As the interest rates rise along with the supply Metro Vancouver is in a market shift away from the white hot conditions that the area had been subjected to over the past couple of years.
Residential home sales reached a total of 2,444 for June 2022. This a 35% decrease from June of last year and a 16.2% decrease from May of 2022 which were 2,918.
“Home buyers have more selection to choose from and more time to make decisions than they did over the past year,” Daniel John, REBGV Chair said. “Rising interest rates and inflationary concerns are making buyers more cautious in today’s housing market, which is allowing listings to accumulate.”
For June 2022 there was a total of 5,256 homes newly listed across all types (detached, attached and apartment) in Metro Vancouver. This is a 17.6% decrease from May of this year and a 10.1% decrease from June of last year.
Currently there are a total of 10,425 homes listed on the MLS (Multiple Listing Service) which is a 4.1% compared to May 2022.
“We’re seeing downward pressure on home prices as we enter summer in Metro Vancouver due to declining home buyer activity, not increased supply,” John said. “To meet Metro Vancouver’s long-term housing demands, we still need to significantly increase housing supply.”
The sales-to-active listing ratio for all home types combined is 23.4% with a break down as follows:
Detached Homes: 14.3%
Analysts generally state that downward pressure on home prices occurs when the sales-to-active ratio moves below 12% for a sustained period, while prices of homes will often have upward pressure when it surpasses 20% over a sustained period.
The current benchmark price for all homes combined in Metro Vancouver is $1,235,900. This is a 12.4% increase from June of last year and a 2% decrease from May 2022.
The total number of detached homes sold in June 2022 was 653 and reached a benchmark price of $2,058,600. This benchmark price is a 1.7% decrease from May of last year and a 1.8% decrease over the past 3 months.
There were 465 attached home sales for June of 2022 and attained a benchmark price of $1,115,600; which represents a 2.2% decrease from May 2022 and a 2.7% decrease over the past 3 months.
Apartment home sales totaled 1,326 for June 2022 and reached a benchmark price of $766,300. The benchmark price is a 1.7% decrease from May of this year and a 0.8% decrease across the past 3 months.
As the interest rates rise purchaser’s buying power will be decreasing. This will have an effect on the listing and sales prices as the purchasers will not be qualifying for as high as they were previously. This shift in the market will be a little slow as sellers tend to adjust slower than purchasers and still hold out to see if they can get that higher dollar amount “in case we get lucky”. Overall we will see some downward pressure on prices, but at the cost of a higher interest rate.
If a purchaser has the means, these market conditions are getting better for them as there is less competition, time to do the proper diligence (inspections and such) and more selection. This is also a stronger market for investors looking to purchase an income producing property.
As people are less sure about purchasing and waiting for “the crash” (which will be a correction at best), it will increase demand for rented units, so we will likely see an increase in rents as there will be less to select from.
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