Detached Enters Buyer Market Territory but Attached Supply Still Struggles to Meet Demand
Luckily most of the snow has melted away but I'm kinda looking forward to sunnier days!
The month of February saw increased sales when compared to January but they were below the 10-year average by about 14%. Despite this, median sales prices continued their upward trend for all 3 categories of homes.
We are still seeing the most activity in condos and townhouses with the sales-to-active ratio favoring the home seller. The market for detached homes is favoring home buyers throughout the Greater Vancouver Area but still favors sellers out in the valley. Overall, the market has shrunk with lower inventory levels when compared to prior years. This can be seen in this exciting chart below.
So what does this mean?
Home Buyers: There are fewer homes to look at than prior years, however it appears that there are fewer buyers as shown by the lower sales numbers and SA ratio. Qualified home buyers are seem to be facing less competition compared to previous years.
Home Sellers: Sellers are seeing less competition as there are fewer homes on the market but need to price carefully due to the reduced number of buyers.
Obviously, this is a very broad overview of the market and will vary greatly depending on the type of home, location, condition, etc.
As Jill Oudil, President of the Real Estate Board of Greater Vancouver stated:
“Rising interest rates and stricter mortgage requirements have reduced home buyers’ purchasing power, particularly for those at the entry level of our market. Even still, the supply of apartment and townhome properties for sale today is unable to meet demand. On the other hand, our detached home market is beginning to enter buyers’ market territory."
"The spring is traditionally the busiest time for home buyers and sellers in our market. We’ll wait to see how they react to the taxes and other policy measures that our provincial and federal governments have introduced so far this year,”
Interest Rates, New Lending Rules, and New Measures for Housing Speculation
- Rising Interest Rates: The Bank of Canada raised interest rates by 1/4 point in January and we can expect that rates will be hiked a few more times this year given the current conditions. This will likely have an effect on the housing market as higher rates increase the cost of borrowing and eat into disposable income.
- Stress Tests for uninsured mortgages: New stress tests came into effect in January of this year for uninsured mortgages which has made it more challenging to secure mortgages. I have also noticed that lenders require more time to do their due diligence and are also requiring more documents and details from buyers.
- 2018 NDP Budget: I covered this in details in my previous post but the biggest takeaways are increased Foreign Buyer Tax, increased property transfer tax for properties worth over $3 mill and a new Speculation Tax.