Hope you enjoyed your Labour Day long weekend. The Vancouver real estate market continues to slow in August. The sales volume was 40.7% lower than last year and was 29.2% below the 10-year August average. New listings were 17.5% lower than last August and 16% lower than this past July. Nevertheless, the prices continue to go down. Month over month, detached homes lost 2.3%, townhomes lost 2.5% and apartments were 2.0% lower.
Most of this month’s real estate news consisted of different institutions revising their house price forecast downward. RBC, TD, BMO, Desjardins and Oxford Economics all predict about a 20% to 25% price drop from the peak by the end of 2023 or the start of 2024. Also, as the banks gauge the economic data and speeches coming out of the Bank of Canada and the Federal Reserve, they are more convinced of a slower reduction of rates when we reach the peak rate.
Headlines like historic drop, worse in 40 years and biggest correction in 50 years, do paint a dire picture for the Canadian real estate market. But to put things in perspective, a 25% drop in prices only erases about 50% of the gains since covid.
The Bank of Canada’s next meeting is on September 7th. Most are predicting a 0.75% rate increase followed by another 0.25% in October. This will continue to make qualifying for a mortgage more difficult. Affordability will not improve until house prices drop significantly followed by a drop in the mortgage rates. This likely will not happen within the next 12 months.
