As noted in last month’s edition of the rennie review, the expectation for July and August was that denizens of the Vancouver Region would likely be more focused on socializing with humans than they would be transacting in homes. Turns out, the data for July aren’t inconsistent with this notion, with listing activity down and sales lower, too.
Typically we start off our commentary with some thoughts on sales activity; not surprising, of course, with home sales serving as the primary indicator (among many other secondary and tertiary ones) of how our housing market is performing. This month, however, the tale of sales has been usurped by the inventory story.
Specifically, the 14,569 available listings in the Vancouver Region in July 2021 were the second-fewest in the past 35 Julys (6% higher than July 2016’s count). Compared to July 2020, the region’s supply of homes for purchase had shrunk by 25%; it was also 33% below the past-decade July average of 21,821 listings.
The phenomenon of evaporating inventory is being seen across all home types, with detached listings 15% lower than last year, condo listings 27% lower, and townhomes listings down 41%. More interesting is that the most recent trend--that is, the change between June and July--bucked the typical seasonal pattern of change: while the past decade has seen an average inventory expansion of 1.2% between June and July, this year listings were down 13%. So, what gives? The rising prevalence of socializing aside, there are a couple of factors at play.
Sales activity in 2021 has been strong: compared to there having been an average of 29,934 sales in the first seven months of each year over the past decade, we have racked up 45,403 so far in 2021 (a 52% increase). In other words, the existence of robust demand has meant that the only way inventory could have been expanding in 2021 is if the growth in new listings exceeded that of sales. And as you might have guessed, it has not: through the first seven months of 2021, the total number of new listings is only 21% higher than the past-decade average for the same seven months.
Unless there is a shift in our market in the coming months--lower sales counts, an influx of new listings, or both--inventory will remain constrained for some time. As a result, the seemingly perpetual sellers’ market conditions that have been created by our supply-and-demand dynamic are likely to continue, leaving buyers to compete for limited inventory that is available.
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