I apologize for the delay in getting this out....I finally succumbed to Covid so wasn't at my best for a week! But better late than never....
As I mentioned last month, we have been seeing pretty steady declines in sales in almost all markets across the country. Interestingly, Facebook keeps sending me my past real estate posts from 2016-2019 where the comments I made then, were similar to what I was saying at the beginning of this year and going forward since.
The year 2016 was our last big peak and then the market declined fairly steadily until we had the big Covid bump...The drops in sales weren't as dramatic as what we are seeing now but they were definitely happening. So, 2016 was a big peak; sales dropped a bit in 2017 but were still above the 10 year average; in 2018 they were below the 10 year average. Sales went down first and then prices. From 2017 to 2018 the benchmark price for detached homes went down 7.8% in the Greater Vancouver area, with some areas, including Vancouver's West Side, dropping a lot more than that.
In response to the 2016 peak, the federal government began bringing in a number of measures to cool the market. As those changes were implemented, from 2017-2019, a combination of public perception, wait and see, and actual impacts of the measures combined to slow the market substantially. By the end of 2019, sales were 20% below the 10-year average and most of us did NOT anticipate any improvement in 2020....but then who expected that a global pandemic would cause real estate to go crazy????
Fast forward to now it's deja vu all over again: another crazy peak leading to several planned government interventions. However, this time instead of the market slowly cooling over a couple of years, the timeline has been accelerated and we have seen similar sales volume drops (not yet prices) occurring in a much-compressed time frame.
Until last month, we hadn't seen much in the way of price drops. However, as sales volume decreases continue, price decreases are becoming more common.
As I mentioned last month, recently there have been a lot of changes in the factors that can have a big impact on the real estate market and we are expecting this to continue with interest rates continuing to rise and the implementation of legislative changes which will further impact the market. For now, things are not as bad as one might think looking at what is being reported in the news. The headlines do make it sound like the sky is falling but that has not happened yet.
In July we saw:
-sales were down 43.3% from July 2021
-sales were down 22.8% from a month earlier, June 2022
-sales were 35.2% lower than the 10-year average for July
-the number of homes listed for sale was down 9.5% when compared with July 2021
-the number of homes listed for sale was down 24.7% when compared to a month earlier, June 2022
-detached home sales were down 50.2% from July 2021
Some key take aways:
For Sellers
-we are into August now and August is usually a very slow real estate month. Buyers tend to be on vacation until after school comes back. In the Fall we should see a bump up of sales (and possibly prices) as the demand increases. August is usually not a great month for selling a home.
-offers are coming in with a lot more subjects BUT prices are still high. Prices are down 2.3% since June 2022 BUT are still up 10.3% from July 2021. In other words, prices are still high even though they are trending downwards
-the sales to active listing ratio is now below 12% for detached homes. Generally downward pressure on prices increases when the ratio is below 12% so if one were thinking of selling, this Fall will likely be a lot better than next Spring unless we see significant changes.
-the upcoming legislative changes will work in favour of buyers and could therefore accelerate negative impacts we are currently seeing for sellers
-the impacts sellers are seeing and will continue to see vary somewhat based on type of home, price point, location, etc.
For Buyers
-interest rates are heading up; consider asking your mortgage specialist to obtain a rate hold for you and discuss the implications of fixed vs. variable rates in an upward trending rate situation
-rates are still VERY low so it probably does not make sense to wait to buy if you can afford to
-the market has now shifted so that not only can buyers compete with fewer other buyers, as a buyer you can now also take time, breathe and put subjects in your offer and pay asking or less rather than battling others to overpay. While the stats show very modest price declines, we are seeing some buyers doing very well on their purchase prices relative to what they would have paid not too long ago
For those selling AND buying
-it’s all about the gap: this type of market can work very well for those who are upsizing or moving to an outlying location or another province. In many cases, the selling buyer will end up with more money in their pockets, even if they are selling for less money than they would have a few short months ago
So what should you do? Last month I explained what I would do if I were a seller or buyer in this market and that hasn’t changed. I am happy to discuss your individual situation as obviously there are factors that are different for each situation. If you have friends or family struggling with what to do in this market, please tell them to call me to discuss.
Enjoy the rest of the summer!