Walking my dog around my neighborhood, I feel like I’ve been noticing a lot more properties coming to market.
Or stated more specifically: a lot more than I’d expect given historical and seasonal patterns.
Where I live, it’s pretty rare to even see a new listing at all.
That’s because many of my neighbors are older homeowners determined to stay in their homes until the inevitable day of reckoning that comes for us all.
So when the “for sale” signs started getting punched into the ground around my neighborhood, I thought,
“Are all my neighbors suddenly kicking the bucket?”
I sure hope not!
I quite enjoy my neighbors, and that would be terribly sad.
And then I thought,
“Is this just a local phenomenon? Or is it part of a wider trend?”
Maybe you’ve noticed something similar?
If so, this post is for you.
Provincial perspective
The first thing I figured I’d look into is whether this is purely a “Vancouver thing” by comparing the Vancouver region new listing data to other regions in the province.
To do that, we can easily pull up the historical new listing time series data going back to the 1990’s, but I want to display it in a particular way, where we can compare the most recent year-to-date data to the historical data on a month-by-month basis1.
Pulling in that much historical data and plotting it can often get messy pretty fast.
To make things a little easier to see, I’ve grayed-out the historical data to contrast it with the year-to-date data shown in a highlighted color.
Here’s a plot of what that looks like:
Standing out
If you were expecting to see new listing trends blowing way past previous years everywhere (as I was, based on nothing more than my casual neighborhood-level observation), you may be surprised by that plot.
In some of the larger regions (Vancouver, Fraser Valley, Okanagan, Victoria), we’re definitely seeing new listings coming in pretty hot this year.
But they’re not quite blowing past previous records (yet).
In some smaller regions (Powell River, Northern Lights), the data is showing new listings trending a bit more towards the mid range of the historical data.
It’s a bit of a mixed bag - there isn’t a clear and consistent pattern of extremely high levels of new listings showing up everywhere we look in BC.
So that’s interesting.
Cross country checkup
At this point, we’ve determined it’s not strictly a phenomenon specific to Vancouver, but it’s still not clear that it’s not a “bigger than BC” kind of thing.
Maybe there’s some commonalities across major centres in Canada?
I’ve been hearing that inventory levels are piling up in Toronto2, so let’s take a look at a smattering of major centres across Canada.
Foiled again!
We can see that some markets are pushing the upper boundaries of the historical records, but some others (like Winnipeg, for example) are right in the middle of the historical data.
And interestingly, the East Coast markets of Halifax and Saint John seem to actually have new listing trends coming in at the lower end of the historical range!
What’s driving these trends?
Honestly, I’m not sure.
I’ve been trying to figure out what, if anything, can explain these patterns.
But there’s just not enough consistency in these patterns across markets to pin the blame on some singular thing, like high interest rates, for example.
The best theories I can come up with (at the moment) are:
It appears that regions with higher property values (and potentially more heavily mortgaged homeowners) seem to be the ones with higher levels of new listings coming to market. This may be a “higher interest rate environment” kind of phenomenon.
It’s also possible that areas with a higher concentration of investor-ownership might correlate with higher new listing levels in some markets, as some investors may be trying to avoid the June 25 deadline for the recently announced increased capital gains tax.
Age demographics might be playing into this. It could be that markets with a higher concentration of younger people (who are more mobile and tend of have higher mortgage debt) are seeing higher new listings levels, while areas with older homeowners (who are less likely to move, and also less likely have mortgage debt) are seeing more “historically average” new listing levels.
The surge in new listings (in some areas) could be related to the fact that last year, we saw fewer new listings than normal3 across almost every region in Canada. And so maybe, a lot of people are finally deciding to make that move.
Some combination of these factors, as well as others not mentioned above.
For the record, if I had to put money on it, I’d be willing to bet it’s primarily #4 and #1 driving these trends.
But getting to the bottom of that will have to wait for another post!
Balancing probabilities
One thing I’m sure a lot of people may have expected to see, but is perhaps only weakly evident (if at all), is that the new Short-Term Rental (STR) regulations introduced by the BC NDP Government don’t seem to be driving these trends to any obviously significant degree, since:
We are seeing similar patterns of higher new listings trends in markets/regions where these new BC-specific regulations do not apply (e.g., Calgary, Ottawa, etc.).
In some very tourism-dependent regions of British Columbia (e.g., BC Northern, etc.) where STRs are also prevalent, new listings trends are fairly in-line with historical averages, suggesting people in these regions aren’t suddenly panic-selling their STRs.
With that said, it’s important to note that a significant share of STRs in BC tend to be located in major urban centres.
This fact is at least partly a numerical phenomenon, since these regions also have the most housing units and are therefore most likely to have higher numbers of these kinds of rentals!
So, I suppose that it is certainly possible that these new regulations could be contributing to the increased new listing counts in these more populous areas.
But, on the balance of probabilities, I’d be hesitant to argue that this represents the driving force behind the new listing trends we are seeing since the vast majority of STRs in existence are not frequently rented, and most are in fact someone’s primary residence (as opposed to an investment property).
I’ll probably dig into the issue of STRs a little in a future post, since there’s some interesting data available out there we can look at.
So… what did we even learn here?
Well.
As far as I can tell, the lack of consistency across regions in these elevated new listing trends suggests that there isn’t one singular predominant force driving this phenomenon.
It’s more likely some mix of idiosyncratic factors.
Some of these factors may be common across regions (e.g., interest rates), while others (e.g., STR regulations), may be colliding in some cosmic fashion to explain what we’re seeing in these markets today.
I know – it’s a bit of an unsatisfying explanation.
But that’s just how this kind of analysis goes sometimes.
You start out with an idea, or a theory, and the data says you’re probably going to need to put a LOT more thought into it to figure it out!