The Real Estate Board of Greater Vancouver stated that in January 2023, there were 1,022 residential home sales in the area, which is a 55.3% drop from the sales recorded in January 2022 (2,285) and a 21.1% decrease from December 2022 (1,295 homes sold).
Last month’s sales were 42.9 per cent below the 10-year January sales average.
“Due to seasonality, market activity is quieter in January. With mortgage rates having risen so rapidly over the last year, we anticipated sales this month would be among the lowest in recent history,” said Andrew Lis, REBGV’s director, economics and data analytics. “Looking forward, however, the Bank of Canada has said that it will pause further rate increases as long as the incoming economic data continues to support this policy stance. This should provide more certainty for home buyers and sellers in the market.”
In January 2023, 3,297 detached, attached, and apartment properties were newly listed for sale on the MLS® in Metro Vancouver, which is a 20.9% decrease from the 4,170 homes listed in January 2022 but a 173.4% increase from December 2022 when only 1,206 homes were listed.
Currently there is a total of 7,478 homes listed in Metro Vancouver, which is a 32.1% increase from that of January 2022 and a 1.3% decrease from December of last year.
The sales-to-active listings ratio for January 2021 is 13.7% and breaks down by property type as follows:
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.
“We know the peak for prices in our market occurred last spring. Over the coming months, year over-year data comparisons will show larger price declines than we’ve been reporting up to now,” said Lis. “It’s important to understand that year-over-year calculations are backward- looking. These price declines already happened, and what we are seeing today is that prices may have found a footing, even if it’s an awkward one sandwiched between low inventory and higher borrowing costs.”
The MLS® Home Price Index for all residential properties in Metro Vancouver is $1,111,400, which is a 6.6% decrease from January 2022 and a 0.3% decrease from December 2022.
In January 2023, 295 detached homes were sold, a 52.6% decrease from the 622 sales in January 2022, with a benchmark price of $1,801,300, which is a 9.1% decrease from January 2022 and a 1.2% decrease from December 2022.
The sales of apartment homes reached 571, a 56.6% decrease from the 1,315 sales in January 2022, with a benchmark price of $720,700, which is a 1.1% decrease from January 2022 and a 1% increase from December 2022.
The sales of attached homes in January 2023 were 156, a 55.2% decrease from the 348 sales in January 2022, with a benchmark price of $1,020,400, which is a 3% decrease from January 2022 and a 0.8% increase from December 2022.
The Take Away:
Traditionally the start of the year is slower, so this is not too much of a surprise. With the continual raises by the bank of Canada, this has been exasperated. Many buyers are waiting on the sidelines to see how high the interest rates will rise and many sellers that didn’t NEED to sell are now either sticking by their guns for the price they were hoping to cash in on or pulling their unit off the market. The ones that are coming on the market are selling for a reason such as wanting to get a larger place (upsizing in a down market is a savvy move) or do in fact need to sell (such as a pending substantial lift in their mortgage renewal).
This leads to the future part of our “take away”. There will be many mortgages coming up for renewal soon and this might put some people in a sticky spot if they are not able to handle the 4 points and change that they purchased their home with 5 years ago. This MIGHT mean that there will be some deals to be had out there for buyers. This does NOT meant there is a fire sale and to send a bunch of lowball offers, unless you enjoy rejection. It does mean that there will likely be some negotiating space to be used.
As stated above though, there are a lot of people on the sidelines and the Bank of Canada not raising at their next opportunity could be a signal (true or not) that the end of the increases have arrived and could start the frenzy of people becoming more active in the market and thus causing pricing to rise.
I am still a believer that the mortgage rates will be dropping again in the relatively near future, so if you can manage a variable mortgage currently. Buying in a cooler market and riding this out might be the best bet; so that you can enjoy the rates as the variable rate drops when it does.
Another indicator of this theory of the rates dropping is that currently a fixed rate is almost 1 entire point less than the variable rate… Almost as if the banks are trying to entice people to get into a fixed term mortgage over a variable. I have no crystal ball so who really knows?
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