Despite historically high numbers in the cooler months, home sales around Vancouver will likely remain flat.
Preparing for the fall is a typical process for many of us. I always look forward to the thought of pulling out the sweaters and buying new boots. My kids are asking about buying school supplies (yes, my children are looking forward to school). Buyers who have long been absent return to the market with the goal of getting into a new house by Christmas—or will they?
Sales in Vancouver (and the surrounding area) are experiencing a seismic shift. Richmond, South Surrey and White Rock have become a buyer’s market (who would have thought?) The Fraser Valley has seen a nod toward deeper moderation. But generally sales have slowed throughout the area. So, will this new market and changes to supply and demand bring back the seasonal fall buyer?
A traditional fall means more listings and more sales, but expect that activity to remain fairly flat. The average first-time buyer will get preapproved for a mortgage and have that preapproval extended after the first 120 days. That buyer will take an average of 11 months to commit to a property. If those buyers perceive the property values will drop, they will sit on the sidelines for an even longer period. Markets are highly localized and there is a difference between the valley and the metro area.
According to the Canadian Mortgage and Housing Corporation’s spring report, mortgage rates were to increase near the end of 2012, and if that happened, we could expect a more robust spring in 2013. But it’s unlikely. The fall report for Canada (B.C. section) is silent on the Bank of Canada’s interest rate but “With core inflation running below target and external headwinds still blowing, we don’t expect the Bank of Canada to resume tightening until well into next year,” wrote Robert Kavcic of BMO Capital Markets Economics in a note to investors. So the CMHC report goes on to say: “On a quarterly basis, the number of resale transactions is forecast to gradually improve in the rest of 2012, in line with strengthening employment and population growth. Provincial resale market conditions are forecast to remain in balance during the rest of this year and next, although local market conditions will vary.”
When I’m really bored, I like to check forecasts against actuals. The CMHC Spring 2012 report says: “This increase in supply, along with fewer projected sales, will reduce upward pressure on prices. Under these conditions, expect more moderate increases in average home prices." Demand will continue to be stronger in the Vancouver core and major transportation corridors, such as Surrey. It’s a great opportunity for first-time homebuyers or those looking to move up to larger homes — they should consider opportunities to purchase in areas further east in the Fraser Valley, where resale prices tend to be lower. My thought is to keep your eye on Aldergrove, which has been on a downward trend.
To wrap it all up, with no interest rate increases to spur local buyers and a modest increase in listings, expect a quiet fall season. Attractively priced homes continue to sell quickly while homes with prices that reflect historical (A.K.A. inflated) prices will not. Just ‘cause neighbour Bob’s house sold for $700,000 last year (or even last spring) is no indication of what your house “should” sell for today. We’re no longer in that market.