Join me for my discussion of the current market conditions, the changes we’ve noticed, and the effects they will have on buyers and sellers.
In today’s discussion, I’m joined by my friend Mark for a back-and-forth about how the real estate industry in Greater Vancouver is undergoing certain changes.
“What do people need to know in order to make smart real estate decisions in our market?”
The last couple of years in our market have been red-hot, and sellers have been able to dictate the pace. Now, however, we’re undergoing a change.
The biggest thing consumers in the market need to watch out for is how active the market currently is. Comparing July 2017 to July 2018, Vancouver and the Fraser Valley Boards have shown quite a decrease in the number of properties sold. The Fraser Valley Board’s sales were down by 33 per cent, and the Vancouver Board saw a 30 per cent sales decrease.
Because of that, some buyers are taking a step back to decide whether they want to move forward at this time.
“How is the current market affecting sellers?”
Sellers are taking a step back as well. Compared to July 2017, sellers this year were a little hesitant about moving forward. For the Fraser Valley Board, the number of new listings this July was down by about 11 per cent over last year. The Vancouver Board was down by about 10 per cent, as well.
All in all, some buyers are moving forward with their purchases, but many sellers aren’t stepping up to put their properties on the market, preferring to take the “wait and see” approach.
“How are interest rates affecting the area?”
It’s a perfect storm right now, and interest rates are why we’re seeing a transition: as the rates go up, the qualification hurdle gets a little higher. Having to qualify at a higher rate is making it more difficult, and our foreign buyer tax is stopping a portion of the market from coming in to buy.
After 2.5 years, the market was frenzied for a while. A lot of the buyers left the market because they’d already purchased their homes. New homebuyers are now facing tougher challenges in order to qualify.
The last trend that we watch to understand the market’s activity is the sales-to-list ratio—how many properties are selling in a given month, compared to how much property is available. We’ve been in strong seller territory for 2.5 years now, with a 20 per cent sales-to-list ratio. Now the Vancouver Board is 17 per cent, and the Fraser Valley Board is at 19 per cent, meaning that it’s a more of a balanced market. When the number drops below 15 per cent, it means we’re in a buyer’s market, which we’ve seen in certain areas. West Vancouver, for example, is selling at about 6 per cent, when means we’ve got a 16-month supply of properties.
These are important numbers, and if you miss the market, you’ll end up chasing it as it does change. We’re not seeing too much of a decrease in price at this point, but when you don’t have many sales, it’s hard to track pricing changes. We’ll see what happens in the fall; we’ll have three months of slower activity to understand if the buyers are going to dictate the market, or if it’s just a cooldown period.
If you’re thinking of buying or selling in these current conditions and would like to know more about your specific situation, I encourage you to reach out to me by phone or find us online at www.2percentsolution.ca. I’d be happy to arm you with the correct information so that you can make the best decisions moving forward.