Real Estate Market Review
The new mortgage rules and higher interest rates continue to decrease the demand for housing. Some buyers are now waiting to purchase in hopes that prices will continue to drop. July and August sales, for all property types, were down about 35% compared to the same months last year. Sales of townhouses and condos continued to make up over half of all residential sales.
Prices for attached properties are dropping across the Fraser Valley. Most areas have now shown two consecutive months of falling prices for both townhouses and condos. Even though prices have started to drop, most areas remained in a sellers market over July and August. The difference however was the rate of sales. Last year, 80% to 100% of inventory for attached properties would sell in a month. Today, the turnover rate is between 18% and 33%.
In the detached market, most areas have settled into a balanced market. South Surrey however has been in a buyers market since May. Prices have dropped in all areas over the past three months. Cloverdale prices for detached homes have dropped 3.5% in the past three months while South Surrey prices have dropped over 5% in the past 12 months.
The Canadian economy remains strong and has grown at an average rate of 2.6% over the past 8 quarters. The B.C. Real Estate Association is forecasting that the Bank of Canada will raise its overnight rate to 1.75% in October.
HPI® Benchmark Price Activity
- Single Family Detached: At $1,008,700, the Benchmark price for a single family detached home in the Fraser Valley decreased 0.9% compared to July 2018 and increased 2.9% compared to August 2017.
- Townhomes: At $548,300 the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley decreased 1.7% compared to July 2018 and increased 11.5% compared to August 2017.
- Apartments: At $443,200, the Benchmark price for apartments/condos in the Fraser Valley decreased 1.6% compared to July 2018 and increased 26.9% compared to August 2017.
Overall, sales were 25.2% below the 10-year average for the month of August. Like the Fraser Valley, the Greater Vancouver area has seen prices drop over the past two months for all property types.
For attached properties, all areas in Greater Vancouver, except Tsawwassen, Ladner and West Vancouver, remained in sellers markets over the summer months. Despite this, prices have decreased in most areas.
For detached properties, Maple Ridge and Pitt Meadows were the only areas that continued in a sellers market however, both these areas have seen prices drop over the past three months. Vancouver, east and west, West Vancouver, North Vancouver, Richmond, Burnaby, and Port Moody were all in buyers markets in August. West Vancouver and Vancouver, west side, are both showing price decreases over 10% in the past year. Even with a 10% price drop, the benchmark price for a detached home on the west side of Vancouver is still $3,278,500.
HPI® Benchmark Price Activity
- Single Family Detached: At $1,561,000, the Benchmark price for a single family detached home decreased 3.1% compared to August 2017 and decreased 1.5% compared to July 2018.
- Townhomes: At $846,100 the Benchmark price for a townhome increased 7.9% compared to August 2017 and decreased 0.8% compared to July 2018.
- Apartments: At $695,500, the Benchmark price for apartments/condos increased 10.3% compared to August 2017 and decreased 1.4% compared to July 2018.
There will be plenty of buyer opportunities this fall. Prices may be falling now but eventually they will stabilize and start to rise again. For example, when the Provincial Government brought in the foreign buyer’s tax of 15% in August 2016, prices dropped. This decrease didn’t last for long. In the Spring of 2017, prices in the Fraser Valley rose to levels higher than they were before the tax was brought in.
There is a large group of buyers that will need to purchase homes in the next 10 years. This group is referred to as Millennials. In my opinion, townhouses and condos will continue to drive the market here in the Lower Mainland as Millennials look to buy their first home and Baby Boomers look to downsize.