Every month it’s the same comment: the B20, mortgage stress test is keeping many buyers out of the market, decreasing the number of sales and resulting in an increase in inventory. While an increased inventory is exactly what buyers needed after the madness of 2016/2017, prices have not fallen enough to counteract the B20, mortgage stress test. While sales are down, detached properties in the Greater Vancouver area is the only property type experiencing big price decreases. Detached properties in the Fraser Valley have fallen about 5% in the past six months but are now stabilizing. The Fraser Valley may never experience the buyer’s market that Vancouver is currently experiencing because of the difference in property values.
The average contract rate for 5-year mortgages has declined about 30 basis points from its peak in 2018, reaching 3.44% in March. Unfortunately, this still means a stress test rate of 5.44%, even for the highest quality borrowers. The BCREA (BC Real Estate Association) has forecast that the average 5-year mortgage rate will fall to 3.30% by the summer. The Canadian economy has slowed since the end of 2018 and the Bank of Canada has held the overnight rate at 1.75% since October 2018. It is no longer expected that the Bank of Canada will raise the rate again in 2019.
The Fraser Valley Real Estate Board processed 1,221 sales of all property types in March, a 24.3% increase compared to sales in February 2019 but a 26.6% decrease compared to March 2018. Of the 1,221 total sales, 462 were residential detached homes, 300 were townhouses, and 346 were apartments. This was the lowest sales total for the Board during March since 2013.
Many benchmark prices saw gains last month, particularly for condos. The benchmark price for condos in North Delta, Surrey, Cloverdale and Abbotsford rose between 3% and 4%. Prices remained mostly stable for townhouses. Detached prices remained mostly stable except for North Delta and Abbotsford which posted over 2% gains.
The market for attached properties was in a sellers market last month while the market for detached properties varied. Mission, Cloverdale and North Delta were in sellers markets while Langley, Abbotsford and Surrey were in solid, balanced markets. South Surrey just can’t get out of its buyers market with only 10% of inventory selling last month.
HPI® Benchmark Price Activity
- Single Family Detached: At $963,100, the Benchmark price for a single family detached home in the Fraser Valley increased 0.4 per cent compared to February 2019 and decreased 4.2 per cent compared to March 2018.
- Townhomes: At $517,300, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley increased 0.3 per cent compared to February 2019 and decreased 4.5 per cent compared to March 2018.
- Apartments: At $418,000, the Benchmark price for apartments/condos in the Fraser Valley increased 2 per cent compared to February 2019 and decreased 5.1 per cent compared to March 2018.
It’s a much bleaker story in the Greater Vancouver area where March sales were the lowest seen since 1986!
“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced. For three years, governments at all levels have imposed new taxes and borrowing requirements on to the housing market.”
Ashley Smith, REBGV president
For detached properties, most areas continued in buyers markets. Townhomes and condos were in sellers markets in many areas with the exception of West Vancouver, Richmond and Tsawwassen which were in buyers markets.
HPI® Benchmark Price Activity
- Single Family Detached: At $1,437,100, the Benchmark price for a single familydetached home decreased 0.4 percent compared to February 2019, decreased 10.5 percent in the past year.
- Townhomes: At $783,600, the Benchmark price for a townhome decreased 0.7 percent compared to February 2019, decreased 6 percent in the past year.
- Condos: At $656,900, the Benchmark price for condos decreased 0.5 percent compared to February 2019 and decreased 5.9 percent in the past year.