What Changed in the First Quarter of 2021?
Here’s how things changed over the past year in our real estate market.
Now that April is here, it’s time to look back over our first quarter in today’s Q1 Vantage Report.
First of all, our market is blazing hot—we haven’t seen anything like this since 2007. However, we have even less inventory today. Our current buyer situation is also reminiscent of 2007, when there were many offers on each listing and buyers had to offer well above list price.
In our first quarter, sales were up 220% compared to the same time last year. This is a huge jump, and we haven’t even hit the spring market yet. Additionally, sales volume has risen by 300% because more homes are selling and average transaction values have increased. The average home price is just over $700,000—a 25% increase from last year.
The average size of properties increased last year, but it has since leveled off. In fact, it’s a few points lower than it was last year. This is where affordability intersects with desire; people are opting for bigger homes if they can, but because prices have increased, budget constraints are preventing buyers from getting more square footage.
Last year, homes were selling for about a 3% discount. This year, discounts have basically gone away, and average sales prices are sticking around 100% of the average list price. Luxury home sales have exploded by nearly 600% since last year. This is because people are fortifying, and Vancouver residents are migrating here due to their market.
"We’re still in a hot market, but it may cool off with policy changes arriving in June."
Even though we keep hearing about low inventory, new listings increased by 17% from last year. Some had thought people were unwilling to list, but it turns out lots of homeowners are opting to cash in. Still, in my 20 years of working in real estate, I’ve never seen inventory levels so low. We’re down to almost one month of inventory; last year, we had six months. These changes correlate to costs because as inventory levels drop, prices increase.
Many people are wondering when the pendulum will swing back toward buyers. Well, the government recently released a plan to make qualifying more difficult starting in June. This will hurt a buyer’s borrowing power, and combined with high home prices, it may push many buyers out of the market.
Sellers may try to list their homes immediately to avoid this, and they might try to overprice their homes while the market is hot. In these instances, the home may not sell, which might bring our market to the tipping point. We’d leave the super-hot market and go back into a more balanced one. I don’t see a major correction happening this summer, but hopefully things begin to cool down soon.
Measures to create transparency in the bidding process are also being considered right now. Otherwise, people are stuck spending $50,000 more than they need to because they’re afraid of missing out on the home. These measures worked well in Ontario, so they may be adopted here as well.
To summarize, we’re still in a hot market, but it may cool off with policy changes arriving in June. Still, buyers could be forced out of the market if they wait too long, so now may still be the best time for both buyers and sellers to jump in.
Next, take a look at our housing market update for the first half of 2021.
If you have any questions or would like more information, feel free to reach out to me. I look forward to hearing from you soon.