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Market Updates
Real Estate Market Intelligence February 2025
Real Estate Market IntelligenceFebruary 2025 With only one month into 2025 and we're already off to a turbulent start. A lot to unpack here as we saw Bank of Canada dropped their rates by 0.25%, while the US Feds decided to hold rate. Prime Minister Justin Trudeau resigned, leaving Canada without a leader to deal with the on again off again US Tariff trade war. In the midst of all the chaos, the Canadian dollar briefly drop to its lowest value in over 20 years before recovering. Meanwhile, mortgage rates has been just as volatile, with some fixed rates (mirror that of the bond rates) continue to drop to levels not seen in 3.5 years. Last but not least, we have the release of the first month of Vancouver real estate stats, with January's supply increasing at a whooping 31% over the 10 year average, which is the highest for the month of January in 20 years. Let's dive deeper. For the first month of 2025, the Vancouver real estate started off to a busier one as the momentum carried over from last year. Report had shown that for the first 3 weeks of January, open house traffic, showing requests, and sales activities were way up. However, when Trump took office on Jan 19th until the second week of February, the market started to cool. Understandably, as the fog of tariff war persisted, Buyers were spooked and retrieved back to the sidelines. Historically, it would normally take 2-3 months for any major global uncertainty to clear before the Buyers become more comfortable to make a move. However, Spring market is right around the corner and it is usually the busiest time of the year for real estate. Thus, the timing of the tariff talk has, for now, dampened the recent market upswing. Should the scale of the tariff be minimized, I expect sales activity to return quickly. Meanwhile, prices continue to remain flat at +0.1% last month, but what's most important of all is the housing supply, which we have seen a +31% increasing over the 10 year average, and it's the highest number of new listings in the month of January ever recorded (since 2005, when the real estate board started to release stats). This supply surge was mainly driven up by the condo segment, as more newly-constructed condos will come onto the market. Having said that, we are seeing more Sellers willing to come off the sidelines than Buyers. Unlike last Spring when there was a major supply constraint, this year the Buyers are faced with more options and can afford more time to choose and negotiate. Noteworthy is that good homes still sell very quickly and usually within the first two weeks. That tells me although Buyers may be more selective now, are just waiting for the right product to come on. On the economic front, the Bank of Canada has lowered the interest rate by 0.25%. By the same token, Canada's 5 year bond rate (where the bank's 5 year mortgage rate mirrors) had seen it's biggest drop of -0.50% in a matter of 4 weeks (between Jan 14-Feb 14) after tariff announcements. This has given Buyer's more purchasing power, albeit only by a little. Having said that, major banks and economists suggest Bank of Canada will continue cutting in the next meeting, so I expect increased Buyer activity on the horizon. As that same sword cuts the other way, the Canadian dollar had briefly plunged to new lows (on Feb 2) not seen in 20 years, before recovering quickly. A weaker Canadian dollar translate into elevated import inflation risk, and that just spells more trouble in the already troubled Canadian economy. Whether there's a tariff war or a softening Canadian dollar, there seem to be no escape for more inflation incoming this year. Looking ahead, the real estate market, just like everything else, is poised to be even more volatile in the coming months. Stay agile, and position yourself accordingly: the ride has just begun. Some of the unique trends I've been observing:1. Surprisingly, Canada's unemployment rate has dropped slightly to 6.6% in January (compared to 6.7% in December), even though it certainly doesn't feel like it. Of all the provinces, Alberta had the most jobs added (+1.4%), which Ontario has +0.3%, and BC was mid-pack at +0.5%. 2. The US tariff and talks of trade war has sent jitters through the Vancouver real estate market. The first three weeks of January carried the momentum from last year, with increased open house traffic and showing requests. As soon as the tariff was announced, Buyers confidence were shaken, and rightfully so. Imagine who wants to buy one of their life's most valuable assets in the midst of all the uncertainty? 3. The Bank of Canada has slashed the rate by 0.25%, effectively bringing the overnight rate to 3%. What's more important is Canada's 5 year bond rate, which mirrors the major bank's 5 year fixed rate, has dropped by -0.50% in the last three weeks. We are starting to see some of 5 year fixed rates between 3.89% to 4.19%. For buyers, now poses a good opportunity to lock in their rates, whether fixed or variable, just to be safe. 4. In January, the Vancouver real estate market saw the highest monthly listing increase (+31%) in the past 20 years. As this was driven mainly by the condo segment, such Seller should be cautious as this year will have even more new-construction done. This will add further inventory and downward price pressure into the already over-supplied market. And the falling rent is not helping either. 