My talk of cycles in last month’s Update sparked some response and comments which again put me in mind of the Blood, Sweat and Tears hit “Spinning Wheel”. The oft postulated “what goes up must come down” like the pendulum is believed by some to imply the Physics law of an equal and opposite reaction. Far from it here on the ‘sunny’ (?) North Shore. To explain my viewpoint we need only to revisit the tenets of Supply and Demand. A quick aside here – I do wish that the popular press and various other commentators would let go of the notion – rising average prices, GOOD – flat or any decline in prices, BAD. The stages of the cycle are natural and all should be accepted as normal parts of healthy markets. I guess that drama is more exciting when selling a position. Back then to “boring” supply and demand. Supply, as in number of properties for sale at any given time, is certainly up markedly on our North Shore (N/Van particularly with all categories over the number of units offered at the end of Apr 2011). Fact is, however, we have an “improved selection” of homes for sale now. A good proportion of these are, admittedly priced a little higher than the market is comfortable with. Demand too, has apparently reduced; the evidence being (again N/Van figures) the May ’12 fact of (in houses and t/house categories, between 8 – 13% fewer sales vs. May ’11. Apartments are the contrarian with 7% more sales YTD than May ’11. I use the term “apparently” as we are seeing a fair level of interested buyer activity in the market despite the obvious drop in number of offers being made. Seems some price reductions are sought for in the former two categories.
This cautious nature of the “interested buyer” is not surprising but does not by any means indicate that that group has “all packed their tents and are heading off for protracted summer holidays”. In the same vein, I believe that we on the North Shore are not yet truly into the “buyers’ market” alluded to in the official press release of the Real Estate Board of Greater Vancouver. This we cannot really claim until (and if) prices moderate somewhat and average prices show a reduction. [Only W/Van apartments show a lower average (8%) on significantly fewer sales (and small sample size)]. This we have not yet seen – see stats following. To sum up, what we are experiencing is that Buyers are cautious and wannabe Sellers are likely regretting not having put their properties on the market 3 or more months ago. Indeed, we can bet that many of the unsuccessful Sellers who listed in the 1st quarter of the year regret they listed at the price they did.