Dear Clients, Friends and Neighbours,
You may have heard our local housing markets are beginning to shift.
Home sales are continuing to drop across the Fraser Valley while active listings have slowly started to climb. Although active listings remain below what is typical for a balanced market, home supply has tripled since December 2021.
Realtors use the “sales-to-active listings ratio” to measure market balance. A ratio of less than 12% favors buyers, over 20% favors sellers.
In May the ratio for all property types combined in the Fraser Valley was 22% however the most recent stats release shows many sub areas and housing type categories hitting 12%, indicating a buyers’ market.
Similarly, housing prices have begun to shift. The benchmark price for detached, attached and condo categories has shown a month-over-month decrease since March.
Detached homes in South Surrey / White Rock dropped -0.7% from April, the benchmark price now sitting at $2,149,000
Langley saw a -1.8% drop, the new benchmark at $1,872,500
Surrey / Cloverdale -3.2%, now at $1,796,000
The softening of prices will be welcome news for buyers who have seen affordability erode for several years … but … it’s not that simple. Today’s market is best described as a transitional one.
While buyers get comfortable with the higher interest rate environment and begin to see more home choices come on market, sellers are having to adjust to fewer showings, lower offers and longer days on the market.
This transition will take some time but there are much larger economic forces at play that threaten to drag this process out.
To curb multi-decade high inflation the Bank of Canada continues to raise interest rates. This trend is occurring all over the world, just today the Federal Reserve in the US raised interest rates 0.75 points, the largest rate hike in 27 years.
The ultimate destination for interest rates will depend on the trajectory of inflation over the next few months. Some see inflation peaking but the significant pressure on consumer prices is real and it seems more likely inflation will remain high in the near term.
The best-case projections we have come across expect inflation to ease off later this year. The worst-case scenarios project inflation to remain high well into 2023.
While the uncertain global economy will likely moderate housing activity for at least the next quarter, we anticipate buyers will begin to show more confidence as they adjust to the new interest rate environment.
In addition, sellers will begin to list their homes at more competitive asking prices, helping to correct the long-standing supply shortages and ultimately, help bring our local housing markets back into a state of balance.
Are you curious what your home may be worth in today’s market? Have you been thinking of selling soon and wondering how to best time your move?
We can help.