Will The Interest Rate Ignite The Market?


In May, the number of home sales in Metro Vancouver was lower than usual, causing a buildup in the number of available homes. Now, over 13,000 homes are listed for sale on the MLS®. According to the Greater Vancouver REALTORS® (GVR), there were 2,733 residential sales in May 2024, which is a 19.9% drop from May 2023's 3,411 sales. This figure is also 19.6% below the 10-year average for May, which typically sees 3,398 sales.

The surprise in the May data is that sales have come in softer than what we’d typically expect to see at this point in the year, while the number of newly listed homes for sale is carrying some of the momentum seen in the April data,” Andrew Lis, GVR’s director of economics and data analytics said. “It’s a natural inclination to chalk these trends up to one factor or another, but what we’re seeing is a culmination of factors influencing buyer and seller decisions in the market right now. It’s everything from higher borrowing costs, to worries about the economy, to policy interventions imposed by various levels of government.
 

 In May 2024, Metro Vancouver saw 6,374 new listings for detached, attached, and apartment properties on the MLS®. This is a 12.6% increase from May 2023, when 5,661 properties were listed, and a 7% rise from the 10-year seasonal average of 5,958.

Currently, there are 13,600 properties listed for sale on the MLS® in Metro Vancouver, a 46.3% jump from the 9,293 listings in May 2023 and 19.9% higher than the 10-year seasonal average of 11,344.

The sales-to-active listings ratio for May 2024 across all property types is 20.8%. Specifically, the ratio is 16.8% for detached homes, 25.1% for attached homes, and 22.5% for apartments.

Historical data suggests that sustained ratios below 12% exert downward pressure on home prices, while those exceeding 20% over several months typically lead to upward price trends.

With market trends now tilting back toward more balanced conditions, as the number of new listings outpaces the number of sales, we should expect to see slower price growth over the coming months,” Lis said. “Up until recently, prices were climbing modestly across all market segments. But with rising inventory levels and softening demand, buyers who’ve been waiting for an opportunity might have more luck this summer, even if borrowing costs remain elevated.
 
The MLS® Home Price Index (HPI) composite benchmark price for all residential properties in Metro Vancouver is now $1,212,000, marking a 2.3% increase from May 2023 and a 0.5% rise from April 2024.



In May 2024, there were 846 sales of detached homes, an 18.9% drop from the 1,043 sales in May 2023. The benchmark price for a detached home is now $2,062,600, which is 5.9% higher than May 2023 and 1.3% higher than April 2024.

Apartment sales in May 2024 totaled 1,338, a 22.7% decrease from the 1,730 sales in May 2023. The benchmark price for an apartment is $776,200, showing a 2.2% increase from May 2023 but a 0.3% decrease from April 2024.

For attached homes, May 2024 saw 523 sales, a 14% decrease from the 608 sales in May 2023. The benchmark price for a townhouse is now $1,145,600, representing a 5.2% increase from May 2023 and a 0.9% rise from April 2024.


The Take Away:
There has been a buildup of properties coming on the market and this has been caused from various factors such as the pending changes for capital gains tax, changes in the AirBNB rules, and mortgage renewals coming up from the historically low rates that were in 2020 to name a few.
 
We have seen a reduction on June 5th in the interest rates by 0.25%, which is the first decrease in 4 years. While this will not cause a mad rush to the market, this will likely instill some consumer confidence and we will likely see slightly more transactions in the following months.
 
With more selection and a slower moving market that is inching towards a balanced one, this is a great time to be shopping for a home as all the proper items can be checked off such as inspections, negotiations on prices and just generally being able to move at a reasonable pace.

Sellers will have to price their homes sharply and based on current market stats and figures. Gone are the days of just putting a sign in the lawn and watching the multiple offers come in.

If you would like to have to some real world advice about how to navigate the current market and plan for the future call or text me at 604-522-4777 or e-mail directly at: haze@hazerealty.com or join us at our Facebook Page (www.facebook.com/HazeRealty) and we see what the best move can be.


Source: https://www.gvrealtors.ca/market-watch/monthly-market-report/may-2024.html
Share