As we head into the spring market, navigating decisions around real estate can be tricky. With respect to real estate there are always 3 decisions to consider:
Buy: Investing in real estate in Vancouver remains a solid long-term decision, especially with the stock market at all-time highs and projected decreases in interest rates. Vancouver’s status as one of the world’s most desirable cities ensures continued demand and potential for appreciation. I would look at buying properties within Vancouver’s city proper near skytrain stations and future transit sites. For condos I would suggest buying in older buildings with low price per square foot that may be considered having strata wind ups and potential developer buyouts down the road.
Sell: In certain sub-areas, move-in ready detached houses priced under $3,000,000 are in high demand. For instance, we listed a home at $2,800,000 in Mackenzie Heights recently which garnered 19 offers and sold for over $3.2 million. However, it’s worth noting that Westside luxury detached houses have yet to reach peak market prices from July 2016, so we feel there is pent up demand and room for prices to increase further.
Hold: Vancouver’s limited inventory of detached houses, coupled with changes in density regulations favoring multiplexes, suggests that single-family homes will continue to appreciate relative to the market. Despite fluctuations, holding onto properties, particularly detached houses, presents long-term value opportunities in the Vancouver market.
Ready to explore how these market insights can guide your real estate decisions?
Let me help you make sense of the current market and we can create a roadmap to help guide the way forward.
Let’s connect over a coffee or a quick phone call to discuss your specific needs and objectives. Whether you’re considering buying, selling, or holding onto property in Vancouver, I’m here to provide personalized guidance and strategic solutions tailored to your goals.
After a quiet December in real estate we are looking forward to what is ahead in our real estate market. What happens over the next 6-12 months will largely depend on interest rates (we will have a good idea of what Q1 will look like once the BoC makes the rate announcement on January 25th). The market has been quite frozen over the past 6 months (generally speaking sellers have not wanted to list, and buyers have not wanted to buy), and that means there is a lot of pent up activity waiting to happen. An interest hold on January 25th could be the catalyst for that pent up activity to engage, or it could take a sideways market for several more months before buyers and sellers start getting active again. Unfortunately nobody has a crystal ball to know what exactly will unfold this year. One thing is for sure, the Bank of Canada is nearing the end of this rate-hike cycle, and may even be there already (we’ll see on the 25th). To further that, rate relief could be on its way later this year. Some economists believe the Bank could start cutting rates before the end of the year, which would be a major catalyst for our market. We’ve read several economists who feel that interest rates will be lower in 2024 than they are today, but perhaps we may see a 25bps increase later this month. Time will tell.
Our best guess is that our market picks up at some point this year, but when that happens will largely be determined by interest rates. A January 25th rate hold could do it, along with the typical strong ‘Spring Market’ which starts in February in Vancouver, or it may take until the second half of this before rates stabilize (with the potential for a rate drop late 2023 or early 2024) before our market wakes up again. We are already starting to see more activity this week than we’ve seen in the previous few months. Buyer’s seem to be coming back into the fold earlier this year than what we’ve typically seen for early January, which makes us cautiously optimistic (we’ve sold three homes so far this year which is a great start). Once ‘potential sellers’ start seeing activity happen, we feel they will be more motivated to get their homes on the market, which gives buyers more options to choose from. We will see what happens first (increased buyer activity, or increased inventory), but one (or both) of those should happen early this year and hopefully contribute to the other factors above to help ‘thaw’ our frozen market.
Where will buyers come from in this new market?
With recent lack of success in the stock market many equity holders, primarily baby boomers are going to continue to help their adult children purchase homes. Given the state of higher interest rates our prediction is that the size of these family loans/gifts are going to continue to grow in size and frequency. Many economists are predicting that this transfer of wealth will only continue in the coming years.
In addition to that, immigrants will play a major role in our market. Canada added just over 437,000 new permanent residents in 2022, according to Immigration, Refugees and Citizenship Canada (IRCC). This topped the department’s target for the year, as well as the previous high of 405,000 reached in 2021. The bulk of these immigrants are coming from India, China and the Philippines. Looking forward, the government of Canada is predicting nearly 1,500,000 new permanent residents over the next three years. This flood of new permanent residents is expected to bring new homebuyers and renters to communities across the country with a large percentage of those coming to the Lower Mainland. That could increase activity in the residential real estate market, which has slowed since early last year, when borrowing costs jumped with a rise in interest rates.
If you are interested in having an up to date market consultation as it relates to your situation don’t hesitate to touch base with us or pop by our cozy office and we’ll make you a warm coffee or tea!
Sincerely,
Patrick, Devin & The Roch & Weeks Real Estate Group.
And just like that summer comes and goes. My family and I have had a great summer. We spent lots of quality time outdoors, taking in our beautiful city.
At the start of September, after working together for 7 years, Devin Roch and I have decided to formalize our partnership alongside our team. We are excited to now be known as the Roch & Weeks Real Estate Group.
On the real estate front, the past 3-4 months have been one of the slower markets we’ve worked in over the past 20 years. As interest rates rose multiple times, we saw buyers on the sidelines waiting for prices to drop. At the same time, sellers were hesitant to list their homes given the decreased demand from buyers. As a result, inventory levels remain low and there are fewer opportunities for buyers.
It will be interesting to see what happens as we enter the fall market, which is known as the second selling season in real estate. Fall often brings much needed new listings, as both buyers and sellers get back to their routines and life plans after the summer months. If we do see inventory increase this month, it will be interesting to see if buyers become more active, or if the waiting game continues.
In terms of prices, we have seen the greatest price decreases in the Fraser Valley and other suburban markets. Meanwhile, Vancouver has seen more modest price adjustments. Generally speaking, prices are down from February/March’s peak by 5-15% in Vancouver, whereas, we have seen as much as a 20% drop in the Fraser Valley. Given the level of income and down payment required to purchase a home in Vancouver, buyers that are active in the market here are less likely to be affected by interest rate hikes, especially in the luxury sectors of the market ($3 million plus). We are also noticing that “land value” properties are being hit the hardest in terms of price declines. This is a result of developers’ hesitation to buy into the market with the high cost of construction, rising rates, and softening prices of finished product. On the other end of the buyer spectrum, end users also seem to be focusing on “move-in ready” homes and have less desire to buy homes that require substantial renovations given the timelines from the city for permits and difficulty finding trades for reasonable prices.
Consequently, if you are thinking about selling and have a move-in ready home, you are still likely to sell for a relative premium, while fixer uppers and land value properties will need to be priced well if you want to sell in today’s market.
The Vancouver real estate market can move very quickly in either direction, and can often feel like a tap that is turned off or on overnight. There have been few “buyer’s markets” over the past 20 years, and they typically do not last very long. I think it’s fair to say that the current cycle we are experiencing could see prices continue to soften, however, I do not see this being a long term trend. There have been few opportunities to buy into Vancouver over the past 20 years without competing in multiple offer scenarios. If you look back in time, there have only been 3-4 years of buyers markets in the last 20, therefore, anytime there’s a downturn it’s proven historically to be a good time to buy. It’s human nature to hold out for the best possible time to buy and get the best deal possible, but the challenge has always been determining when exactly is the “perfect time”. Often by the time you’ve realized it, the market has already started to move in the other direction. We often take the approach that “time in the market” is more important for long term success than trying to perfectly “time the market”.
We continue to strive to provide the best service available to our clients and although we are in a tough market we have the tools and expertise to help you navigate and make sound real estate decisions. If you are interested in buying, selling, or acquiring investment properties don’t hesitate to reach out. You are also always welcome to stop by our office in Kerrisdale for a coffee.
Roch and Weeks Real Estate Group Introduction Video
