Due to stricter lending policies and rising interest rates the local real estate market finished off 2018 with decelerating sales and contracting pricing. Its likely 2019 will bring more of the same.
Across Canada the shock created by the mortgage stress test (uninsured borrowers must now qualify at the Bank of Canadas five-year rate, or at their current rate plus 2%) has taken its toll and will continue to cap demand in 2019.
Provincially the BC economy is strong and supportive of a healthy housing market. After five years of growth unemployment in many sectors is at its lowest rate in the country. That being said, the sluggish housing market will likely create drag on the economy with low consumer confidence and most struggling to afford housing in these conditions.
A Sellers Guide …
Sellers should prepare for more of the same; fewer buyers and lower sale prices. Gone are the days of crazy bidding wars. The market will likely have little upward pressure on home prices this year with the average annual home price forecast expected to be unchanged. As buyers adjust to the mortgage stress – analysts predict modest improvement in consumer confidence over the next 2 years.
It will be of paramount importance to speak with realtors who specialize in your area as demand remains highly variable, area specific and price sensitive.
A Buyers Guide …
Depending on your area and property type of interest, prices are flat or rising slowly but affordability pressures will remain. As we move further into the year we expect a record low inventory to improve; helping provide buyers with more options. Similarly, high rates of new construction is expected to alleviate low housing stock.
The Bank of Canada was expected to continue with rate hikes in 2019 but the softer market conditions might slow this trend. Buyers may find lender discounts this time of year however it will be important to keep informed of interest rate projections as it is likely – when buyers go to renew their mortgage – the rates will be higher than anticipated.
A Homeowners Guide …
Those up for mortgage renewal in 2019 have some tricky decisions to make. If you renew with your current lender you can avoid the mortgage stress test but will miss out on shopping rates. Those who haven’t paid off as much debt as they had hoped may be considering a lender switch but – they will have to endure the mortgage stress test.
If more and more homeowners decide to stay with their current lender – competition in mortgage markets will decrease – which will reduce the chances of lower rates being offered as new client incentive.
This new interest rate environment is starting to show. As of October 2018, Canadas Office of the Superintendent of Bankruptcy noted a 9.2 per cent bump in consumer insolvencies as homeowners struggle to keep up with mortgage payments.
An Investor’s Guide …
The British Columbia Real Estate Association is forecasting modest growth in the Fraser Valley with a 6.5% rise in unit sales in 2019, and a 5.7% rise in unit sales in 2020.
With rental rates up year-over-year investing in Surreys urban centers will be key to your ROI. Furthermore, with pricing flat or creeping up slowly it will become easier to find a lower purchase price. Look for opportunities close to skytrain and transit. Shopping and schools are also a major boost to value.
In summary, the spring market likely won’t break any records – but overall – the 2019 year should hold stable.
Thinking of making a move in 2019? Book a free, no obligation home evaluation to help inform your options : Learn More …