Real Estate Matters – February 2023
Hello!
As take a look back on what we said last month:
“We think we are reaching a bottom here in regards to the Vancouver Real Estate Market trend.”
As we look back on the stats from January, this was indeed the case. But this time, price increases seem to be from the bottom up. What this means is that this is “need based buying”. How long as this trend been going on? Actually, it started at the beginning of the pandemic. Allow me to explain.
2015 to 2018, we saw a frenzy of “speculative buying”. Whether it was from investors or foreign money, trickling down to people not wanting to “miss the train”. This caused a record price hike like no other. In turn, it caused even more investors seeing it as an opportunity as well as buyers not wanting to let the price outgrow their abilities. It was the perfect storm.
After that, we saw the market take a pause for a year and a half, until COVID hit. This was when the “need based buying” began.
2020 to 2022, as many start working from home, spending much more time with their households, and going out much less, the need for space became the driving factor. We saw individuals and families having to have that home office, extra kid’s playroom, extra pantry/storage, etc. This created a top down effect, as the desire for larger homes was the driving factor.
Since the numerous rate hikes in 2022, it shocked the market into a transition period. As we kept mentioning, this was the best time to buy, but the majority of people stood on the sidelines due to the fear of the unknown (risk). This created a pent up demand, which will need to be released sooner or later – that’s the natural course of the economy. Now that the rates stabilized (and is coming down slightly), those that have been waiting to see what happens, are jumping back in. Another factor that is motivating this trend of bottom up, is the cost of rentals. Because of the rate hikes last year, rental rates have exploded. To a point where it costs more to rent than to pay a mortgage. The condo buyers / first time buyers are feeling this, and taking advantage of the last bit of the low market.
As we go into 2023, we expect the prices to slowly increase. It won’t be at the rate of late 2010’s or the pandemic, because supply will come out along with the demand. Nevertheless, price increases will trickle upwards in the price band.
If you are looking to Buy, Sell, or Move, this is the market where you can do it all. You just need to be equipped with the right information, be realistic, and work with someone that has the experience and expertise to help you navigate it.
It’s never too early to be prepared. Drop us a line or give us a call, and we’d be happy to discuss your options.
VANCOUVER, BC – February 2, 2023 – Inventory remains low in Metro Vancouver* while home sales dipped well below monthly historical averages in January. The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,022 in January 2023, a 55.3 per cent decrease from the 2,285 sales recorded in January 2022, and a 21.1 per cent decrease from the 1,295 homes sold in December 2022.
“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.”
“We know the peak for prices in our market occurred last spring. Over the coming months, yearover-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.”
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