5. Speaking of falling rent, January saw the Canadian residential asking rent fall to a 18 month low, at $2,100. As immigration target is expected to reach net-zero by 2026, it does feel like the immigrants are leaving faster on their own accord. Who would blame them? They were sold a Canadian dream of better job and livelihood, only to find out suffocating high standard of living, limited job opportunities, and nearly no way of ever owning their own home due to elevated prices. If immigrant don't see a viable future in Canada, they will leave sooner or later. 6. According to a report, 60% of all goods in the fridge of a Canadian household is imported. Be prepared for the imported inflation and is poised to further cripple the Canadian economy.7. Canada's inflation shifted slightly back up to 1.9% in January (up from 1.8% in December). This was supposedly to be lower due to the GST break, but it was offset by higher fuel prices. Now that the GST break is over, and it seems the word "inflation" is starting make a come back after being off the headline for over a year. Bank of Canada's next rate announcement is March 12, and whether they cut or not, they will have a hard job to do. But before then, there may be more (tariff) news to shift the market either way. Here are the 4 highlights for January:- Total inventory of 11,494 units was the sharpest rise in January inventory for the past 20 years. - Beginning of January continued the welcoming trend of heightened activities, even though is still -11.3% below the 10 years average. - January is seasonally a slower month compared to what's to come in Spring, which is typically the busiest time. However, this year has seen an unconventional start. - Prices continue to chop sideways for the past three months, with average prices barely moving at +0.1% since November. Here are the in-depth statistics of the January: - Last month's sales were -11.3% below the 10 year January's sales average.- Due to seasonality, month by month residential home sales dropped -12.9% from December 2024.- Month by month new home listings exploded to 230.8% compared to December 2024. Partial of this was due to some of the listings expired at the end of the year, and was being re-listed in January. - Last month's price remain unchanged at +0.1%.- Sales-to-listing (or % of homes sold) ratio is dropped slightly to 14.1% (compared 17.1% in December). By property type, the ratio is 9.2% for single houses, 18.5% for townhouses, and 16.5% for apartments/condos. Download January 2025 Greater Vancouver Real Estate Report Single House Market The January single house market seem to have entered into a slump; prices are flattening, inventory is spiking, while sales are sluggish. It's an intriguing trend happening here that in the face of rising single house inventory, we are not seeing any steep drop in prices (yet). In fact, prices (for now) are holding steady nicely. As the old saying goes: Scarcity determines price, and that seems to be true in Greater Vancouver single house owner. As price is a lagging indicator, this could be at play as we may see the current inventory put downward price pressure on this segment. For now, due to the rising inventory, sales-to-listing ratio (% of homes sold) have dipped into the Buyers market in January at 9.2% (down from 12.7% in December). Meanwhile, prices are holding at +0.3%. Note that in the face of lower rates (and increased purchasing power), the entry level single house (i.e houses under $1.6m) is such a popular product that the demand will always eclipse the supply in the long run. Yes, we also have the the premium homes, such as those on the West Side listed over $4m, are having a harder time to sell. Keep in mind that good products and reasonably priced homes are still moving. This is to be expected because Buyers know that, for the past 3 years, there are just barely any newly constructed single homes. If developers are no longer building new houses, then resale home will hold their value over time. When we multiply that with more single house being torn down and developed into multi-family condos and townhouses, I expect the single house prices, despite rising inventory and increasing downward price pressure, may budge only a little in price. Of all the segments, this may be the most resilient one. As noted before, single house Sellers, who either are mortgage-free or have built so much equity into their home over the past 20+ years, are willing to sell only because they want to, not because they have to. For the month of January, the neighorhoods that registered most price growth were North Vancouver, Sunshine Coast and Squamish at +3.1%, +3% and +2.7% respectively. Conversely, the neighborhoods registered the most significant price drops were Pitt Meadows, West Vancouver and Port Moody, with -4.2%, -3.3% and -1.6% respectively. The single house market has shifted from a balanced market to a Buyers market, with average days on market increasing significantly to 64 days (compared to 45 days in December), and month-to-month average price remained nearly