What's happening in the real estate market today?

Excess inventory is giving buyers the edge.

Interest rates have come down but buyers have not rushed back to the market. Instead, we have seen a huge increase in new listings. This has created an excess of listings in many markets throughout the Lower Mainland. Buyers have more choices and more time to make a decision. Sellers are reducing prices. Now is a good time to be a buyer.

The Bank of Canada is expected to reduce the Bank Rate by .50 percent on October 23. Maybe this will push some buyers off the fence and back into the market.

The real estate market has been especially slow in the new construction sector. New housing starts are down 19% this year compared to 2023. Many large construction projects have been put on hold and some companies have gone into receivership.

Effective December 15, 2024, first-time home buyers will be eligible to amortize their mortgage over 30 years instead of 25 years. That could save a home buyer $250 per month on a $500,000 mortgage. Also effective December 15, 2024, buyers will be able to purchase a home up to $1.5 million with less than 20 percent down. Currently, the maximum amount a buyer can purchase with less than 20 percent down is $1 million. Both of these changes are aimed to help buyers get into the market.

Fraser Valley

The Fraser Valley real estate market fell into a buyer's market in September for detached homes. Prices held steady through the summer months but are now dropping in many areas. Inventory for detached homes has increased 17 percent since last year and has now reached levels not seen since 2019.

The market for townhouses shifted from a seller's market to a balanced market in August, after being in a seller's market for 18 months. While inventory has increased over 50 percent from last year, townhouse inventory remains around the 10-year average.

The market for condos is currently balanced, however, rising inventory may soon change that to a buyer's market. Today, there are more than 2,200 condos listed on the MLS which is a record for the Fraser Valley. Prices have been holding steady but we could see prices drop as more new construction (which broke ground three plus years ago) completes and hits the market.

MLS® HPI Benchmark Price Activity

• Single Family Detached: At $1,501,100, the Benchmark price for an FVREB single-family detached home decreased 1.5 per cent compared to August 2024 and decreased 1.3 per cent compared to September 2023.
• Townhomes: At $834,400, the Benchmark price for an FVREB townhome decreased 1.4 per cent compared to August 2024 and decreased 1.6 per cent compared to September 2023.
• Apartments: At $545,000, the Benchmark price for an FVREB apartment/condo decreased 0.2 per cent compared to August 2024 and increased 0.4 per cent compared to September 2023.

Buyer's Best Bets

Prices for detached homes in Surrey have dropped about 5 percent in the past year. Panorama Ridge and Fleetwood in Surrey both have large inventory levels with low sales.

Greater Vancouver Area 

The Greater Vancouver real estate market is also experiencing an increase in inventory levels. The Greater Vancouver area spans very diverse markets from West Vancouver to Maple Ridge. Generally, the market for detached homes is in a buyer's market while the markets for townhouses and condos are balanced. Prices have been falling slightly since the spring.

Real estate market shows signs of recovery.

2023 had the lowest annual sales in 10 years however, January showed signs of a recovery. Sales in January were up 53% in the Fraser Valley, compared to sales in January 2023 while sales in the Greater Vancouver area were up 38.6%. New listings were also up in January. In the Fraser Valley, new listings increased 29.7% year-over-year and in the Greater Vancouver area, new listings were up 14.8%. While sales were up in January, the Home Price Index remained steady however, there are indicators that suggest prices will be increasing. 

The Bank of Canada decided to hold the policy rate at 5% in January. While many analysts predict an interest rate cut in 2024, the timing of the first cut seems to be less certain. The inflation rate for January was at 2.9%, down from 3.4% in December and 3.1% in November.  While the rise in food and gas prices have slowed, shelter costs continued to rise at 6% in January. In the United States, inflation fell to 3.1% in January but shocked many who expected it to fall lower than it did. At this point, it is unlikely that the Bank of Canada will reduce the policy rate in April 2024. 

