Key Greater Vancouver stats for July:

1. July 2016 unit sales are down 27% from June 2016 and down 18% from July 2015.

Sales pace is slowing, inventory is climbing. This is good for buyers, and essentially we are moving towards a ‘balanced’ market.

2. The sales to Active ratio across the board (Greater Vancouver) is 39%, down from 53% in June of 2016 (peak 64% in March).

The Sales to Active ratio is the primary indicator of demand vs supply, which is the ultimate driver of the market and home prices.

A balanced market is 12-20%, above that causes upward pressure on prices, below that is a buyers market often with falling prices. We are still in a strong seller's market, but there is a definite softening trend that started in June and is continuing through the summer.

3. Total properties listed in July is up 7% from June, and down 27% from July 2015.

It is the lack of inventory that is causing prices to rise, and although inventory is now up 7% from June, it is still well below summer averages of the last 5 years. This means there is still a shortage of supply.

Summary

The sales to active ratio drives prices up or down. That ratio is declining, and likely so will price GAINS. Prices should not start to drop until we start seeing that ratio below the 12-15% range.

If you think of these numbers as speed limits in a school zone, it puts it into perspective:

12-20 kms/hour is safe and appropriate,

64kms/hour is dangerously fast,

39kms/hour is still very fast, and that is where we are today.

Two additional factors to consider:

1. The specific supply and demand varies greatly between condos, townhomes/duplexes and detached homes. In Vancouver East the ratios are as follows:

Condos - 86% sales to active ratio (extreme sellers market)

Townhomes - 61% sales to active ratio (extreme sellers market)

Detached homes - 21% sales to active ratio (almost balanced)

The breakdowns by region and factors driving those numbers and very different, and interesting as well.

2. These July numbers were impacted by the 15% tax announced July 25th. The market had already showed signs of slowing from June and July, and the end of month announcement was only partially reflected in the month end figures.

This tax will have further implications for the market, but we have to wait and see how the market and media react over the upcoming weeks and months. August and September numbers will be most telling. Housing supply is still tight in the lower mainland, and easing the foreign investment pressure could end up being just what the market needs to balance out!