Sunshine Coast Real Estate: A Seller's or Buyer's Market?

[Skook]

Last night, I was thinking about those huge charts in my first post. It is very difficult to make good looking charts with that much data and I really dislike messy and, to me, those charts are messy.

My thought was why not see what the data would look like on yearly basis rather than monthly. Each month the REBV offers a running total on all those stats, so I headed back and grabbed the year-to-date figures in each December’s stat package. Since the Board always compares data to the year before, I was able to get the figures for 2000.

Of course, there is always the fear in the back of your mind that the result may somehow be different from what you initially thought; but, I am not going about this to stroke my ego and if the result means “eating crow” so be it. However, I believe the results in the chart below put that fear to rest.

The data is in the table to the left with S=Detached Sales, L=New Detached Listings, and S:L=Sales to Listings Ratio. In the resulting chart, I did something different; I lowered the “Seller’s Market Bar” to 55% based on the explanation in REBGV quote in my first post:

Quote: - a ratio of three sales for five listings means we are in a seller's market (also known as a ratio of 55 – 60%).

When you view the result of lowering “the bar”, I think you have to agree with me that doing so makes very little difference to the overall picture.

So, the chart shows that a “Seller’s” market on the Sunshine Coast existed for six years (2001-2007) and then the party ended as sales (demand) declined and listings (supply) increased. Since 2007, the ‘Sales to Listings’ ratio has except for 2009 been declining albeit gradually and looks poised to cross the 35% bar this year into a definitive “Buyer’s” market. The million dollar question is - will it?

SC real estate agent Kenan MacKenzie and his fellow agents believe the tide is turning and he says so in his January and February ‘Real Estate Reflections’ which I have posted in my ‘2014 Sunshine Coast Monthly Sales Stats’ thread. In his February piece, he writes:

Quote:The feedback I am getting from the agents is they are working with more buyers than the last few years.

Well, my thought is enquirers aren’t buyers until they have signed the dotted line and the home is sold. The only way for the Sales to Listing ratio to reverse its current path is for sales to exceed the pace of new listings coming on the market. If those individuals currently checking out the SC market feel prices have the potential to drop further and hold off then that reversal isn’t going to happen - at least this year. If interest rates begin to rise this year and they could since inflation figures look poised to jump, then we could begin to see mortgage rates rise once again and that would affect sales. However, these factors might be mitigated if sellers are willing to cross that psychological barrier of selling below assessment value and accepting the fact the only way to move their property is to accept a loss and a substantial one at that. (I recommend RFM's post : 'Pricing Property in a Declining Market'.)

2014 will definitely be an interesting year on the Sunshine Coast.

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In the REBGV quote above in my first post, the Board states:

Quote:A seller’s market is when interest rates are low so there are many qualified buyers and not many homes for sale.

So, low interest rates + low inventory = Seller’s market. Well, the SC inventory is rising and according to real agent Kenan MacKenzie’s total active single detached listings reached 614 at end of February. What about interest rates? The table below shows the Bank Rate and the rate for what the Bank of Canada calls a “Conventional 5Yr Mortgage” for the years 2000-2014. I used the January 1st figures for each year. As of the March 5, 2014, the rate for the Conventional 5Yr Mortgage had dropped to 4.99%. Do you think interest rates will drop further to offset the Sunshine Coast's rising inventory? In your dreams. Will sellers pull their properties off the market to drop inventory? I doubt it.




  BoC Historical Bank Rate 1935+.pdf (Size: 15.22 KB / Downloads: 804)

  BoC Historical 5yr Mortgage rates 1951+.pdf (Size: 14.21 KB / Downloads: 801)

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Again, I encourage readers to post to this thread if they have any thoughts on what I have presented here or if they have their own predictions on where the SC real market is heading - will it be a Seller’s or Buyer’s market in 2014?