Bifurcation

The market is certainly more resilient than one would expect for this time of year. There are more sales than last year as well as lower listings.

The expected rise in the MOI has yet to take place. This is in the face of a few factors which should have a dampening effect

Rates which look like they have broken out.

Mortgages changes which where brought in, in 2012 limiting CMHC insurance to $1 Million and dropping the ratio to 80% from 85%. Now in Vancouver, almost all housing would be over this threshold. But so far we have not seen much of a drop from this factor.

China was experiencing a credit tightening cycle, though it looks like they have loosened the purse strings again and reinflated their housing market (and likely ours).

On the other hand we have an up-tick in court ordered sales. We also have an up-tick in bankruptcy and arrears (hat tip aggregator on Vancouver Condo)

So where does this get us?

Is the market going up again despite the headwinds? Will the MOI drop below 6? Or is this just a pre-approval blip?

It certainly looks to me like there are two areas selling at present. One is the lower end (is there such a thing in Vancouver anymore) which would be explained by the anxious first-timers with pre-approvals in their hands. The second is upper end $3-4m where we have seen more Far East and local Wealthy buyers. Of course they would be undeterred by interest rate and other considerations.

In between, things are pretty stagnant and that may explain the drop in listings. If you see two houses like yours sitting unsold for several months, who wants to be the third one.

There is not enough financial stress out there to 'force' selling and so people will stay put and not move up or cash out. That's why paradoxially those still in the market may be more amenable to offers.

In any case July's number's are likely to be a bit of an anomaly, though I would still expect HPI to show a small decrease. 

Any opinions on what you are seeing out there would be welcome..