flat at +0.4% (compared to 0% in December). Sales-to-listing ratio (% of homes sold) remain dropped to single digit at 9.2%. (compared to 12.1% in December). Townhouse Market The January townhouse price took a surprising hit, albeit only a minor one, with a -0.8% drop. As townhouse remains the most popular choice for the growing family, this minor price drop may have been caused by the Canadian growing economic woes; families who were looking to up-size are either taking a pause, or just started throwing low ball offers because, let's face it, that's all they can afford. As townhouse buyers composed mainly of end-users, they are more affect by job security (unemployment rate), household income, and economic outlook. So now when there are so much uncertainties, they are even more cautious than before. Another way to look at it is that, Buyers who want to upsize to townhouse simply are having a hard time selling their own home, namely apartments, which has seen a surge in supply recently. This ripple effect has caused a slowdown in the townhouse sales and price growth, even though the sale-to-listing ratio of 18.5% remain the highest amongst all segments. Having said that, entry level townhouses less than $1m in Greater Vancouver and $800k in Fraser Valley are still popular, just that Buyers are now more selective. The good ones will fly off the shelves, while townhouses in worse condition or priced higher are poised to sit much longer on the market due to rising competition. In January, the areas with the most townhouse price growths were led by North Vancouver, Pitt Meadows and Maple Ridge, registering +4.4%, +1.4% and +1.1% respectively. Conversely, the neighborhoods with the negative price growth are Vancouver West, Richmodn and Squamish, at -3.3%, -2.1% and -2% respectively. The townhouse market shifted from a Sellers market to a Buyer's market, with date on market increasing to 44 days (compared to 35 days in December). Month-to-month sale price continue to trend down for the second month at -0.8% (compared to -0.3% in December). Sale-to-listing (% homes sold) ratio remain the strongest among all segments and but has dipped to 18.5%. (compared to 23.6% December). Apartment and Condo MarketA perfect storm is brewing for the apartment market, with a surge in inventory compounded by a drop in rent. Rental managers are reporting a 3-4 month turnaround for rental units, even as they continue to lower asking rent. Thus, mom-and-pop investors are liquidating as they wonder just how much longer can they bleed cash every month. But wait, wouldn't lower interest rate increase purchasing power and elevate the sales, especially amongst first time home buyers? Indeed, we are seeing entry level condos remain active, but there are just a lot of competition out there. Also, 2025-2026 will have the most pre-sale units ready to be complete, and that means towers and towers of new supply will come onboard. We are talking about thousands of units pending. It's not hard to see that with Canada's net-zero immigration policy, rents are dropping, investors are hurting, and buyers remain cautious. In the coming months, I would expect inventory continue to rise in the apartment market, and homes will take much longer to sell. This is the segment where the downward price pressure is the most prominent, and Seller would now have to price their homes competitively in order to attract any offers. For the month of January, the best performing neighbourhoods for apartments are all in the outskirts (due to seasonality) at Whistler, Squamish and Sunshine Coast, at +7% +6.9% and +4.5% respectively. Conversely, the areas with the most significant price drops were all in the outskirts in West Vancouver, Port Moody and North Vancouver with -3%, -2.2% and -1.4% respectively. The apartment and condo segment has remained in a balanced market for the second month, with average days increasing to 45 days (compared to 36 days in December). Month-to-month sale price remain nearly flat at -0.2% (compared to -0.4% in December). Sale-to-listing (% homes sold) ratio dropped slightly to 16.5% (compared to 18.7% in December). Here are the Three Trends I'm Observing: 1. Locked InCanada's major banks fixed rates are mirrored to that of the government's 5-year bond yield. With that said, the recent trade war has created a window for prospective Buyers to lock in their rates. It's been 3 years since Canadians had seen fixed rates between 3.89-4.19%. The market is extremely volatile now, so things can go either way. In my opinion, it never hurts to just lock in your rates. (Source: Canadian Mortgage Trends) 2. Supply, SupplyHousing supply across Canada is rising, with year-over-year home for sale inventory climbing in Montreal at +10%, Calgary +18%, Vancouver +27%, and Toronto at a whooping 49%. Even in the face of rising inventory, Canada still faces a housing shortage and an affordability crisis: home prices are still out of reach for many. But for now, the supply is at least normalizing. (Source: Canadian Real Estate Association, RBC Economics) 3. Smiles to Frowns Canada ranks 15th in the 2024 world happiness index, down from 5th in 2015. For those under 30, Canada ranks 58th, which is one of the worst declines globally. Once the happiest group, they are now the least happy in Canada. Coincide this with the Canadian real GDP per capita that has been stagnant for the past decade, it's not hard to understand why. (Source: World Happiness Report 2024)
