Are you a numbers person? Have you ever wondered what factors determine whether it is a seller’s market or a buyer’s market? In the words of my great manager Len Dorey: “this is how and where we are!”
One of the key methods used in determining the status of a real estate market is the sales to listing ratio. The ratio is a percentage arrived at by dividing the total number of sales for a month by the number of active listings at the end of that month. If there were 10 sales in the month and 100 active listing at the end of the month, then the ratio would be 10%.
A 10 % ratio would be considered a buyer’s market. In March of 2014, the Fraser Valley Real Estate Board used a ratio of 18% to 22% to describe a balanced market so anything 17% or lower was a buyer’s market and anything 23% or higher was a Seller’s market. Oddly the Vancouver Real Estate Board used a different ratio to define a balanced market, 13% to 20%. This year the Fraser Valley Real Estate Board adopted the Vancouver Board method for more continuity.
So back in March 2014, the sales to active listing ratio (S/A %) was 18.36% for detached homes in our area, nudging the seller’s market classification using the new percentage range. Well it is a year later and the ratio is now 35.7%, and the seller is in the driver’s seat again. The ratio for attached townhouses is currently 27% and apartments clock in at just over 20%. So it looks like we have certainly transitioned into a seller’s market, particularly with respect to detached homes.
Along with a rise in the S/A %, one can expect a corresponding increase in prices and as can be seen in the accompanying table that certainly is the case with detached houses and somewhat with the other two categories.
The 25% increases in median and average prices indicate that there is much activity in the higher end of the market. Nevertheless a Benchmark price of $959,700 for the “typical” peninsula home is nothing to sneeze at.
A median price of $1,050,000 indicates that half of the sales were under that amount and half were above it. To go further I calculated the number of sales in excess of exactly $1,000,000 at 96. Over two million there were 20 sales and 7 detached sales exceeded $3,000,000. No MLS sales in excess of $4,000,000 were documented in our area by the Multiple Listing Service.
Property Assessments have already been sent out to homeowners. We are getting to the point where half of our detached house owners will have assessments over one million dollars. I wonder how many of those owners realize they are getting close to losing their right to a homeowner grant which now starts to be clawed back at the rate of $5.00 for every $1000 your assessment exceeds $1.1 million, so at $1.214 million there is no grant for you. The limit where claw backs commenced, used to be $1.295 in 2013 and was reduced for the 2014 tax year. Very sneaky. As if the government doesn’t make enough money on the obscene Property Transfer Tax. Well that is a topic for another newsletter. Enjoy the spring!