In the past few years, Metro Vancouver’s housing market was woefully under supplied, putting pressure on home buyers and increasing home prices. This trend, however, is reversing.

If you read our last monthly market report, you’d know last month saw the highest number of homes listed for sale since September of 2014 – a 30 per cent increase over last year.

Broken down by property type, most of the supply is concentrated in single-family homes. The inventory of single-family homes increased in 2016 and has remained relatively stable since then.

Condos and townhomes, what we call the attached market, took longer to build up.

Prices, housing supply, and demand

The law of supply and demand is basic economic theory – the market price of anything sold is determined by the relationship between the scarcity of the product and the amount of people looking to buy it.

In real estate, we use a ratio called the sales-to-active listings ratio to measure this. This ratio compares the total inventory of homes for sale to the number of sales during the month.

Industry experts have found that in Metro Vancouver, prices decline when this ratio dips below the 12 per cent mark for a sustained period. This is called a buyers’ market since these conditions favour buyers. Conversely, prices increase when the ratio climbs above 20 per cent for a sustained period. This is called a sellers’ market.