Hey Clients & Friends, 👋
Hope everyone had a fantastic April – We’ve got a lot to cover, so let’s dive in! 🤠😉
This April marks the third month that the Housing Price Index actually went UP in all categories after 7 straight months of price decline! Sellers reading this are already starting to smile, (and they should!) but hold on because there’s lots to unpack below still 😅. But first, some more news to report on Sales Volume: it went up as expected, however, inventory went up even more, bringing down sales ratios. What’s important is how this April stacks up to the last 20 April’s! Stay tuned!
…So, let’s dive into the stats! 📊
Home Prices
In the Fraser Valley, we’re marking the 3rd month of Housing Price Index increase, after 7 consecutive months of decline in home prices! While last month we saw condos slightly appreciate (0.3%) this month we saw all categories increase. For sellers this is signaling a potentially brighter outlook for prices compared to the recent trend but many buyers are worried they missed the bottom:
⚠️NOTE There was a correction in the percentages as the Fraser Valley Real Estate Board made some errors last month. I was actually the first Realtor in our entire membership to catch it and it’s because I do these in-depth analysis that I was able to find the mistakes 🤓🤓🤓 (adjusted below!).
April 2024 +0.5% 🟢
March 2024 +1.4% 🟢
February 2024: +0.9% 🟢 (Previously documented erroneously as +3.7%)
January 2024 : -0.3% 🔴
December 2023 : -1.5% 🔴
November 2023: -1.1% 🔴
October 2023: -1.4% 🔴
September 2023: -0.9% 🔴
August 2023: -0.9% 🔴
July 2023: +0.5% (but started declining halfway through the month) 🔴➡️🔴
We’ll delve into exactly what types of homes are selling, so stay tuned!
Sales Volume & Sales Ratio:
While April saw prices increase by half a percent overall 📈, it also saw Sales Volume increase (Detached & Attached Combined) slightly from 1,244 sales in March to 1,310 in April. This marks just a 5 % INCREASE over March 2024 and ranks as the 12th highest April in the last 19 years of tracking. So definitely far lower than we’re used to seeing in recent history with the exception of last year. You’ll also see below that Listings went up more, actually bringing sales ratios down unfortunately. 🏡💼📊📈🔼
And then Sales Ratios 📊 (The number of listings that sell as a % of active listings in any given area) actually decreased to an overall 23.8% from 26.6.8%.📉 (which is very much dependent on PRICE POINT with the sales ratios being favorable for sellers at the lower to mid price ranges and then almost non-existent in the luxury market).
And just like last month, we’re going to have a look at a couple of areas in the Fraser Valley, starting off with
Langley Detached houses:🏡
Sales ratios have decreased at least slightly in nearly every price/area category! 📈
In the last two months we still had very few homes sold in the higher price points, and while that’s still largely true, we did see lower sales ratios (slightly higher sales) in the the $2M – $2.5M market as you can see above.💰
This pushed the AVG PRICE up 3% which doesn’t really tell the whole story but good to see none the less. 🚀Keep in mind this is not meaning prices themselves have gone up 3% in just a month but that just the average sale price moved up that much higher. This is somewhat interesting for anyone with a more expensive home as they can now expect to sell it but they must be competitive with the other homes on the market as the ratios are still extremely low. 🏡✨
Even better news for Langley (And all Fraser Valley) Condo and Townhome owners! 🎉 Sales ratios have only dropped slightly (41% to 39%) which haven’t been seen since Spring 2023 (before the last two interest rate increases!)…and we’re still just starting to see this number fall slightly. Some price points have sales ratios as high as 68% and some areas of Langley are 85% sales ratio across all Condos / Townhomes such as Walnut Grove! 📊(Taking out low volume prices/areas).
Finally, let’s take a look at the available Inventory!
