Monday, May 06, 2019

REBGV Sales Update Through April 2019

REBGV released their stats package through April 2019. Here are the numbers:





The spring selling season has been sluggish. Sales in April were the lowest since the mid-1990s. Inventory growth has been alright -- not fantastic, mind. The market is definitely slow. Small discounts off list are the norm in this market, for properties that sell.

Below are price graphs, the first two are alternate depictions of 6 month change in prices versus months of inventory, the last is the annualized change in MLS residential composite HPI for REBGV, showing close to -10% drops.




While prices have come off some since 2018, price growth through the 2010s has been quite robust, around 7% gains annualized. Another year of falling prices followed by a period of stagnation would see prices in real terms return to mid-2000s levels within about 5 years, after accounting for some priced-in density premiums and lower cost of capital. I don't know where interest rates are heading in the medium term, but at some point there will be a bottom for prices. A true correction will see inventory elevated for several years before it begins to bleed off. (NB: units under construction remain very high and completions will continue to be high for some time.) Once bleed-off starts accelerating, there is a good chance there won't be much more downside. Something to watch for in the coming years.

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