Below are updated sales, inventory and months of inventory graphs for Greater Vancouver to December 2011.
And the detached benchmark price:
Commentary: December 2011 saw rather weak sales volumes; in some years weakness in December is attributed to snowy conditions; not so this year with only trace amounts of snow for the entire month. Months of inventory (MOI, the number of months it would take to clear month-end inventory at current monthly sales levels), a key indicator of market liquidity and impending price strength, is at about 6, a level concomitant with flat prices.
Total inventory usually declines through the month as Realtors typically take vacations around this time and homeowners wanting, but were unable to, sell retrench for the more robust spring selling season. This year we have already started adding listings, I speculate due to those who are eager to sell sooner rather than later.
Below is the predictor of price gains, based on half-over-half price change to months of inventory correlation, and below that the scatter plot showing the raw actual data:
What this shows is the change in prices in a month from 6 months ago based on actual data and “predicting” the price based on months of inventory from that month based on linear regression of half-over-half price change to months of inventory (with 3 month moving average).
December 2011 was weaker than past years in terms of sales, however inventory declined as it does every year and was not inflated as it was at the finish of 2008. There will nonetheless be a historically average base of listings going into January. Due to several factors -- higher prices, relatively subdued population growth, tightened credit conditions, and a predicted increase in dwelling completions -- I expect the first few months of 2012 to see lower sales volumes and higher listings than 2011. I do think benchmark prices will increase from current levels through the first half of 2012. If inventory continues to increase and sales remain subdued, however, I anticipate the price increases will be transitory.