There are 395 single family homes currently for sale in West Vancouver, which is actually a bit high. This counters what is happening across the lower Mainland. Of the 395 active listings, over 200 are above $4,000,000, making it a heavily top-end market with reduced inventory levels. This heavily top-end market is the realm where we find mostly foreign buyers. One might argue that this is a susceptible market for the impact of the 15% Foreign Property Purchase Tax, however, I feel that this upper-end market is not so sensitive to the tax. While it is true that the new tax could have the impact of scaring foreign buyers to Victoria, Kelowna, or for that matter maybe Toronto, San Francisco or San Diego (they could see some fall-out benefit of our new tax), the uber-rich may think that the benefits of buying in Vancouver out-weigh the tax.
Two or three other issues regarding the tax are of concern; the first of which is discussed above, namely the direct impact of the tax (foreign buyers changing their purchase decisions in the face of the new tax, i.e. buying in Toronto instead). The far bigger effect of any government economic policy change is the indirect effect. The indirect effects are how the market behaves in expectation to what the market thinks the foreign buyers are going to do, and what they think might happen to the market. This causes people in the market to alter their behavior and this altered behavior, if pronounced enough, changes the market. As we know, expectation and hope are strong drivers of the market. In other words, if enough people think something will happen they end up creating the very thing they expect!
The Sales activity shows that 59 homes were sold in the last 60 days (2 full months), which represents 15% of the total listings. This equates to under 10% sales on a monthly basis and a Sales-to-Listings ratio of under 10%, which is an extreme Buyer’s Market indicator.
March/2016 113 sales
April/2016 134 sales
May/2016 88 sales
June/2016 70 sales
July/2016 51 sales
Aug/2016 (MTD) 15 sales
In addition, we had the best months for volume of sales from Feb – June this year with each month being the best we have on record, July fell into and around the 10 year-average, and we’ll find that August has slumped from there. This indicates that the market has changed in West Van which could be due to properties coming on the market at too high a price, resulting in less listings selling. This typically means we have hit the high point, and signals either a correction or a plateau of prices with a considerable drop in volume of transactions.
There is also a natural tendency for the market to soften in the Summer, from about the last week of June through July & August, with a notable improvement after Labour Day. Inventory levels drop as Sellers take their homes off the market and there are less buyers roaming around, preferring to be on vacation, etc. It is possible that the current malaise could be just the normal Doldrums’ of Summer although slightly high inventory levels are of some concern.
We are approaching what is usually a very strong market in the fall, it is the second strongest period of the normal year. This could be a great time to list in the period after Labour Day Long Weekend and before Christmas.