September 6, 2023
The Bank of Canada (BOC) has noted consumers have been tightening their belts, household savings is on the rise and excess spending is diminishing. Pressure on labour markets is easing off. The unemployment rate rose to 5.5% in July, up from a cycle low of 4.9%. Further to that, net exports have slowed, and the Chinese economy has weakened sharply.
On inflation, recent data indicates inflationary pressures are broad-based and rising gas prices may cause a near term increase in CPI inflation and core measures of inflation continue to trend near 3.5 per cent with little recent downward momentum.
The economic factors above and more have led the BOC to hold its overnight lending rate at 5%. For now.
The BOC, though independent, has been coming under increased political pressure. In an unusual move, the premiers of both BC and Ontario have publicly called for a cessation of rate hikes. Even so, the BOC remains wary of triggering another boost in the housing market, similar to what we saw in April.
Market conditions in August have been slow, housing sales and home prices in the Fraser Valley fell slightly for the second month in a row. But because inventory remains low, upward pressure on pricing remains. Many saw attached homes in hot markets selling over asking price.
The average price in BC has varied slightly all year peaking at just over 1 million in May as sales in more expensive markets surged amid dwindling supply. If average home prices continue to trend upward in the second half of this year, 2023 may post an annual average price of $976,600, a 2 per cent decline compared to 2022.
Let’s zoom in for a snapshot of average prices in your area shall we?
- Detached home average sale price in August …
South Surrey / White Rock, $2,109,000 down from $2,337,000 in June
Sullivan Panorama, $1,563,000 down from $1,743,000 in June
Cloverdale, $1,429,000 down from $1,680,000 in June
Langley, $1,543,000 down slightly from $1,584,000
- Townhome average sale price in August …
South Surrey / White Rock, $1,043,000 down slightly from $1,050,000 in June
Sullivan Panorama, $833,000 down from $903,000 in June
Cloverdale, $790,000 down from $859,000 in June
Langley, $858,000 down from $891,000 in June.
This most recent rate hold should help buoy up local real estate markets but as we move into fall we expect buyer confidence will remain low, cautious in anticipation of more rate hikes. Interest rates are at their highest levels in 20 years, further compounded by the punishing mortgage stress test.
There are two more meetings before the end of this year and many are expecting another rate hike in one of those meetings. The next announcement is due October 25.
So, it may be to soon to call it a comeback but with pricing relatively stable and active inventory slowly on the rise, we hope to see more listings come onstream over the next couple months.
If you have been thinking of making a move this fall pricing strategy is of paramount importance.
We can help. Book your free home evaluation now. We work with you to craft a pricing plan in line with your goals and these rapidly changing conditions.
Jenn & Colin