Normally this time of year as we head into Christmas, new listings coming on the market tend to slow down, and "tire kicker" buyers tend to put things on hold to focus on the holidays around the corner. With already record low inventory and what appears to be consistently strong demand. Will this year be different? The past 2 years have been different on so many different levels. This year on a lot of buyers' wish lists is a new home for Christmas. These are all things I continue to watch and compare year over year analysis, however, looking at the first couple weeks of December, looking at the current market it does appear that this December is different for 3 reasons. 1. Inventory(supply) - Inventory continues to decrease as expected for the time of year, however, the total amount of inventory is around 57% of what the five-year average of listings, currently in the Central Okanagan there is 1041 listings compared with the 5 year average of 1, 795. If we consider the five-year average a 'healthy' market. There is a lot of inventory needed to get us to more of a balanced market. Right now the market is severely favouring the sellers.
2. Demand (Sales) - Looking at the number of sales to determine how much demand is out there, the technical term we look at is the absorption rate. Currently, in December there have been 208 sales, compared to the 5 year average of 329, the trend for the month appears to be ahead of the pace, of past years, however, we can expect at least a good week of next to no new listings and fewer sales as everyone takes holidays. When looking at the demand for this entire year, currently there have been 7,744 sales in 2021. The next closest year in terms of sales was 2016 where there were 7,093 sales and a five-year average of 5,815. 2021 has had a significant increase in demand over the past years. 3. New Listings - How much of the low supply is due to the lack of people listing their homes? As we look at the new listings that come on the market and the additional risks of people coming through their homes is a real threat, in December so far there have been 206 new listings so far compared to the 5 year average of 362. Looking at 2021 so far, there have been 9,810 new listings so far, comparing that with the 5 year average of 9,910 listings indicates that 2021 has had 99% of new listings compared to the 5-year average. To me, this indicates that the low supply of listings on the market currently isn't as much of a lack of new options coming on the market rather than strong demand that is purchasing the listings. One caveat of using these numbers as in some market cycles sometimes homes are taken off the market and relisted more than in other market cycles, this would impact the overall number of new listings in past years more than this year given how fast homes are selling these days. Currently, in 2021, 78% of all new listings have sold. If you factor in the current inventory of 1,041 listings on the market has turned over that ratio is 89% which indicates that roughly 11% of new listings have at one point either been taken off the market or relisted at some point in 2021. To answer the initial question, are we in for a December slowdown? Likely for a week or so as everyone takes holidays, however, all indications that it is not due to the demand out there, and if supply comes out during the holidays, it is my bet there will be a lot of eyes on the property as I believe on a lot of buyers wish lists this year is a new home for Christmas. Let me know if there is anything I can do for you! Have a great week and feel free to reach out with any questions! Mark
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