Real Estate Market Intelligence 2025 Overview
Hope your New Year is off to a wonderful start. In summary, 2024 was a year nothing short of up's and down's, with the year started off strong but fell flat since the summer. For the second half of the year, it gave up all the price gains it made, and ended up near where it started. On the bright side, the year ended on a high note with elevated sales. However, the overall total sales of the 2024 was also nearly flat (compared to 2023), and ended again at 20% below the 10-year sales average. To cap it off, 2024 was another year of roller coaster ride. Looking ahead, I believe 2025 will be an even more volatile year. Here are the emerging trends to observe: 1. More affordability with lower rates and increased amortization (for first time buyers)2. End Users remain the market's main driving force3. Single house and townhouse market will outperform condos4. Distress sales will grow as insolvency rises5. Retail investor remain sidelined and seek alternative options6. Rental rates drops further as immigration head to net-zero next two years7. Projected annual price growth at 1.6% Observation 1: More Affordability with Lower Rates and Increased Amortization (for first time buyers) Canadian major banks are predicting that the Bank of Canada will slash rates in the range of 0.25% to 1.25%, effectively making the policy rate ranging between 2% to 3%. While that is a huge gap for experts to predict, the core belief is that more affordability is on its way. However, keep in mind that policy rate does NOT equate bank rates, as we have been seeing in the past 2 weeks that the 5 year bond rate is slowly creeping up, causing some mortgage rates to rise. This has caused further confusion among Buyers. Overall, lower rates compounded with federal policy of increased amortization (for first time buyers), more buyers more likely to come out of the woodwork. Key is, would there be abundant supply (like that of 2024) to keep the market balanced. Observation 2: End-User Remain the Market's Main Driving Force Whether it is a growing family with a newborn on the way, or a retiree looking to explore options as a snowbird, the 2025 market look to continue to be dominated by end-users meeting their actual needs and demands, over those looking to purely invest. There will be more local demand driving local markets. Observation 3: Single House and Townhouse Market Will Outperform Condos For decades, the Vancouver single houses have been bought and rezoned into townhouses and condos. While that is profitable for developers, Buyers still yearn for more space, and their ultimate goal is still upsizing to a bigger home. With single house a dying breed, its supply remain constrained. Such Sellers (who have baked enough equity in their home) can sell on their own terms and timing, all the while with deeper pockets and less restraints. On the other hand, more new construction condos are poised to be completed (and flooding the market) in 2025 & 2026. This will place further price pressure on the condo resale market. As for townhouses, it remains to be the perfect blend between the two and the most sensible and affordable choice for growing families. If scarcity defines price, then single houses and townhouses are your best bets in the years ahead. Observation 4: Distress Sales Will Grow As Insolvency Rises Since 2022, the perfect storm has been forming with higher interest rates, higher wages, and weaker economy. As Canada's insolvency just hit a 15 year high, what can pile on to the misery is the pending US tariffs. Even with a slight bump up in tariffs, the Canadian economy would have to suffer higher inflation and higher unemployment. Remember in Sept 2024 that another developer, Thind, had gone bankrupt and was placed under receivership of $302 million? Expect more of the same this year. Observation 5: Retail Investors Remain Sidelined and Seek Alternative Options"Mom and Pop' investors will be looking away from investing in real estate due to the BC government's increasingly over-controlled tenancy laws. As these regulations continue to strip away the landlords rights, it has become an uphill battle for any landlords to sell (i.e 4 month notice to end tenancy). Rising costs (strata fees, repairs), market uncertainty along with all the headache and sleepless nights just isn't worth it anymore for mom and pop anymore; they'll explore easier alternative such as stocks, mutual funds or REIT. Observation 6: Rental Rates Drop Further As Immigration Head to Net-Zero in the Next Two Years The rise and fall of rental rates have historically coincided with immigration and unemployment rate for decades. Since April 2022 to Dec 2023, Canada has absorbed over 1.5 million immigrants, composed of temporarily workers, international students and permanent residents. As the federal government slammed the brakes on immigration on Oct 2024, compounded with unemployment rate near 7%, one can argue that residential rental vacancy will rise as the rental rates will fall. For 2025, the best case scenario for rental rate would be remaining