FRASER VALLEY REAL ESTATE REPORT: OCTOBER 2023
Observations, Opinions, Trends and Analysis of Suburban Vancouver BC Housing Markets
In the start of the classic fall real estate market cycle in the Fraser Valley, things on the whole appear to be in a balanced state. With summer holidays in the rearview mirror, housing market participants began to resume buying and selling activity with greater focus. Below are my key takeaways from residential real estate activity in the Fraser Valley, for September 2023.
The Market Backdrop
In early September 2023 we saw the Bank of Canada leave it’s benchmark interest rate at 5.00%. The BOC left open the possibility of further interest rate increases, but many economists have been suggesting that this is probably the end of this interest rate hiking cycle.
Given the above, there may be more clarity and predictability that benchmark interest rates may stabilize in and around current levels, at least in the short-term.
The trend since December 2022 has been a slow and steady rise in the inventory levels of listings.
What Stood Out to Me in September 2023
Sales numbers were down from August by 13.6%
The average days on market to sell a home was still quite low: 29 days for detached houses, 23 days for townhomes and 24 days for apartments. This means there is still steady demand for homes.
The sales-to-active listings ratio overall was 17% indicating a balanced market for the housing market as a whole. For the three main property types, the ratio was 14% for detached houses, 31% for townhomes and 25% for condo apartments. Fraser Valley townhomes continue to be in high demand and have been selling quite fast.
Rising oil prices and inflation may mean higher for longer interest rates; this could negatively impact the psychology of home buyers
My Take on the Current Housing Market
There resilience of prices holding firm has been quite a surprise. One might have expected more downward pressure on prices in light of the fast increase in mortgage rates over the past year and half or so. But perhaps negative amortizations are keeping forced sales from happening as repayment terms get extended out to keep payment levels constant or stable.
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. Interest rate increases work with a rolling lag in relation to the impact on homeowners with mortgages. As some people struggle keeping up with higher mortgage payments, we will likely see more homeowners forced to list and sell their Fraser Valley home. The bank regulator has publicly stated they are not comfortably with excessive amortizations that are being offered as stop gap measures by banks, in the current environment.
What I’m Watching in the Months Ahead
It may be the case that the Bank of Canada stays on pause with it’s interest rate increases. Their next scheduled interest rate announcement will be in late October. At that time, we should have more certainty around whether or not this interest rate hiking cycle is actually over or not.
Inventory levels of active listings remain modest but steadily increasing. 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 later this year 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.