School is back in session and buyers are back in the market.
Besides some great weather over the past two months, we also saw real estate sales increase across the Lower Mainland. August is typically the second slowest month of the year in real estate sales, however, sales across the Fraser Valley and Greater Vancouver area were up about 13% over August 2018. This follows a similar increase in July. The fall is the second busiest season of the year in real estate. The increased sales of the last two months could be an indication of a stronger fall season.
One factor behind increased sales may have been the drop in the mortgage qualifying rate, from 5.34% to 5.19%. Also, the major banks all dropped their 5-year fixed-term mortgage rates over the summer and you can now find a 5-year rate lower than a variable rate. I have recently seen 5-year rates as low as 2.66%.
Another factor leading to increased sales may have been the decrease in prices over the past 12 months. We can’t deny that prices rose to extreme levels in 2018 and the decrease in prices seen over the past year was to be expected and welcomed by many. The question now is, have we reached the bottom?
There are many factors affecting our economy and the real estate market. The Bank of Canada recently decided to hold the overnight bank rate at 1.75%. Many economists believe that a future rate cut is still coming. The Bank has said that any rate changes will depend on data available and not future projections. The latest report on jobs in Canada just came out and shows a gain of 81,100 jobs in Canada in August. The dollar is also up slightly to 76 cents U.S. and our inflation rate is 2%, right where the Bank wants it. So while the U.S economy shows signs of struggling, Canada’s economy still looks steady.
Over the months of July and August, condos and townhouses have been in a sellers market. For detached homes, North Delta, Cloverdale, Langley, Abbotsford and Mission all experienced strong balanced to sellers markets. South Surrey continued in a buyers market while Surrey was solidly in a balanced market. On average, prices for all property types have posted a 1.1% decrease over the past three months.
- Single Family Detached: At $954,100, the Benchmark price for a single‐family detached home in the Fraser Valley decreased 0.3 per cent compared to July 2019 and decreased 5.4 per cent compared to August 2018.
- Townhomes: At $521,400, the Benchmark price for a townhome in the Fraser Valley in the Fraser Valley increased 0.1 per cent compared to July 2019 and decreased 4.9 per cent compared to August 2018.
- Apartments: At $409,200, the Benchmark price for apartments/condos in the Fraser Valley decreased 0.1 per cent compared to July 2019 and decreased 7.7 per cent compared to August 2018.
Sales in the Greater Vancouver area increased over the past two months to just 9.2% below the 10 year average. Compared to 40% below the 10 year average, which we saw for many months last year, this is a big improvement.
Across the Greater Vancouver area, over the past two months, townhouses have been in a balanced market, condos have been in a balanced/sellers market and detached homes have been in a buyers market.
Prices in most Vancouver areas are still slowly dropping. In the past three years, prices for detached homes in Vancouver, west side, have dropped a whopping 20%. Maple Ridge on the other hand has seen prices increase almost 15% in the past three years. All property types, in all Vancouver areas are showing price decreases in the past 12 months.