We have been parroting much the same message as knowledgeable industry experts when it comes to how the simple laws of supply and demand are at the root of why homes are as expensive as they are in places like Toronto and Vancouver, and it is well known that the median prices for homes nationwide are up too for the same reason along with more people moving out of dense urban areas to find more affordable homes elsewhere. People are always going to be looking to downsize and if it is possible to do that and sell your existing home it will be best to work with a realtor who can advise on how you should best set your asking price.
Any realtor will have an understanding of current home values in their local market, and that’s true even of those who are new to the business. Establishing a client base does take time, but realtors can speed up the process by taking advantage of our online real estate lead generation system here at Real Estate Leads. Based on Internet Marketing principles it generates leads on individuals and couples who are genuinely considering buying or selling a home in the area of the country where you’re working as a realtor.
Back to topic, a new report is indicating that here in Vancouver there are way more people looking to buy a home than there are ones who are either selling one now or are likely to be putting their home on the market in the near future. That’s to the tune of approximately 7 to 1, meaning for every home on the market there’s 7 different parties that are wishing to buy a home there. That type of discrepancy means that even with increased new home building starts there’s never going to be downward pressure on the market because of the availability of homes.
Basic Economic Principle
This prospective buyers to actual sellers ration has been put forward by the B.C. Real Estate Association and it reinforces the unavoidable realities of the law of supply and demand. The gap between the number of buyers and sellers has been predictive of growth in home prices, and the prices for detached homes in Greater Vancouver and the Fraser Valley have seen yearly increases in the vicinity of 32%. Consider as well that the average price of a home in BC went up 25% since COVID-19 struck last year.
Behind all of these factors is supply and demand. At the peak of market activity in March of this year, there were an estimated 67,000 buyers were searching for homes across BC. The number of homes on the market during that time? The estimate is around 24,000, and that works out to a ratio of homebuyers to sellers of almost 3 to 1.
This creates the most common scenario as one where there is significant upward pressure on prices and transactions often occurring after multiple offers. March of 2021 saw realtors across B.C. selling a total of 15,073 homes, and that’s a new record. Most home sell very quickly, and as mentioned it is almost expected that many homes will sell for over asking.
And for the most part it is local buyers who are driving this. While it is a trend that will likely eventually shift back, the number of foreign buyers in B.C.’s property market dropped to almost zero due travel and border restrictions put in place because of COVID-19.
Change over 2 Year Span
During the slowdown of 2018 and 2019, the numbers of buyers and sellers were fairly even, with demand picking up right before the pandemic resulting in a drop in market activity. This ratio continued to rise rapidly until March 2021, surpassing a value of three and regions covered by the Real Estate Board of Greater Vancouver saw a sharp increase in the ratio of buyers to sellers. This was also true in Surrey, Langley, and Abbotsford.
This rise in total demand during the pandemic was a reflection of potential buyers looking outside of the Vancouver area for more affordable space and at the height of the market during the spring the BCREA estimates that buyers outnumbered sellers by similar 7 to 1 or-so numbers in the Fraser Valley and Chilliwack too.
As home prices rose around 14% in the Greater Vancouver Area, the increase seen in the Fraser Valley and Chilliwack was closer to 30%. These model-based estimates of the imbalance between supply and demand confirm the trends observed throughout the pandemic as well as the broader long-run issues with the challenges of housing affordability in BC.
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