The Canadian government continues to try and combat the housing crisis with policy changes. It recently extended the Foreign Buyer Ban to January 1, 2027.  In addition, a temporary two-year limit on foreign student enrolment was announced in January. This cap would cut the number of new permits by 35 per cent this year. It is hoped that a decrease in foreign students will ease pressure on rental rates. 

Detached Homes
Sales for detached homes across the Lower Mainland ticked up slightly from December to January however, the increase year-over-year was quite significant.  The Fraser Valley posted an increase in sales, year-over-year, of 66% and the Greater Vancouver area posted an increase of 29%.  The Home Price Index shows very little change month-to-month however, we are seeing an increase in properties selling over list price because of buyer competition. New listings have also increased year-over-year but not at the rate that sales have. 

Townhouses
Sales of townhouses increased in January 2024 compared to December. Across the Fraser Valley, sales were up 37% year-over-year. Across the Greater Vancouver area, sales increased 83% year-over-year. Both areas are in sellers' markets with prices holding steady, for now. 

Condos
Across the Fraser Valley, sales were up 56% year-over-year. Across the Greater Vancouver area, sales increased 31%. While the Fraser Valley condo market is in a seller's market, the Greater Vancouver area market is more balanced. 

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Fraser Valley MLS® HPI Benchmark Price Activity
 

• Single Family Detached: At $1,466,100, the Benchmark price for an FVREB single-family detached home decreased 0.4% compared to December 2023 and increased 8.6% compared to January 2023.
• Townhomes: At $825,600, the Benchmark price for an FVREB townhome increased 0.1% compared to December 2023 and increased 6.9% compared to January 2023.
• Condos: At $539,700, the Benchmark price for an FVREB apartment/condo increased 0.4% compared to December 2023 and increased 6.5% compared to January 2023.

Greater Vancouver MLS® HPI Benchmark Price Activity

• Single Family Detached: At $1,942,400, the Benchmark price for a single-family detached home decreased 1.1% compared to December 2023 and increased 7.3% compared to January  2023.
• Townhomes: At $1,066,700, the Benchmark price for a townhome decreased 0.6% compared to December 2023 and increased 4.3% compared to January 2023.
• Condos: At $751,900, the Benchmark price for a apartment/condo increased 0.1% compared to December 2023 and increased 4.4% compared to January 2023.  

Sales in December and January were the lowest on record in a decade.  New listings last month were also significantly lower than average for January. Low sales and low inventory have put the market generally in a balanced position. The market for detached homes in many areas across the Lower Mainland are experiencing buyers markets however, many areas are experiencing sellers markets for attached properties leading to some price increases.  This difference really is a result of price. Large mortgages accruing interest at 6% are both expensive and difficult to obtain. 

The Bank of Canada increased the policy rate a further .25% on January 25 however, it also announced that it will now pause on further increases.  This pause comes with a disclaimer; if inflation does not continue its downward trend, more hikes will be made in the future. One of the categories that has a strong influence on inflation is the cost of housing. If the real estate market heats up in the spring and prices start to increase, the Bank of Canada may decide to make another increase to the policy rate. 

Inflation is currently sitting at 6.3%, down from a high of 8.1% in June. The Bank is expecting inflation to fall to 3% by the middle of this year and reach the target rate of 2% in 2024. There are many variables involved in this projection but if inflation does reach 3% this year, we can expect the Bank to start looking at policy rate decreases. 

Fraser Valley Stats

Detached Homes

182 detached homes sold across the Fraser Valley in January. That number is 61% less than January 2022 and 17% less than December 2023. It really is a buyer’s market for detached homes, despite the low inventory. 

The Benchmark Price for detached homes in the Fraser Valley has now dropped 17.6% in the past year. Mission and Abbotsford have both seen prices drop over 26%. South Surrey prices have shown to be the most resilient, posting a drop of only 8.7% in the past 12 months. 

