This “Weeks” year in review and predictions for 2022
Vancouver Real Estate Market Intelligence:
This December feels special. After such a long covid-induced stretch of isolation from extended family and friends, we are anticipating lots of cheerful get-togethers this holiday season!
Historically, the real estate market shuts down for the holidays mid December, resuming the 2nd week of January. However, the pandemic has had a dramatic effect on the real estate market’s day to day operations, and these timelines no longer apply. This season promises to be busy throughout the holidays, similar to what we experienced last year
Our clients are asking for guidance as to the best approaches to trading up or down in 2022. The catch 22 in an active real estate market is the age-old decision homeowners have to make: do I buy before I sell or do I sell before I buy? These are very complicated and personal decisions. There are several approaches to take, depending on your goals, price point, location, and budget. We are here to consult with you. Do not hesitate to reach out to discuss your next move, be it for personal or investment advice.
The key issues likely to affect our real estate market in 2022:
- Continued lack of supply for affordable family-driven homes
Single-family homes in Greater Vancouver are landlocked by water and mountains on all sides. There is a finite number of single-family homes and those are quickly evolving into strata-titled duplexes and townhome sites. The single-family home will continue to be a highly sought-after asset for the foreseeable future.
- Lots of pre-sale opportunities
The pandemic has slowed down many sectors of the economy. The first thing that comes to mind is construction. Labour shortages, supply chain issues, as well as long periods of permit wait times, have all contributed to development site delays. As a result, many projects are getting launched at the same time, creating rising inventory levels for pre-sale projects.
- Potential interest rate rise
Bank of Canada Maintains Rate But Ends QE (Quantitative Easing) Program. The Bank of Canada held its 7th meeting of the year on October 27th, 2021. Highlights from the meeting include:
- The Target Overnight Rate will remain at 0.25%. (unchanged from prior meeting)
- The Bank of Canada will be ending their Quantitative Easing (QE) program
- The Bank of Canada expects the first of possibly several rate hikes beginning in Q2 or Q3 of 2022
- Consumer Price Index (CPI) inflation reached 4.5% in September 2021 and is expected to stay around 4.75% for the remainder of the year.
CPI inflation rose above what the Bank of Canada was expecting and will remain elevated for the rest of the year. While there’s no rate hike this month, the ending of the bank’s QE program does signal a change of pace as the possibility of several rate hikes in 2022 increase, especially since inflation is expected to be higher for longer.
- Government intervention: the “cooling off period” for buyers.
The B.C. Government will introduce legislation in the Spring of 2022 with the aim of giving homebuyers a timeframe in which to change their minds on their real estate purchase.
In a statement Thursday, the Province said a so-called cooling-off period would allow purchasers to back out with no or diminished legal consequences.
The B.C. The Financial Services Authority said it will also be consulting with those in the real estate industry and other experts on more ways to protect consumers, including a review of the blind bidding system, which can significantly raise the purchase price.
The COVID-19 pandemic has impacted the real estate market, first by dipping during the initial weeks of the pandemic, then surging. The BCFSA was formed after a dip in consumer confidence in the real estate industry as well as other financial services. This marks another significant change to how we will be selling real estate. While this system has already been in place for pre-sale purchases, the government has now decided it needs to intervene in the resale market. It remains to be seen if this will help buyers or just complicate an already challenging market process. The government felt this cooling off period was necessary due to the increased number of transactions over the last 18 months.
- Reduced cost of construction.
As supply chain issues are resolved and government subsidies for employees ease, we would expect to see an increase in labour as well as inventory of materials and goods. However these adjustments will take a long period of time. Promised streamlining of real estate developments within the City of Vancouver’s planning department should help in theory as it will reduce developers’ holding costs and timelines. We’ll see in time if this comes to fruition.
- Increased density throughout single family home neighborhoods in Vancouver.
The mayor announced this fall that Council plans to increase density for all single family lots throughout the city allowing for strata title townhomes, ½ duplexes and titled coach houses. These have been permissible with many of the city’s character homes (pre-1940) but that is likely to extend to newer-built homes as well. The plan, if approved, would allow for up to 6 townhouse units in single family zoned neighbourhoods throughout the COV. This is a follow up to the city of Vancouver’s multiple conversion plan that was brought in in 2018. https://vancouver.ca/files/cov/2019-06-20-character-home-retention-incentives.pdf
If you would like to discuss a game plan for your next purchase or sale, don’t hesitate to reach out to us. Our full service team of 6 and our combined 50+ years of experience give our clients the edge, with industry leading results even in the busiest of markets.
We look forward to connecting with you soon. Your ongoing support and referrals are very much appreciated.
Kind regards,
Patrick Weeks Real Estate
Patrick Weeks PREC* – Partner & Lead Realtor
Devin Roch PREC* – Partner & Senior Realtor
Jenny Do – Realtor & Listing Manager
Matt Gibson – Realtor & Inside Sales
Noah Armstrong – Realtor & Pre-sale Specialist
Susan Jackes – Administrative & Client Care Manager
*Personal Real Estate Corporation
Patrick Weeks Real Estate – 2020-2021 YTD performance:
- Top 5 out of 14,000 Greater Vancouver Realtors
- Over $400,000,000 in total sales.
- Over 200 homes sold
- Top 5 team RE/MAX Western Canada