experts: real estate column Wednesday, February 08, 2012

The Strength of Demand

What is demand? What makes it strong?

By Alan  Skinner

What is demand (or the "I want to buy...") side of the supply/demand equation? What makes it strong ... "Please dear Seller, please pick my offer" or weak "As a Buyer, I'll think about it ... or delay my decision until I'm more confident"? At what point does weak demand become 'pent-up demand'? These are some of the essential questions that drive the market and raise/or lower prices. Supply is somehow the easier side to get one's hands around. Simply count the inventory this month vs the inventory last month (or this year vs last year) and consider the obvious question "Is it growing or is it shrinking?"

The Buyer's confidence that I refer to above often relies on the premise that the folk around us must be out there making offers and consummating deals in order for us to be confident. This is the counter-intuitive anomaly in many markets. A paucity of fellow Buyers is seen as a signal to hold back and defer decision making. The core supply/demand premise is the driver of "what I will have to pay"; i.e. less when demand is weak and more when it is strong. Why would the individual Buyer not take advantage of higher supply times or at least low (weak) demand times? The argument here is the person who needs to sell in that very same weak demand period. The Buyer who is selling in the, say, $5/600k range and aspiring to buy in the, say, $9k/1mm range would clearly see that this makes sense. The logic being that, if the entire market is down by 10%, they may, in the above example, net $50/60k less on their sale but would save $90/100k on the one they are acquiring. An opportunity ... ?

I referred last Update to the thought that we are (in 2012) heading into a "stabilizing era" I believe we are seeing this starting to emerge in North Van with West Van lagging a little in this process. Remember again that the year-to-date figures we are considering below are exactly the same as the 'month of January' figures. Thin statistics indeed. Only as we progress further in the year will these stats become more meaningful. The other factor exacerbating the earlier year stats is the fact that (especially in West Van) the 'sample size' i.e. very few sales makes logical conclusions fraught with danger.

With the foregoing clearly in mind, we now present the 'skinny' North Shore 2012 picture. North Van detached homes sold are up by 23 % from this time last year, attached (t/hses) sold up 18% and apartments up 41% from 2011. Detached - average price is 4% higher than 2011 and inventory Jan 31st, 2012 unchanged from 2011. Average prices up 17% (t/hses) and up 8% (apts). Inventory (t/hse) unchanged from Jan 31st, 2011 and (apt) up 16% from 2011. N/Van overall inventory at Jan 31st, 2012 is now 17% higher than 2011 and again N/Van, 28% higher in total number of sales '11 to '12.

In West Van, detached number of sales for this time 2012 is up by 23% from last year. Average price up by 4% and inventory Jan 31st, 2012 unchanged from last year. On the condo side - sales of attached (t/hses) are lower at 3 vs. 5 units; average price change is not relevant owing to the small sample size. Active listings up from Jan 31st, 2011 (33 vs. 30). Apartments sold are up over 2011 (10 vs. 8), with average price 54% higher than '11 (remember also a small sample) and active listings down 9% from Jan 31st, 2011 (79 vs. 87). Overall marginally higher inventory with slightly softer demand evident.

Again, not to over embellish, do remember that the year-to-date stats and the Jan/12 stats are one and the same thing in this Update the more important message to consider is, which way is inventory trending and also which way are number of sales trending for each market segment? Each month from now on will reveal more and more relevant YTD statistics. 'Til next month.

Again, visit my website to see and "hear" the new developments. I continue my commitment to keep you ... - the "go to" site for North Shore Real Estate analysis and jumping-off point for FULL market listing information.

To join those wishing to get the e-mail version of this "update" - send a request now to and you'll be assured receipt; phone me at (604) 988-7368 or visit

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Recent Articles by this columnist:

Keeping Realtors Honest
Tuesday, August 12, 2014

How well do we stack up?
Tuesday, July 29, 2014

Resistance to change and compliance delay
Wednesday, June 04, 2014

Of urban planning and municipal wisdom
Thursday, April 17, 2014

Yes, it's official - demand is rising
Tuesday, March 11, 2014

All articles by Alan  Skinner

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