Welcome to this month’s review of Metro Vancouver’s real estate market. Sales activity was slowing, and inventory was building up, but prices for detached homes and townhomes continued to climb. Not sure why that is. I would expect the price to drop a little.
Sales in May are down 19.6% from the 10-year May average and down 19.9% compared to last May. Meanwhile, inventory is climbing at an above-average rate. The number of new listings in May is 7% above the 10-year average, while total active listings are 46.3% higher than last May and 19.9% above the 10-year May average.
The trend in the sales-to-active listings ratio also points to a slowdown in demand. Typically, when this ratio is above 20% for sustained periods, prices rise. From the chart below, it’s clear that demand has been falling over the last three months, but price gains have been steady for detached homes and townhomes.
t’s generally expected that the Bank of Canada will cut the overnight rate in their next meeting on June 5th. Many expect this will bring people off the sidelines since getting a mortgage would be easier. But this is only true if you’re looking at a variable-rate mortgage. The one and two-year rates might go down, but it won’t have a big impact on the five-year rates if the long-term economic outlook hasn’t changed. Also, if US rates don’t drop, their bonds will be more attractive than ours. At some point, the spread between our rates will be too great, pushing our bond yields up. So, the five-year fixed rate can still go up even if the Bank of Canada cuts their overnight rate
Where the five-year fixed rate will go in the next couple of years is far from set.
Have a great month, and don’t forget Father’s Day on June 16th!
