Home Sales Outlook
The REBGV rolling 12-month home sales as shown on the chart below for Greater Vancouver and Fraser Valley showed worsening housing markets since 2016. Home sales since the middle of 2018 had crashed below the10-year average sale, and there are few signs of buyers getting back into the market. The fundamental shift in housing demand since 2016 has a major impact on the housing markets in the lower mainland of Vancouver and Fraser Valley.
Until housing market sentiment becomes more conducive and the many constraints on buyers become more favourable, home sales are expected to remain low for some time. Home sales for the second half of 2019 will provide a clearer picture as when a rebound in home buying activities will resume. If the decline in home prices is gradual, the recovery in sales may be delayed and dragged on for 2 or more years.
Based on the chart below, the current average days-on-market is around 35 days. The current housing market cycle and market dynamics for the Greater Vancouver and Fraser Valley will likely take up to early 2020 before the days-on-market reaches the 10-year average of 48 days.
However, the days-on-market may over shoot and pushed up to 60 days before pricing pressure causes more sellers to sell their homes at lower prices to push the days-on-market back to its average figure.
HPI Home Price Outlook
The Canadian Federal and Provincial Governments appear to have set their sight on guiding the housing market and make home prices to a more affordable level. At current rate of price decline, home prices will have to decline more over a longer period before reaching the long term price levels sometime around the middle of 2021.
If the rolling 12 months HPI price projections for Greater Vancouver and Fraser Valley were to follow the rates of decline as shown on the chart below, the HPI price decline would represent 22% and 25% respectively from their peak HPI prices of 2018.
It may take another 2 years of low housing activities and lower home prices before buying interest returns to boost home sale to levels above the 10 years sale averages of 2,500 units and 1,350 units respectively for the Greater Vancouver and Fraser Valley markets.
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