flat. However, it would be more likely to see further rent rates drop as more condo inventory (i.e pre-construction completed) come onto the market later this year. Observation 7: Projected Annual Price Growth at 1.6% 2025 is poised to be a another year of volatility, so it is that much harder to do any projection. In my opinion, real estate, stripped away the investors and dominated mainly by end-users, will have a nearly flat price growth of 1.6%. Key factors to consider are the Canadian economy, which remains weak despite more incoming rate slashes. Higher unemployment rate may around 7% will cause most people to be more concerned about their job security, staying afloat and putting food on the table, rather than getting a new home. Downsize Risk:Sales slow further and dip between 25-30% below 10 year average if the Canadian economy deteriorates further due to tariff war. Double whammy of high unemployment rate with rising inflation. Canadian dollar tanks further. Upside Risk:Sales pick up drastically as Buyers respond to lower rates. First time home Buyers and other end-users finally come of the woodwork having waited for over two years of elevated interested rate. Demand eclipses supply, and minor price gain follows. While on the backdrop of the Canadian dollar tanking, some retail investors may consider returning and crowding the real estate investment market, in an attempt to hedge the falling loonie. Download December 2024 Real Estate Market Report Here are the in-depth statistics for the year 2024 - Prices has remained nearly flat at -0.1%, with the first half of the year registering +3% gain, before pulling back -3.1% to end the year. - Total sales for the year was 26,561 units, almost nearly flat as well at +1.2% from 2023. - Last year's sale total was 20.9% below the 10 year annual sales average. - Total number of properties listed was 60,388 units, which was 5.7% above the 10 year annual average.
Real Estate Market Intelligence November 2024
Real Estate Market IntelligenceNovember 2024 Winter was off to a wild start: jumbo rate cuts, BC provincial election, US election, and Canadian dollar depreciation. The past few weeks was certain filled with surprises (whether pleasant or not), and the Vancouver real estate market was in for the ride too. In what is a non-seasonal trend, October's real estate sales shot up significantly as Buyers suddenly turned optimistic (possibly due to the jumbo rate cut and pent-up demand). In fact, last month registered +31.9% more sales than the previous month, and is the 3rd highest monthly sales volume for 2024 only behind April and May. So have we finally turned a corner and heading towards recovery? One month doesn't make a trend, but we are starting to see stale listings (i.e homes that's been on the market for many months) that are getting sold, and lowball offers are vanishing. These could be signs that a market recovery is on the way, but with caution. Note that the October sale has increased, but it is still -5.5% below the 10 year average. Also, the total inventory is still +26.2% over the 10 year average. What this means is, some segments have shifted from a Buyers market back into a Balanced market, and from Balanced to a Sellers market, and we are still in an environment where supply is outpacing demand. The theme for the this year has been the weak Canadian economy, with rising unemployment and negative growth for per capital GDP (less productive per person). As mentioned before, if Canadian are worried about their jobs, if they get fired, if their work hours are reduced, or if they get get a bonus, then real estate is really just an after thought. The recent reform in immigration policy, where we were initially projected to have 500,000 permanent residents and "unlimited" temporary workers, has been cut to 390,000 permanent residents and hitting the brakes on the temporary workers together from 2025-2027. Canadian government has projected there will be -0.2% population growth in the next two years. Whether we like it or not, this complete U-turn in immigration will have a major aefect on the Canadian economy. In my opinion, had it not been for the immigrants to artificially prop up the Canadian economy in the past 2 years, we would've been in much deeper recession than we are now. Having said that, the provinces that gets hurt the most will be BC and Ontario, with the most temporarily workers representing 9.3% and 8.5% respective of the entire Canada. With the possibility of net outflow of people (the most significant in BC and Ontario), we should see rental rates drop further. When that happens, would the landlords, seeing less return on their investment condos in these two provinces, decide to liquidate their investments and possibly flood the market in next 2 years? Keep in mind that there are also plenty of pre-sale projects that will be completing in the next 2 years. Thus, we should be seeing the condo/apartment segment having an abundant supply in the future. Simply look at Toronto now, which is the epicentre of the condo market crash, and one can observe the rise and fall of an over-leveraged and over-supplied condo market. Moving forward, there is simply too much market volatility to even predict what's going to happen even three months from now. One thing for