Residential sales through the Real Estate Board of Greater Vancouver dropped 55 per cent in January versus a year ago, but seasonal patterns held steady as buyers adjusted to market conditions.
“Due to seasonality, market activity is quieter in January. With mortgage rates having risen so rapidly over the last year, we anticipated sales this month would be among the lowest in recent history,” said Andrew Lis, REBGV’s director, economics and data analytics.
Sales in January were 42.9 per cent below the board’s 10-year January sales average, totalling 1,022. This was the lowest of the past decade, slipping below the 1,103 sales in January 2019, following another rise in borrowing costs – one that provide temporary.
The past two years have seen significant increases in sales in March, and while this year could see a similar increase the higher cost of borrowing promises to create a closer comparison to 2018 and 2019, when the spring surge peaked in June.
The raw numbers aren’t likely to look pretty in comparison, however.
“Over the coming months, year-over-year data comparisons will show larger price declines than we’ve been reporting up to now,” Lis said.
The benchmark residential price for Greater Vancouver is $1.1 million, down nearly six per cent from a year ago. It’s also down more than 12 per cent from the peak of $1.26 million seen last April.
The numbers are a sharp reversal from two years of double-digit price growth, with downward pressure coming largely from seven consecutive rate hikes by the Bank of Canada last year. An eighth at the end of January has yet to show in the numbers, and capped a 400-basis point rise in the policy rate.
This has pushed fixed-rate mortgages to an average of 4.5 per cent, according to Ratehub.ca data REBGV cited, while variable rate mortgages average 5.3 per cent.
Lis pointed to signals from the Bank of Canada as indicating a more stable environment for interest rates and borrowers in the coming months.
“The Bank of Canada has said that it will pause further rate increases as long as the incoming economic data continues to support this policy stance. This should provide more certainty for home buyers and sellers in the market,” he said.
REBGV’s sales forecast for 2023, released earlier this week, expects a 2.6 per cent decline from the 29,261 sales recorded in 2022, or approximately 28,500 sales. A stabilized environment will allow for a marginal 1.4 per cent increase in home prices this year, back to an average of $1.2 million.
“Despite the well-publicized challenges of housing affordability in this region, the amount of people who continue choosing to reside here represent an important source of demand pressure that continues to push up against a supply of homes that remains scarce, in relative terms,” the forecast said. “As the real estate market continues to adjust to the higher mortgage rate environment, it is likely that more buyers and sellers will step back into the market.”
An analysis of the Lower Mainland market by the analytics team at marketing firm Rennie suggests that the opening months of 2023 will largely continue the trends seen in late 2022.
“The inertia in the Vancouver region’s housing market from the second half of 2022 will carry into the first half of 2023,” it reported this week, suggesting an 18 per cent decline in sales from the 10-year average.
But it also expects price declines to bottom out by spring before rising as buyers acclimatize to the new environment.
“We expect benchmark MLS condo prices to reach their floor in the early spring before growing again thereafter, to 98% of their 2022 peak by the end of 2023. For detached homes we see the price recovery lagging that of condos, reaching 88% of their 2022 peak price level by year’s end,” Rennie reported.