Is the Real Estate Market Cooling?

IS THE REAL ESTATE MARKET STARTING TO COOL DOWN?

After nearly two years of one of the hottest real estate markets we’ve ever seen, the Greater Vancouver market is definitely cooling rapidly – and becoming a balanced market. The Real Estate Board of Greater  Vancouver reports that 1,887 homes sold in July 2022, a 43.3% decrease from the 3,326 sales in July 2021 and a 22.8% decrease from the 2,444 homes sold in June 2022. Uncertainty is a major reason: buyers are unsure whether to buy now or hope for lower prices in the future. Sellers are suffering the same uncertainty – accept a lower price now, or delay selling? Check the Market Statistics  page to see the market trends for yourself!

OUR TAKE ON THE MARKET

Prior to the Pandemic in the Fall of 2019, the real estate market in Greater Vancouver was moving steadily higher, with occasional setbacks when governments introduced new taxes or other disincentives to try to slow the market. At that time, a representative detached home was selling for $1,440,000, the average price per sq ft was $545, and interest rates hovered around 4.1% for a 5 year fixed mortage amortized over 25 years. Then Covid struck – and the market paused because of recession fears. In response, the Canadian government launched an unprecedented rescue effort for the economy, probably the strongest in the world, where interest rates for 5 year fixed mortgages were driven well below 3% (and variable rate mortgages were available at below 1.5%!) and nearly $600 BILLION was injected into the economy. Much of that cash found its way into real estate investments, with entirely predictable results: prices soared! By April 2022, that same representative house was worth $2,100,000 and the price per square foot was $801 — a price gain of 46% in just 18 months during a pandemic! It was a great time to be selling a house. Fast forward to today and suddenly the behaviour of a home buyer has changed. Buyers are now being more conservative, much more selective and many are putting their searches on pause to see how low prices may go before jumping back into the market. While homes may not sell as high today, or with as many offers as a few months ago, sellers are still receiving great prices for their homes. That representative detached home will still fetch just under $2,000,000 at the end of July 2022– a 10.3% increase over July 2021 (and a 2.3% decrease from June).

And speaking of buyers – we still have a considerable number of well qualified buyers (some are cash home buyers), ready to buy.  See what they’re looking for – perhaps your home fits their needs?

ANSWERS TO OUR CLIENTS FAQ’S:

• Are we seeing the beginning of a market crash?  In short, no. There is a massive net migration into BC – over 100,000 people in 2021, with the bulk of those migrants settling in the Greater Vancouver area. Moreover, there are many, many investors and would-be homeowners waiting on the sidelines for lower prices to enter the market – and this massive demand will cushion price drops.   The market is currently balanced – it only seems like a buyer’s market compared to the extreme seller’s market of the past 2 years.
• Is it a good time to buy? Yes! The selection of homes is the best in years, buyers don’t have to compete or write cash offers to have a chance to win the home of their dreams, and prices are moderating nicely – and are negotiable! While interest rates have risen slightly, it’s important to remember that rates are still historically low, even at 4%-5%. If rates drop you can always refinance. Let us help you find the home of your dreams.
• Do you think the market will return to the height of a few months ago?  It’s hard to imagine, unless we are faced with another worldwide catastrophe that creates a ripple effect in the housing market. While homes might not break records as often, the market is still up significantly from 2021.
• Is it a bad time to sell? Did we miss our window? Absolutely not! Let’s put the news in perspective: prices have declined, yes, but they haven’t even given up all of the gains made in 2022! Let me repeat that: prices are back to where they were in January 2022. Not exactly a missed window… timing the market more accurately than that is simply not possible.
  However, there is a caveat. In any market, there are some who buy emotionally – they fall in love with a property and are willing to pay a premium for it, while others are motivated by a “good deal”. In today’s market, the second group, the bargain hunters, comprise the vast majority of those shopping. Getting a great price requires that the property be really well prepared so it shows better than the competition and wins over buyers from the first group – and we excel at that.  Let us give you a Free  Home Valuation to see your home value today!

Check our other blogs under Market Trends – that might give you answers about buying or selling a home.

The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.