As I mentioned for the past several months, we have been seeing pretty steady declines in sales in almost all markets across the country.
Interest rates are obviously impacting buyers and all levels of government are apparently still working on methods of cooling what has now become a pretty chill real estate market. By the end of this month, we should know how Fall is going to look and have a better idea of whether we are in a normal cyclical downturn or whether the pent up buyer demand of the last couple of years, with many buyers unable to get into the market, will result in a bounce back from the slow down in sales we have seen since Spring.
The numbers still show that, while the sales volume has dropped dramatically, prices are still holding fairly strong. Having said that, many homes are not selling at all and it could be that the numbers are showing a false positive in that those homes would sell if the prices were lower...and that would impact home price stats. We are definitely seeing more homes with longer days on the market and many homes with several price drops before they sell. There have been a number of sellers who have sold for less than their assessed values and also some who have sold for less than they paid for their homes. However, most homeowners will still see significant financial gains should they sell. Buyers are also seeing benefits of this market in that they can breathe and buy after doing their due diligence.
So the market has shifted but the sky is not falling!
In August we saw:
-sales were down 40.7% from August 2021
-sales were down just 0.9% from a month earlier, July 2022. However sales were down by over 22% in July when compared to June and June, May
and April had already seen continued decreases from prior months.
-sales were 29.2% lower than the 10-year average for August
-the number of homes listed for sale was down 17.5% when compared with August 2021
-the number of homes listed for sale was down 16% when compared to a month earlier, July 2022
-detached home sales were down 45.3% from August 2021
Despite significant drops in sales volume n Greater Vancouver, prices of detached homes in the region were down only slightly from July 2022 at 2% less; however prices were still up 7.9% when compared to August 2021.
So sellers are still doing well on prices year over year based on the current evidence. We don't know if this is a reliable number however as too few homes sold and those that failed to sell may require significant reductions which would push down the benchmark price.
Some key take-aways:
For Sellers
-We are into September and the Fall is usually great for sellers. August is normally very slow and not a good time to sell. I explain to my sellers that it doesn't make a lot of sense to list in July and August because the buyers are gone! Buyers tend to be on vacation until after school comes back. In the Fall we should see a bump up of sales (and possibly prices) as the demand increases.
-as I mentioned last month, offers are coming in with a lot more subjects BUT prices are still high. Prices are still up from last summer.
-the sales to active listing ratio was below 12% for detached homes last month and has now just bumped up to 12.2%. Generally downward pressure on prices increases when the ratio is below 12% so if one were thinking of selling, this Fall will likely be a lot better than next Spring unless we see significant changes.
-the upcoming legislative changes will work in favour of buyers and could therefore accelerate negative impacts we are currently seeing for sellers
-the impacts sellers are seeing and will continue to see vary somewhat based on type of home, price point, location, etc. I can provide you with details applicable to your particular location and property type.
For Buyers
-interest rates just increased again this week; consider asking your mortgage specialist to obtain a rate hold for you and discuss the implications of fixed vs. variable rates in an upward trending rate situation
-rates are still VERY low so it probably does not make sense to wait to buy if you can afford to buy now
-the market has now shifted so that not only can buyers compete with fewer other buyers, as a buyer you can now also take time, breathe and put subjects in your offer and pay asking or less rather than battling others to overpay. While the stats show very modest price declines, we are seeing some buyers doing very well on their purchase prices relative to what they would have paid not too long ago
For those selling AND buying
-it’s all about the gap: this type of market can work very well for those who are upsizing or moving to an outlying location or another province. In many cases, the selling buyer will end up with more money in their pockets, even if they are selling for less money than they would have a few short months ago
So what should you do? I am happy to discuss your individual situation as obviously the factors at play differ for each situation. If you have friends or family struggling with what to do in this market, please tell them to call me to discuss.
Enjoy the Fall and hopefully the lovely weather will continue!