Home prices are affected greatly by the supply and demand for homes by home buyers and sellers. The chart above from the Real Estate Board of Greater Vancouver showed a steady drop in listings (reported for the month of December) of 1997 to 2003.
The supply & demand chart to the left showed that the housing market suffered an overload of supply when sales dropped sharply between April 2008 to March 2009 as a result of the credit crunch.Home prices dropped by 15% or more in less than a year. However, by May 2009, home buyers returned in large drove, bidding up prices as there were more buyers than sellers.
Buyer vs Seller market
The balance of power between buyers and sellers can be tracked by following the list/sale ratio graph below:
The running 3-month list and sale ratios as shown on the chart to the left for 2008 and 2009 showed that there was more up-ward pricing pressure since July 2009 when the list to sale ratios was less than 3.The market can only re-balance when more supply is coming into the market, or the sale pace slow down. It will appear that this may not happen until after the second half of 2010.
The housing market after the winter Olympics
While the public are inclined to speculate that the market will slow down after the winter Olympics, there are others who are cautiously optimistic that that housing market may be able to sustain at current level of activities. If a stable supply and demand for homes can be maintained, CMHC and others maintained that a moderate price gained for 2010 can be expected.
The next few months list sale ratios will be able to tell us more about the future direction for metro Vancouver's housing market.
View Vancouver homes for sale.
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