Sales are pretty hot in the Greater Vancouver area. Interest rates have come down enough that it has reduced the prospective monthly payment of a homebuyer by 30%. Combine that improvement in affordability with the price correction witnessed over the past 12 months and I can certainly understand why sales have been brisk.
Active listings have not moved up as much as last year. Sales have taken some inventory out of the market but that doesn't explain the big difference between this year and last year. I suspect that many potential homesellers are waiting until after the 2010 winter olympics with the hope that the games will goose the market upward.
With higher sales and lower listings, months of inventory has fallen dramatically.
House prices have moved up handily in the past three months as buyer competition has been the norm with a low MOI.
The correlation between MOI and price changes is very high and as expected, last month was no exception with a low MOI relating to an increase in prices.
It should be very interesting to see how the rest of the year plays out. With a continued low MOI, I expect prices to inch upwards. If mortgage rates continue to inch upwards from the recent lows, it will probably take a lot of the sales out of the market and push listings upward. The past 12 months have witnessed a massive 40% improvement in home purchasing affordability but prices are still incredibly out of line with local rents and incomes and I fully expect that over the next 2-3 years we will see further price erosion.