Overall in October we unfortunately saw very much the same sort of market as September, with prices continuing to fall in most categories.
We saw 860 sales in the Fraser Valley in October, which marked the second lowest volume October in the last 20 years. September 2022 was also the second lowest volume for that respective month. Both lowest records were set in the 2008 financial crisis ( October 2008 was 709 and September 2008 was 912)
To put it in perspective for the last 3 years:
- 2021 had 1863 sales in October
- 2020 had 2215 sales in October
- 2019 had 1313 sales in October
We had the first two weeks of October start off a bit faster, but then, as the interest rate hike happened near the end of the month, things came to a complet slowdown.
What this means is that we just don't have nearly as many sales happening as usual and homes are taking longer to sell than in recent history on average. Homes priced accurately are selling in the 30-90 day range, but a quick look at the market will see many homes that have been on the market for months and months - the majority of those are simply overpriced in the current market and will not sell unless they reduce. (So the average days on market stats get skewed by these homes!)
We saw 5,098 listings in October 2022 which is below the 20-year average which has been between 7000 - 8000 most years prior with exception of 2021 where we had 3184 the lowest in recorded market history. This is something that we haven't seen too often when we see prices fall at the same time. Nearly every other time we have had a market crash in recent history, we've seen inventory actually increase as more people flood the market with their homes to sell (Such as July 2008 when we had a whopping 10,474 listings!). This time is different though, as we are seeing a much more complicated landscape with buyers and sellers. Many sellers are terrified of selling right now as they see their variable mortgage payments go up by 1/3, see their home valuation drop by 1/3, and see the cost of rent go up nearly 20% (since last year)if they were to rent ...all very tough decisions for many homeowners out there, and this is certainly a factor for the low listing volume.
With regards to price, we saw roughly the same decrease of home values in most areas of anywhere between 1-3%. Some areas were more exaggerated such as Cloverdale Detached that has fallen another 6% and Attached 5%. One area seemed more resilient, South Surrey / White Rock which saw an increase of 7%. When you look at both areas in the Housing Price Index however (vs Average Prices) then both of these areas show a Housing Price Index as a decrease that lines up with the rest of the Fraser Valley being a decrease of 3% in Cloverdale and 0.5% in South Surrey / White Rock.
Prices are still falling fast due to many economic factors, but primarily the consequence of the interest rate hikes and people's lower affordability. With the Bank of Canada mandate to decrease our rampant inflation (Currently 6.9% but this DOESN'T include the food and energy sectors which have been hammered) they are set to continue their rate hike policies. They will likely do this until we have inflation much lower and that number doesn't look like it's coming down any time soon. I am forecasting and predicting sometime in mid to end of 2023.
WHAT SHOULD YOU DO?
If you are a first-time home buyer and thinking of getting in the market, you may want to consider getting pre-approved right now to determine what you can afford and what interest rate you would be locked in at and then see what's available. Will prices continue to come down? Very likely but will interest rates increase? Almost certainly and sometimes that can be a good reason to buy sooner when you compare what a few rate hikes can do to your monthly payments vs what the price decrease might be etc!
If you are buying and selling then, depending on what you are buying and selling, the relative valuations may go down very similarly giving you a similar "gap" between property prices, and despite the interest rates being higher on your new mortgage, you may actually come out ahead of the game depending on what you're selling! For example, if you are selling a smaller condo right now for $500,000, you may have come down from the peak of the market $100,000 , however the detached house on acreage that you might have paid $3,500,000 might now be $2,700,000 so you can see what I mean about it being favorable for some. You are saving more than you're losing
Now may be a good time to talk to a mortgage broker, get pre-approved, and purchase your first property, or sell your existing property to purchase another. If you need assistance with this, please let me know and I can put you in touch with the rifght people.