Historically, September has ushered in the fall market and typically brought increased sales momentum with it. However, this year, resale activity compressed over the month as buyers and sellers reconciled with changing values stemming from inflation and rising interest rates. Buyers have become more selective in today’s price sensitive market, looking more critically at a listing’s location, specs, and overall value. If a buyer feels any of these are misaligned, sellers have had to choose to either lower their price or take their listing off the market.
It should be noted that sales activity is not necessarily reflective of underlying housing demand. For homes that have a strong offering at the right price, buyer activity has been positive. This has been especially true in the presale market where recent launches with a strong offering have, in turn, seen robust initial presale absorptions.
As inventory rises and resales decline, the scales of the Greater Vancouver housing market continue to tip in favour of buyers. There were 1,687 resales in September, which indicates volume is down 46.4% from last year and is 35.7% below the 10-year average. Conversely, inventory has increased by 8% from the year prior. The sales to listing ratio saw detached homes at 12%, townhome products at 18%, and condominiums at 21%. With an overall sales to listing average of 16.9% across property types, the market has effectively been brought into what could be classified as ‘balanced’ market conditions (12-18%).
Benchmark pricing for all product types fell 2.1% in September compared to August. Unsurprisingly, detached product has been the most price sensitive product form, declining 9.1% over the last six months. Townhome and condominium product have fallen 8.5% and 5.7% respectively.
September 2022 saw 897 resales in the Fraser Valley, a decline of 51.9% from last year and 11.8% from August. While the decline in resales is notable, it’s important to recognize the historic run-up in demand the Fraser Valley has had over the last two years. Since September 2020, benchmark pricing has increased 38% and resales in 2021 were 16% above the previous all-time high set in 2016. Given the growth we’ve seen over this period it is reasonable that, with headwinds now testing the market, buyers are choosing to ‘wait and see’ how, when or if the market will level out. While rising rates will impact resale product in the Fraser Valley over the near term, increasing connectivity to transit, immigration, and relative affordability will continue to support values within the market.
In September, Fraser Valley saw approximately 11 presale programs that began sales, which released approximately 1,100 units to market. Notable presale releases in September include Skylark by Polygon in West Coquitlam, Byrnepark by Polygon in Burnaby, and Georgetown 2 by Anthem in Surrey.
Resale activity in Greater Victoria continues to trend downward, with a ‘reluctant September’ pushing trends from the summer into the fall. Resales decreased, on average, 46% year-over-year and 14% month-over-month. Condominiums were the worst hit product at a 59% reduction from September 2021, and detached homes decreased at a less significant 33% from the year prior. Simultaneously, active listings have increased 105% from last year, doubling the available inventory in market. These conditions have resulted in more balanced market conditions, with well-priced properties still receiving attention and, often, multiple offers. The benchmark value of a single-family home in the core of Victoria was $1,364,200 in September, a 13.6% increase from the year prior but a 2% reduction from August’s comparable benchmark pricing.
September in the Okanagan real estate market was met with stabilization in absorptions, pricing, and inventory levels. There are several factors at play that are creating this stability in the market and putting an end to the market correction we have experienced over the past few months. Currently, unemployment in the Okanagan is at an all-time low, with Central Okanagan sitting at 4.1% as of September. It is common to see unemployment rise during a market correction. Businesses across the country have beared witness to the effects on unemployment because of the pandemic where it has been increasingly more difficult to obtain a reliable workforce. If there are no more aggressive interest rate hikes for the final two Bank of Canada announcements – scheduled for October 27th and December 3rd – the market will continue to stabilize into the new year.
With fall in full swing, buyers and sellers will continue to reckon with values influenced by inflation and interest rates. Sellers in British Columbia’s major markets will need to understand the intersection of their listing’s location and offerings in relation to its overall value and understand that buyers will continue to exercise hesitancy in, at the very least, the coming month.