Market Update July 2021

About 25 years ago we noticed trends that seemed predictable in the Real Estate Market. I had a theory about what was happening so I hired a wonderful lady who was a retired librarian to do some research for me to see if my theory was correct. We discovered that there are 5 statistics that are all interconnected. Those statistics are Sales, Inventory, Absorption, Days on market to sell (DOM) and Prices. We investigated and tracked those 5 statistics in 8 major centers across Canada. Some cities had better historical data than others. In Toronto we could go back 30 years.

What we discovered was ubiquitous in every set of data that we looked at. There were a lot of other less absolute discoveries but in every case and in every marketplace we found the following. If there was a period of 4 months or more of increasing inventory and DOM and falling absorption it would be followed by a statistically corresponding downward pressure on sales and prices. Sometimes the downward pressure on prices was simply that the rate at which they were rising was reduced. Corollary, we found that if there was a period of 4 months or more of decreasing inventory and DOM and increasing absorption it would be followed by a statistically corresponding upward pressure in sales and prices. For years following this research this allowed us to accurately predict the markets at least one year in advance.

This so-called “algorithm” was always true and verifiable with one exception: if there was a major negative world event, everything fell apart for a period of time. For instance after 9/11 the fear of the world apocalypse made people pull back from virtually everything for a short period of time. Conspiracy theorists came out of the woodwork just like they have now. About a year after 9/11 the markets fell back into their regular cycles. The reason I bring this up is that the pandemic was the next major, negative world event. In April and May of 2020 it looked like the Real Estate world was going to end. The top economists in the country were predicting a major drop in prices that would not recover for at least 2 years. They were predicting a 20% drop in prices. I was one of the people that was in that mindset. The only people who thought the markets would maintain were uninformed optimists that were hoping. We now know that the rebounding market was miraculous with record breaking statistics. We have seen more price increases and multiple offers than ever in history. And now we see the markets settling down. The absorption is down to 70% in the North and Central and 50% in the Shuswap. This is high but not ridiculously high.

Traditionally June has higher sales than any other month of the year. This year, in all 3 zones June sales are down. However, make no mistake, the market is not collapsing and no bubble is bursting nor is it going to burst. The market is and will continue to “settle into” the regular cycle. The cycle will be different because there are new forces pushing it like interest rates and the exodus from cities and office buildings to less populated areas. But it is settling. We will see a continued strong market till at least the end of 2021 and likely through 2022.

Warmer weather and longer days means you’re spending more time outside, so spend some time making your backyard into your dream oasis. Since the pandemic, the backyard has been a place to relax, exercise, explore new hobbies, connect with friends and family, and much more. Elevate your space, whether it is a tiny balcony or abundant garden, with these 2021 backyard trends so you can enjoy your private area all summer long.