Townhouses

There were 169 townhouse sales in January but with only 684 active listings, the sales-to-listings ratio indicates a sellers market.  Despite this, prices continue to drop for townhouses. The Benchmark Price for townhouses has dropped 8.8% in the past 12 months. South Surrey has seen prices drop over 12% while Langley prices have dropped only 2.5% in the past year. 

Condos

The Benchmark Price for condos has dropped 5.9% in the past 12 months, however, many areas have shown price increases over the past two months.  The affordability of condos has played a large role in continued demand. Also, the recent changes to strata rules which eliminated the ability of a strata corporation to restrict rentals, has led to an increase in condo purchases by investors. 

In the past, condos have generally had more restrictive bylaws than most townhouses. Strata corporations can no longer restrict an owner from renting their unit as long as the initial rental term is for one year. In addition, age restrictions under 55 years are no longer allowed. These two changes mean that families and investors have more options. 

Fraser Valley MLS® HPI Benchmark Price Activity

• Single Family Detached: At $1,357,800, the Benchmark price for an FVREB single-family detached home decreased 1.4% compared to December 2022 and decreased 17.6% compared to January 2022. 
• Townhomes: At $773,100, the Benchmark price for an FVREB townhome decreased 1.8% compared to December 2022 and decreased 8.8% compared to January 2022. 
•  Condos: At $503,700 the Benchmark price for an FVREB apartment/condo decreased 0.2% compared to December 2022 and decreased 5.9% compared to January 2022.

Greater Vancouver Stats

Sales in the Greater Vancouver area were down 55.3% from January 2022 and down 21% from December 2022. January typically posts the fewest number of sales in the year. 

The market for townhouses and condos has been balanced for the past two months with some exceptions. North Vancouver, Ladner, Port Coquitlam and Pitt Meadows have been in sellers markets, largely due to very low inventory.  Prices have gone up for attached properties in certain areas while prices in other areas appear to have stabilized for now. 

Demand for detached homes in Vancouver, west side, West Vancouver and Richmond has been very low for the past two months. Demand in other areas has been stronger however, prices for detached homes are still falling throughout the Greater Vancouver area. 

Greater Vancouver MLS® HPI Benchmark Price Activity

•Single Family Detached: At $1,801,300, the Benchmark price for a single-family detached home decreased 1.2% compared to December 2022 and decreased 9.1% compared to January 2022.

•Townhomes: At $1,020,400, the Benchmark price for a townhome increased 0.8% compared to December 2022 and decreased 3% compared to January 2022.

•Condos: At $720,700 the Benchmark price for a apartment/condo increased 1% compared to December 2022 and decreased 1.1% compared to January 2022.  

PRICES ARE DROPPING

The real estate market has been on a roller coaster ride this year. Buyers flooded the market when the Bank of Canada paused interest rate increases in March, however, that pause didn’t last long. The Bank of Canada raised the policy rate again in June and July, which eventually brought sales down to near-historical lows again. The Bank’s policy rate now sits at 5% which is an increase of 4.5% since Feburary 2022.  The next interest rate announcement is October 25.  

As of September 2023, the inflation rate is sitting around 3.8%. The Bank projects that inflation will stay around 3% for the next year, returning to the 2% target by the middle of 2025. If this projection holds true, the Bank may not decrease the policy interest rate until late 2024. This situation will prove problematic for many home owners that have mortgages coming up for renewal in the next year. There could be a significant increase in new listings from owners looking to downsize their mortgage. 

Greater Vancouver MLS® HPI Benchmark Price Activity

•Single Family Detached: At $2,017,100, the Benchmark price for a single-family detached home decreased 0.1% compared to August 2023 and increased 5.8% compared to September 2023.

•Townhomes: At $1,098,400, the Benchmark price for a townhome decreased 0.5% compared to August 2023 and increased 5.3% compared to September 2022.

•Condos: At $768,500, the Benchmark price for a apartment/condo decreased 0.5% compared to August 2023  and increased 5.8% compared to September 2022.  

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