Last March was the highest selling month in history, so comparison against it will be deceiving. The sales number for this March is 23.9% lower than last March, but are actually 25.5% above the 10-year March average. So this is still a very strong market.
If you look at the chart below, you can see several obvious trends. Sales-to-active listings ratio is a measure of supply and demand. A ratio of 50% would mean that in a given month, 50% of the active listings are sold. Ratios that are over 20% on a continual basis point towards increased pricing pressure. From the table below you can see that demand has not let up. In fact, it has increased from last month.
This translated to strong price gains over the last month. And from the table below you can see that while the price growth has slowed a little, March was still a very strong month. You can also see that townhomes have been the sweet spot and it makes perfect sense. As detached homes become increasingly unattainable, townhomes which are the next best thing take over as the most attractive option.
There are lots of headwinds for the real estate market going forward. The main one is the increasing interest rates predicted for the year ahead. RBC has recently updated their forecast to be more aggressive, predicting a 0.50% increase in the next Bank of Canada meeting on April 13th. Aggressive rate hikes will definitely slow the market down.
Also on March 28th, amendments to the Property Law Act were made to enable the creation of a new Homebuyer Protection Period. This is one step closer to protecting consumers from the pressure of making a no-subject offer in overheated markets. It is estimated that more than 70% of offers in BC’s most competitive markets over the past year may have been without conditions. This expose consumers to unexpected repairs costs or the loss of a deposit if financing falls through. The BC Financial Services Authority will consult with real estate industry stakeholders before ironing out the details. Implementation is expected by summer. Measures against blind bidding and flipping maybe coming later in the year.
In the short term because of the headwinds, investors/speculators might lose interest and leave the market but for people who are planning to live here long term, it might mean a buying opportunity. For the long term, the trend is still up.
Have a great Easter!
