Low Inventory, Overactive Market  and Government Interventions

Have you ever had an idea you thought was brilliant but the result unexpected? Where you planned for one thing to happen but it didn't work out that way and the result ends up being catastrophic?I was probably about 7 or 8 years old at the time when that happened to me. Really though, it probably wasn't the first time and I know it certainly wasn't the last.
In those days, we spent most of our days playing outside in the yard or around the neighbourhood. A favorite activity was to have target practice with my slingshot. Not the kind of slingshot you can get a Cabela's these days, Those are more like weapons. Our slingshots were homemade. You found a piece of a tree branch that was the right shape, and an old tire tube along with a patch of leather for the pocket that would hold the projectile. With a bit of help from your father, the result was a great accessory for living out the fantasy's 8-year-old boys have.
One day, my friend was over and my idea was to show him how I could hit a tin can off the rail of the fence that separated our yard. My mom and dad had told me that I should never shoot at a person so I made sure my buddy was safely beside me. I found the perfect stone. Placed it in the slingshot pocket. Stretched it back as far as it would go and let fly!
To my horror, rather than flying straight and true toward the can, the trajectory resulted in the stone flying directly at my friends head. He went running home crying and I thought I had killed him. After all, isn't that what happened in David and Goliath?
Just as the stored elastic energy of my slingshot transferred into the kinetic energy of the stone and hurt my friend, I think the stored up Energy/Demand of a real estate market with reduced levels of inventory has transferred into the rapid acceleration of housing prices.
An often-overlooked statistic is the Percentage of Original Price. As you look at this clip, you see that over the last five years there are three times where this ratio has. Two of those times are the most prominent. 2016 and again, now in 2021. 2016 we reached a peak of 104.3 % of the asking price and this year it seems to have peaked at 107.9% of the Original Price.
Now if we turn to look at the active listings to see the levels of inventory, You can see the levels for those same time periods to be among the lowest ever. Especially when we look at the last 10 years. Peak inventory levels of detached housing in May of 2011 was 778, At the end of April 2021, we are sitting with 342 Single-family houses for sale in Abbotsford. Less than 1/2
Combine that with record low-interest rates and you have our current scenario.
An overheated Real Estate market isn't good for anyone. However, it seems to be our reality for the moment.Unfortunately, I think one of the ways our governments think to solve the issue is by implementing different monetary policies that make it harder to qualify for a loan thereby lessening the demand. My question to them would by what are you doing to improve the supply?
After all in a supply and demand kind of market, when supply is low, increasing it typically should have a stabilizing effect.I think the theory is sound but from a realistic point of view, our supply has been low for a long time so it may take a while for it to get back to more reasonable levels.
Let me know what you think by leaving a comment or like our page. And remember if you have any other questions about your specific circumstance, let me know. I am only to happy to help. have a great week. #Don Goertz #Don Goertz Real Estate, #Abbotsford BC, #Townhouse for Sale in Abbotsford BC, #Condo for sale in Abbotsford BC, #House for sale in Abbotsford BC, #Real Estate Agent Abbotsford BC, #Realtor Abbotsford BC, #How to buy a house, #Buy a House,