FRASER VALLEY REAL ESTATE REPORT: DECEMBER 2023
Observations, Opinions, Trends and Analysis of Suburban Vancouver BC Housing Markets
For the closure of the 2023 real estate market cycle in the Fraser Valley, things on the whole continue to be in a balanced state. Below are my key takeaways from residential real estate activity in the Fraser Valley, for December 2023.
The Market Backdrop
The Bank of Canada once again left it’s key benchmark interest rate unchanged in December 2023
In addition to the above, there is a growing chorus of economists predicting that interest rates will be coming down in 2024 as the BOC is likely to follow the Federal Reserve in the US, in making such moves. What this implies is that the economy in Canada is expected to slow and weaken over the course of 2024. In turn, this might mean growing layoffs and unemployment as 2024 moves along.
The slowdown in home sales in December compared to a year earlier was also met by a decline in new listings coming to market. This is helped keep supply and demand in a sort of equilibrium that allows prices to hold steady (at least for now).
What Stood Out to Me in December 2023
Sales numbers were down from November 2023 by 6% but 17% higher than December 2022.
The average days on market to sell a home was still quite low: 40 days for detached houses, 32 days for townhomes and 33 days for apartments. This means there is still steady demand for homes.
The sales-to-active listings ratio overall was 18% indicating a balanced market for the housing market as a whole. For the three main property types, the ratio was 16% for detached houses, 29% for townhomes and 26% for condo apartments. Fraser Valley townhomes continue to be in high demand and have been selling quite fast.
We have seen very tentative and early signs that mortgage rates MAY be beginning to trend downwards to start out in 2024.
For the year 2023 as a whole, sales were down 4% compared to the year 2022 but 23% BELOW the 10 year average.
For the year 2023 as a whole, new listings were at a 10-year low and 8% below the 10 year average. Clearly, this reflects an absence of forced selling and distressed sales.
My Take on the Current Housing Market
There resilience of prices holding firm has continued to be quite a surprise. The lack of a surge in new listings or build up of active listings has (so far) kept a slowdown in sales from negatively impacting prices much, if at all.
There may be a more significant increase in new listings coming to market if and as people face mortgage renewals at mortgage rates they cannot financially handle. I imagine there may be struggling homeowners who are desperately waiting and hoping for mortgage rate decreases to materialize in 2024, rather than listing and selling. If they are able to weather the current mortgage rate enviornment, then excess listings may not provide enough supply to meet the steady demand that always seems to be out there.
What I’m Watching in the Months Ahead
It may be the case that the Bank of Canada stays on pause for a little while longer. Whether they actually proceed with rate cuts in 2024 could have a big impact on market pyschology. If they do cut, how much and how often could shape 2024 in real estate. It could reignite buyer motivation to purchase if affordability can be improved for shut-out buyers.
Inventory levels of active listings remain modest but still better than record lows seen in recent years. If the level of distressed sellers putting their homes up for sale increases, that could be a negative influence on prices. So far the banks have been flexible around negative amortizations and trigger rates. Will that continue to be the case though?
The unemployment rate remains very low and the labour market still seems good. But cracks do seem to be forming in specific pockets. Social media accounts show long lines in Ontario, for example, of hundreds of people applying for just a few specific retail and entry level service sector jobs. Is that a harbinger of things to come out West? In this context, will the recession that so many economists predict is coming in 2024 be short or shallow? Will there even be a recession? Looking at jobs numbers will give us a clue.
Home Prices Across the Fraser Valley
Housing Market Update by City (stats)
North Delta & Surrey Central Housing Activity
North Surrey & Cloverdale Housing Activity
South Surrey, White Rock & Langley Housing
Abbotsford & Mission Housing Market Activity
Disclaimer:
This publication is not intended to cause or induce breach of existing agency agreements.
The views contained within are my own and not those of any organizations I may be affiliated with.
Statistical data is deemed accurate as of the date of publication and based on available board information at that time. Please verify accuracy of stats independently, if deemed important.
This newsletter is not for investment advice and only reflects my observations. Please seek qualified professional advice, before making any disposition or acquisition decisions.