certain is that the Canadian economy is going to need time to recover and to stay competitive. With more imminent rate drops, the Canadian dollar (compared to the USD) has further tanked to its lowest point in the past 4 years, and we may see further dips. As such, Canada's biggest trade partner, the US and their economy, will be heading in the other direction and out-performing many other nations. With the economic and production gap widening between the two countries, Canada will try to avoid to importing the inflation from the US. If your investments portfolio is highly invested in Canadian funds, it would be highly advisable to explore alternatives aboard. Meanwhile, let's buckle our seats: there will be more turbulence ahead. Some of the unique trends I've been observing:1. Last month's Vancouver Real Estate saw a pleasant uptick in sales (+31.9% over September), and is the third highest transactional month since April and May. However, sales still remain -5.5% below the 10 year average. Also, total inventory remains elevated at +26.2% above the 10 year average. Some products are shifting from a Buyer's market back into a Balanced market. However, there remains downward price pressure, with last month's average price dropping -0.6%. Single house was the under performer, registering monthly loss at -1%. On the flip side, townhouse was the outlier with the price gain at +0.9%. Apartment was the mid pack at -0.6%. 2. Facing more political pressure, the Trudeau government made a complete U-turn on the immigration policy. In short, there will be a stoppage in importing temporarily workers, and there will also be a net outflow of immigrants. The projected Canadian population growth will be -0.2% in the 2025-2027, which is a first negative population growth for Canada outside of the pandemic. An interest fact was that this announcement was made in October, but three months earlier in July, Statistic Canada has shown that permanent resident application had already fallen by 57%. In other words, potential immigrants were already NOT considering coming to Canada, possibly due to the high standard of living, the lack of housing affordability and the weak economy. The recent revision by Immigration Canada was just to reaffirm that fact. Either way, Canada is no longer an ideal immigration country anymore. 3. According to a report by Desjardins, Canada's budget deficit could balloon to $46.5 billion in 2024-2025. On a provincial level, the Metro Vancouver Board has approved a +25.3% increase to regional tax bill. In other words, British Colombians are whooped both on a federal or provincial level. As more and more taxes are ready to be piled into the Canadian families to "solve the problem", just how are they suppose to improve the living standards of Canadians? In fact, studies have shown that more taxes are counter-productive and would further drive away innovations, investors and business start-ups. I can only imagine what our next generation's tax burdens would be like. 4. With Trump winning the election, the attention now turns to his policies, namely the tariff he promised to imposed. As such, Canada does 77% of it's trade with the US, and imposing a 10% tariff would translate into a $30 billion per year impact as report by the Canadian Chamber of Commerce. 5. If lower rates were a drug, then the consumers are the addicts: Canadian consumer confidence is now at a 30 month high. Cautiously optimistic, anyone? 6. Buyer sentiments is a funny thing. Even when the Bank of Canada had the jumbo rate cut of -0.5%, one will have to understand that actually had no effect on the fixed rates. Keep in mind that only variable rates are affected in the event of a rate cut/hike, but not for fixed rates. In fact, the 5 year fixed rates (which is determined by the 5 year Canada bond yields), have risen by +0.4% in October. In other words, fixed rates gone UP, variable rates gone DOWN, which means, in some case, borrowing costs have gone higher! Buyers coming off the sidelines with the sole belief that mortgage rates are "cheaper", may only be in for a rude awakening. It is very possible that we may see fixed rates remain the same in the near term. Here are the 4 highlights for October:- Total inventory of 14,477 units has remain nearly the same as last month. It is still the highest for the month of October since 2014. - After months of dismal sales, the October sales saw a pleasant surprise uptick of 2,632 units, which is +30.2% over September. Some of the stale listings actually sold last month. - The jumbo rate cut may have got some Buyers off the sidelines, but keep in mind that one month doesn't make a trend. Could November be another month of surprise? - October home monthly price drop slowed to -0.6% (compared to September's -1.4%). Further rate cut may see the negative price growth level off, and possibly head into a flat territory in the next few months. The two key factors are: would sales keep up, and would inventory level remain elevated. Here are the in-depth statistics of the October: - Last month's sales were -5.5% below the 10 year September's sales average.- Month by month residential home sales surged to +30.2% from September 2024.- Month by month new home listings dropped by -12.7% compared to September 2024. - Last month's price dropped slowed to -0.6%, compared to -1.4% from September.