worse than the 2008 financial crisis. 

detached listings in Vancouver
REBGV detached listings 12 month – monthly average.

This temporary suppression of new listings has helped keep overall months of inventory stable at 7.9 months and has kept prices from falling further. Will sellers be able to continue waiting for better days ?

MOI Vancouver detached homes
Months of inventory for detached homes in Greater Vancouver.

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The Canadian Economy

Steve Saretsky -

Happy Monday Morning! We got a string of new data this past week confirming inflation in consumer goods, and housing are proving to be more than transitory. Canada’s consumer price index continued to drift higher with prices hitting an 18 year high, up 4.7% from last October. The recent floods in BC...

Steve Saretsky -

The calls for impending interest rate hikes continues. CIBC’s chief economist, Benjamin Tal, was out recently suggesting the Bank of Canada could hike its benchmark interest rate at least six times beginning in early 2022. “I think there is a risk of getting into the market at today’s rates,” noted Tal....

Steve Saretsky -

The BC Government announced it is looking at several cooling measures for the housing market in 2022. They have highlighted two measures. The first is an end to the blind bidding process, and the other is a mandatory “cooling off period” which will allow any buyer a 7 day recession...

Steve Saretsky -

The Bank of Canada continues to slowly drain liquidity after flooding the system with a firehose of cash during the pandemic. Bank of Canada governor Tiff Macklem announced the end of Canada’s QE program (also known as money printing). Furthermore, in Macklems words, “We expect to begin increasing our policy...

Steve Saretsky -

Consumer price inflation ripped higher in September, surging 4.4% year-over-year, the fastest pace of price increases in 18 years. Let’s discuss this further. We have an inflation problem and the Bank of Canada remains of the view that inflation will be transitory. Although they really can’t say otherwise, for if...

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The Saretsky Report. December 2022