Supply & Demand
Simply put demand drives the market, and supply can greatly affect the value of that market.
Going back to 2006 statistics (available to anyone on the OMREB website), we see between March and November new monthly listings averaged around 837 units with the only noticeable change being a drop in November. Looking at the number of units sold over the same time period, there is an almost steady decline moving forward. (Average 355 units per month not sold and added to inventory) New listings appear unchanged while sales dropped by 160 units or 28% and inventory increased by 522 units (2,498 monthly average) or 23%.
Are these figures a warning of a bigger issue or is this a regular occurrence. It’s too soon to tell but a decrease in sales and an increased inventory at some point will signal a buyer’s market. That being said history shows that home prices were still rising and that is a seller’s market. davidiverson.ca
In 2007 new listings between March and November rose to a monthly average of 952 an increase of 13.7% over 2006. The number of units not sold over the same time rose to an average of 390 per month which increased inventory 20% to almost 3,000 units.
We are witnessing a shift in the market but haven’t hit the wall yet because home prices are holding value and not dropping. An increase in new listings with fewer sales is quietly building inventory.
That led into 2008 where the average number of new listings hit 1,210 an increase of 27.1% over 2007. Of that the number of units not sold per month hit an average of 887 which is a 127.4% increase and that tsunami ballooned inventory to an average of 5045 units per month, an increase of 68.2%. Sales steadily decreased month over month until October when the cheese totally fell off the cracker.
If there wasn’t a clear signal prior that it was a buyer’s market, it is profoundly obvious now.
Fast forward to 2015; average number of units listed per month is 906, while the average number of units not sold is 366. Inventory is riding around the 3510 mark with a drop off in Oct/Nov which similar to 2006 could be viewed as seasonal.
Now to 2016 with limited statistics (Mar – July); average number of new listings per month is 1,072 while number of units not sold is 282. Inventory average is 2,820 units but it should be noted that unlike 2006 – 2008 where inventory doubled, inventory is on a steady decline from 2,921 in March to 2,672 in July. davidiverson.ca
See Kelowna Okanagan Housing Bubble? Part 3: Analysis