- Sales-to-listing (or % of homes sold) ratio is rose significantly to 18.8%. (compared 12.8% in September). By property type, the ratio is 13.4% for single houses, 22.5% for townhouses, and 22.2% for apartments/condos. Download October 2024 Greater Vancouver Real Estate Report Single House Market Last month, the single house market was a mixed bag. The welcoming news was that month-over-month sales was up significantly by +25.6%., bu on the other hand, the single house monthly price drop at -1%. This mixed signal shares the same polarizing views of the Sellers and Buyers. Even with the recent uptick in sales, we are simply going from a slow market to a normal market. It was far from crazy and with hardly any bidding wars. The most noticeable effect was that Buyers sentiments have returned after having ghosted for nearly the entire summer. The Sellers, who are serious and motivated, was able to get their home sold before the new year. Even though there is a rise in showing requests, the open house traffic is still sub-par. Key is, the single house market have shifted back to a balanced market after spending the past 3 months in the Buyer's market. This shift has caused some uneasiness and adjustment with the Buyers, as their low ball offers (which was plentiful in the summer) is no longer considered now by many Sellers. Noteworthy is the single house inventory in back in a balanced market, and what remains to be seen is if it can stay there. The historical trend for the recent years for single house Sellers mainly support the theory they are focused on the supply side of the equation. Theoretically, this has put a price floor for this market. However, this year was different as inventory was plentiful (for the summer). Pockets of neighorhood, such as North Vancouver and Cloverdale, are seeing hot trends of sales-to-listing ratio (% of homes sold) at 25% and 31% respectively (Seller's market), even though we saw North Vancouver monthly price dropped -3.4%. On the flip side, West Vancouver and Vancouver Westside have sales-to-listing ratio at 6% and 10% respectively (Buyer's market). It does look like the average single house neighborhoods (under $1.6m) are performing fine, while the premium home neigborhoods ($3m+) market remain subdued. Would the recent uninsured mortgage limit increase from $1m to $1.5m further boost the single house segment? I'm a bit skeptical on that. Questions is, can a regular Canadian family can stomach the hefty monthly mortgage payments of these high (95%) loan-to-value ratio Buyers, in the face of a Canadian economic downturn?For the month of September, the neighorhoods that registered most price growth were Pitt Meadows, Burnaby South, and Port Coquitlam at +5.4%, +4.1% and +2.7% respectively. Conversely, the neighborhoods registered the most significant price drops were Tsawwassen, Port Moody, and North Vancouver, with -4.8%, -4.1% and -3.4% respectively. The single house market have moved back into a Balanced market, with average days on market nearly flat at 38 days (compared to 39 days in September), and month-to-month average price continue to slip at -1% (compared to -1.3% in September). Sales-to-listing ratio (% of homes sold) edged up to 13.4%. (compared to 9.1% in September). Townhouse Market The townhouse market is the only segment that saw a price growth of +0.9% last month (compared to single house -1% and apartment -0.6% respectively). Not surprisingly, the townhouse market likely benefited from the upswing in apartment sales. When an apartment owner who just sold and is looking to upsize, the most sensible choice to climb up the property ladder would be buying a townhouse. By the same token, this ripple effect "should" also tickle into the single house market, but in that segment the effects are lessened. Much like the single house segment, the townhouses that was stale (listed for over 45 days) were also starting to sell. Meanwhile, monthly total inventory was holding steady -4.6% (given seasonal adjustments). This has shifted the townhouse segment from a Balanced market to Sellers market. As I've mentioned before, townhouses has a history of being the easiest to adjust to market upswings due to its nature of the "next best thing" in terms of affordability to a single house. When we combine that with historically limited townhouse supply and elevated brand new townhouse prices, again this has created a price floor for resale townhouses. Noteworthy is that price is always a lagging indicator, and when there are more sales and less inventory, price tend to firm up quickly, but may not reflect so until 2-3 months from now. With boots on the ground, I am seeing Seller's getting firmer and firmer on their prices. Again, entry level townhouses priced under $1m in core Burnaby, Richmond, and North Vancouver are getting much more action and selling faster than other products. As for Fraser Valley such as Surrey and Langley, their newer townhouses (less than 5 years old) that priced under $900k are also moving fast. There are signs that some Buyers want to be ahead of the curve and get in before the new year. Would townhouses be the first segment to recover? In my opinion: highly likely. In October, the areas with the