What is demand (or the “I want to buy…”) side of the supply/demand equation? What makes it strong … “Please dear Seller, please pick my offer” or weak “As a Buyer, I’ll think about it… or delay my decision until I’m more confident”? At what point does weak demand become ‘pent-up demand’? These are some of the essential questions that drive the market and raise/or lower prices. Supply is somehow the easier side to get one’s hands around. Simply count the inventory this month vs the inventory last month (or this year vs last year) and consider the obvious question – “Is it growing or is it shrinking?”
The Buyer’s confidence that I refer to above often relies on the premise that the folk around us must be out there making offers and consummating deals in order for us to be confident. This is the counter-intuitive anomaly in many markets. A paucity of fellow Buyers is seen as a signal to hold back and defer decision making. The core supply/demand premise is the driver of “what I will have to pay”; i.e. less when demand is weak and more when it is strong. Why would the individual Buyer not take advantage of higher supply times or at least low (weak) demand times? The argument here is the person who needs to sell in that very same weak demand period. The Buyer who is selling in the, say, $5/600k range and aspiring to buy in the, say, $9k/1mm range would clearly see that this makes sense. The logic being that, if the entire market is down by 10%, they may, in the above example, net $50/60k less on their sale but would save $90/100k on the one they are acquiring. An opportunity…?
I referred last Update to the thought that we are (in 2012) heading into a “stabilizing era” – I believe we are seeing this starting to emerge in North Van with West Van lagging a little in this process. Remember again that the year-to-date figures we are considering below are exactly the same as the ‘month of January’ figures. Thin statistics indeed. Only as we progress further in the year will these stats become more meaningful. The other factor exacerbating the earlier year stats is the fact that (especially in West Van) the ‘sample size’ i.e. very few sales makes logical conclusions fraught with danger.
Again, not to over embellish, do remember that the year-to-date stats and the Jan/12 stats are one and the same thing in this Update – the more important message to consider is, which way is inventory trending and also which way are number of sales trending for each market segment? Each month from now on will reveal more and more relevant YTD statistics. ‘Til next month.
Again, visit my website to see and “hear” the new developments. I continue my commitment to keep you… www.OnTopOfTheMarket.ca – the “go to” site for North Shore Real Estate analysis and jumping-off point for FULL market listing information.