Summer Newsletter – Current Market Conditions and the Cooling Offer Period Announcement
Summer is in full swing in Vancouver…finally!
It’s been an incredible run in real estate over the last 2 and ½ years, but it should come as no surprise that the market has begun to cool off. As history has taught us from previous real estate cycles, we knew the torrid pace of our market was going to eventually end, but we just didn’t know when. In Vancouver, the market began to slow down in late March/early April (a month earlier in the Fraser Valley), and we’ve seen a steady decline in sales and market activity ever since.
Along with record-setting real estate price increases over the past two years, inflation began to steadily rise. As a result, the Bank of Canada began increasing interest rates in the Spring and have continued to aggressively raise the overnight rate to try and combat inflation which is at a 40-year high. As painful as it is going to be for this period of time, we will all get through this just like we did the pandemic.
Life is complicated these days, with so many decisions to be made and the media coming at you with opinions from all angles. What we’ve all learned through this challenging time is that the most important things in life are family, friends and having a home to share this space with.
The reality is we just don’t know when the market is going to change again, and what the catalyst will be that changes the current trend. It could be anything from pent up demand from Buyers that have sat on the sidelines over the past several months, an increase in immigration, or simply the Bank of Canada holding rates flat for a few announcements.
In past market dips such as the 2008 financial crisis, we did not predict how quickly the market would rebound (prices started to increase in early 2009). I also don’t recall anyone predicting that the real estate market would take off shortly after the beginning of the pandemic, but it did. History shows that time and time again savvy investors have bought stocks and real estate when sentiment is low, and then turn around and sell when sentiment (and price) are high. This recipe has a proven track record and it makes us think of a famous Warren Buffet quote: “be fearful when others are greedy, and greedy when others are fearful.” In other words, buy when prices are low, and sell when prices are high.
That said, the reality for most of us is that we cannot time the market perfectly, whether we are talking about stocks or real estate. So often the best strategy is time in the market, and not trying to time the market. Short term and emotional based decisions can have harsh long term consequences. As your trusted real estate advisors we can help you navigate through these uncertain times and help you make sound decisions that will benefit you in the long run, through any real estate (or economic) cycle.
We also wanted to briefly touch on the long awaited (cringe) Cooling Off Period that was just formally announced this week. After much discussion over the past 6 months, the BC Government has introduced the Cooling Off Period which will come into play January 1st 2023. The key facts are as follows:
- Will be in effect as of January 1, 2023;
- Buyers will have three days to back out of a residential purchase after signing a contract;
- Buyers who back out of a contract within this three-day period will have to pay a rescission (cancellation) fee of 0.25%. For example, if the purchaser exercises the right of rescission on a $1-million home, they’d be required to pay the seller $2,500.
As we have been expecting this announcement for quite some time, we have had many discussions with lawyers, other realtors and our clients about how this will impact our market, and more importantly, how it will affect our clients when they buy and sell real estate in BC. We already have many ideas and solutions that will help our clients be better prepared for this changing environment, and to ensure our clients continue being successful in achieving their real estate goals.
We are here for you anytime you would like to have a real estate check in. Give us a call anytime or stop by our office on the Arbutus Greenway at 6158 East Boulevard.
We hope you have a great summer and look forward to having you at our Vancouver Canadians private event September 6th at Nat Bailey Stadium. We will send you a formal invitation in the coming weeks.
Kind regards,
Patrick, Devin, Noah, Matt, Jenny, Georgia and Elana
Pre-sale Projects
We continue to work with several different developers selling their incredible projects. From 20 unit apartment buildings on the west side to ½ duplexes on the east side and plenty more, we have the perfect home for every lifestyle. If you aren’t seeing what you’re looking for on the market, give us a call anytime to discuss the perfect presale for you.
Multi unit Development
Heritage West Boulevard
Shaughnessy Pearl
Oak Keys
La Menta
Garden Park
Wales Living
Duplexes
E 7th
E 4th
12West