most townhouse price growths were North Vancouver, East Vancouver and Whistler, registering +7.4%, +5.5% and 4.2% respectively. Conversely, the neighborhoods with the negative price growth are Coquitlam, Maple Ridge, Pitt Meadows, at -3.5% and -2.2% (tied for 2nd & 3rd) respectively. The townhouse market shifted from a Balanced market to a Sellers market, with average days on market remaining dropping slightly at 28 days (compared to 29 days in September). Month-to-month sale price improved by +0.9% (compared to -1.8% in September). Sale-to-listing (% homes sold) ratio remain the best among all segments and edged up significantly to 22.5% (compared to 16.9% September). Apartment and Condo MarketThe apartment market saw a huge spike in sales in October, posting a monthly +32.7% gain, which is the best in all segments. Most of the first time home buyers, who have waited for a good part of the summer, has finally come off the sidelines and landed on their home. As we mentioned, Buyer sentiment is a funny thing. Even when the Bank of Canada has dropped rates by 0.5%, the major bank's rates have actually gone UP. So in fact, Buyers who purchased did not get a cheaper rate, and the "rush" was largely psychological and more in the line with the herd mentality. Either way, it was definitely a positive change of winds for the much needed apartment scene. The reasonably priced apartments under $500-$600k are showing signs of increased traffic and offers. However, collapsed offers are still happening. Some Buyers, whether they are overstretching beyond their financial means or simply decided to hold off till Spring, are causing elevated inventory level at it's highest month of October in since 2020. Noteworthy is that are a tidal wave of pre-sale apartment pending to be completed in 2025. As such, these newly finished apartments will inject even more supply into the market. Worst yet is that many of the pre-sale Buyers & investors will still face a higher interest rate than they'd like. The math just doesn't work for them to rent out (bleeding negative cash flow monthly) or to cut their losses (take a minimum $100k loss and walk out). Keep in mind that in either case, these investors confidence are shaken and they will not be returning anytime soon. Thus, I think the pre-sale scene would face an uphill battle for at least the next 2 years. Overall, the apartment market should hoover around a balanced market in the near future. For the month of October, the best performing neighbourhoods for apartments are Pitt Meadows, Maple Ridge and Tsawwassen, at +6% & +5.6% (tied for 2nd and 3rd) respectively. Conversely, the areas with the most significant price drops were New Westminster, Vancouver East and Sunshine Coast, with -3.2% (tied for 1st and 2nd) and -2% respectively. The apartment and condo segment has popped back up into a Sellers market, with average days dropping slightly to 33 days (compared to 31 days in September). Month-to-month sale price maintained the slightly negative trend at -0.6% (compared to -0.8% in September). Sale-to-listing (% homes sold) ratio shot up significantly to 22.2% (compared to 14.6% in September). Here are the Three Trends I'm Observing: 1. Grand ClosingCanadian businesses are struggling, and it really shows in the latest report that September had the third highest business insolvency in the past 40 years. From higher unemployment rate to restaurants going out business, this downward spiral is hurting the Canadian middle class the most. Behind every job or business loss is a hurting family scrambling for food on the table to missing a mortgage payment. What's worrying is that this may get worst before it gets better. (Source: OSB, Better Dwelling) 2. Reverse PsychologyCanadians breathed a sigh of relief that Bank of Canada had a jumbo rates cut of 0.5% last month. Real estate Buyers were eager to move into the market because of the rate drop, right? In reality, one needs to understand the difference between Overnight rate (set by Bank of Canada) and bank rates (set by the major banks). Simply put, banks look at bond yields to determine their fixed mortgage rates. As such, the most popular 5 year Canadian bond yields have actually gone up +.30% since the beginning of October. Thus, contrarily to the common belief, the bank rates have edged UP, while overnight rate has gone DOWN. The truth is that it costed the Buyer MORE to buy in November than in October (yes it sounds odd). Regardless of these fact, we know that buying is mainly psychological. If real estate Buyers thinks rates are cheaper (but in fact they're not) but it's a good time to buy, then they'll just dive right in, which is what happened last month in Canadian real estate. (Source: CNBC) 3. Sorry Not SorryIn a nearly unbelievable turn of events, Trudeau's government made a complete U-turn on the immigration policy, seeking to drastically reduce immigrants and will be seeing a negative population growth of -0.2% in 2025-2027. So Canada will have less people, lower rent, less consumption, while there will be more pre-sale apartments to be completed soon. All this spells dis-inflationary. Perhaps this makes a good case for Bank of Canada to further lower interest rate? (Source: Bloomberg)
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