Despite persistent inventory shortfalls, housing sales in the Fraser Valley have remained steady.
Housing inventory is not just low; it is extremely low. At first blush, the lack of new listings seems counterintuitive. With borrowing costs at decade highs and high inflation squeezing household budgets, it seems reasonable to assume that new listings would hold steady, or even rise, as some overburdened households are forced to sell.
Instead, new listings have declined substantially across BC housing markets. According to the latest report from the British Columbia Real Estate Association …
- New listings in BC have fallen to 25 per cent below pre-pandemic norms.
- A multi-decade high interest rate differential between old and new mortgages is playing a role
- The situation should resolve with time, but the current period further highlights the structural problem of chronically undersupplied housing markets, which results in volatility and susceptibility to demand shocks.
“Shock” is an understatement as buyers once again find themselves scrambling to purchase a home in multiple offer situations.
On average since the 1980s, shocks to inventory levels have been the most important driver of new listings. That is, if new listings are low, they will likely stay low as falling inventories limit options for sellers. Conversely, when new listings are high, sellers have many more options, and moving from one house to another is easier.
This year, it appears that low inventories are limiting the ability of sellers to find suitable options for moving and therefore listing.
Demographics are also playing a large role. The large population cohort aged 25 to 40 are seeking housing to start a family. At the same time, the large cohort of people over 60 are preventing supply from being unlocked as these seniors age in place. Those in the younger cohort are less likely to have a home to sell, while the latter cohort is often comfortably housed, without a mortgage, and settled in their home without the intention of moving.
A turnaround in housing markets across Canada is expected later this year (depending on inflation numbers), in the meantime, slow inventory will mean fast sales and rising prices.
The good news is, there are workarounds that can help you achieve your goals. Short term fixed rates are a great example of this.
If you have been considering a move this year, give us a call. 604-583-2000
We can help you craft a plan specific to your needs.
It’s what we do.