Throughout Metro Vancouver, we're seeing rapid home price appreciation, buyers lining up to tour homes and bidding wars that drive prices above what sellers are asking.
It's a classic seller's market.
This type of market is typically characterized by low interest rates, many qualified buyers and fewer homes for sale.
But one conclusion is inescapable: the real estate market is cyclical which is why you may have heard the term, “real estate cycle.”
Several key factors influence this cycle, including mortgage interest rates, employment growth, investment growth, construction, immigration, government assistance programs for first-time buyers and gravitational forces caused by major weaknesses in the local and world economies. All influence whether there is a buyer’s market or a seller’s market.
In contrast, a buyer’s market is when there are many more homes for sale than there are buyers. As a result, the price of a well-kept home in even the most desirable neighbourhood may decline as home owners become eager to sell their property. Sellers may ask themselves, "Do we lower the price, or do we take it off the market altogether and wait?"
To measure market activity, the Real Estate Board has a unique tool - a sales-to-listings ratio which measures the balance between demand and supply:
- a ratio of three sales for five listings means we are in a seller's market (also known as a ratio of 55 – 60%)
- a ratio of less than seven sales for every 20 listings means we are in a buyer’s market (also known as a ratio of less than 35%).
There have been predictions a possible downturn in the Metro Vancouver real estate market for the past few years. This is because prices have risen much faster than incomes and detached homes have been unaffordable for first-time buyers.
However, based on the Real Estate Board's data, demand is continuing.