Active Listings: While we saw somewhat promising developments in pricing, we’ve seen sales ratios drop and therefore as you would expect, inventory has started to increase substantially! (specifically Detached and Attached Combined), with numbers rising from 4,666 in March 2024 to 5,494 in April, reflecting a 17% increase. This positions it as the 9th highest inventory April of the last 19 years on record, indicating a rather average level. (Back in January for comparison we also ranked as the 12th highest January on record📉). It’s challenging to discern significant trends from the modest uptick last month; however, this trend has been accelerating recently, with some areas that are heavy in rental properties experiencing very high inventory. I anticipate this trend will continue to happen as more and more sellers recognize the declining sales ratios, causing many to want to list ahead of what they see as a softer market ahead! 💡🏡
My Forecasting:
I’ll do my best to keep it short (but we know I never do lol 😅)
1 & 2.) Interest Rates/Inflation:
As noted last month, the last inflation report saw inflation increase to 2.9% (from 2.8% in February and 2.9% in January respectively.) While this is down from December’s 3.4%, it appears we are quite stuck at this ~3% number for a number of reasons…I’m not so sure we’re going to see this come down soon necessarily, despite what many are hoping for. And if we assume the Bank of Canada won’t lower interest rates until we are stable under 3%, then there really isn’t any big reason to celebrate just yet. Think about it, if your child was getting straight F’s for as long as you can remember and they brought home one or two C minuses would you say your work is over and fire the tutor and let the child go back to their naughty habits? I don’t think so! It’s the same here and the government with THEIR naughty spending habits that will continue to cause more inflation through debt and high interest rates on that debt.
In January, many top economists were still expecting 4-6 rate cuts for the year and expecting the first one to be between June and July…but this month, things have shifted! Many economists and those in the forward-hedging markets are now predicting as low as 1 to 2 rate cuts which is much less than many Canadians have been expecting and preparing for.🔄
When you factor in that 47% of all mortgages will have been renewed at higher rates by the end of this year, and by next year we will have 65%, (with the rest in 2026!) we will have an uncertain but negative impact depending on how must of a difference the rates are between the record low rates during the COVID pandemic policies and when they renew! This is going to double some people’s mortgage payments and some homeowners simply won’t be able to manage without selling.
What about
Fixed Rates? Fixed Rates are
closely tied to the Canada 5-Year Bond Yield. This rate of return the Government of Canada gives on a 5-year bond is typically within 1% to 2% of the Fixed Interest Rates for various reasons. While
early January predictions of the 5-Year Bond Yield seemed very positive, falling to a low of 3.38% on January 2nd, it
has since risen to 3.717% (record-high for this year) with Economists far more bearish in this regard. Not great news for new mortgage takers or old mortgage holders hoping to renew soon with a lower interest rate than today’s highs.
💸
Canada 5-Year Bond Yield – Investing.com
3) Rental Property Cash Flows
This section remains the same as last month, FYI: With interest rates as high as they are, and likely to remain higher for longer, rental properties have become dramatically different to own. Someone who purchased a home at 3% interest rates might have had the rent cover all the expenses of the house, referred to as “breaking even,” OR may have potentially had some positive cash flow if the home had a secondary suite or the like. The difference is NOW, that same rental property (at 5% to 7% interest) may be negative cash flowing anywhere from $500 to $4,000 a MONTH! This is becoming more and more untenable and will continue to lead to more rental properties having to be sold due to not being able to afford that much per month. 💔
In BC, nearly a quarter of all homes are owned by investors. 1/3 of all condos are investor-owned. This is more than any other province, so this could have a major impact. 📉
I’m personally quite persuaded by the rationale that the BoC is going to wait until GDP slows down further than it is now, and also wait for inflation to stabilize closer to 3% before it starts to decrease rates. I still think it could very likely be around the June/July announcement dates, which would dramatically shift the market sentiment and very likely increase prices. If interest rates remain unchanged for now, then we might see prices continue to increase slowly or very likely fall if we see large amounts of inventory finally hit the market for the reasons above. This could stagnate the market again in terms of sales too!
Also, If we start to see listings come to market faster than expected, this could drive prices lower again even despite an interest rate cut. It’s hard to know but it will very much be based on when interest rates start coming down and by how much!
I hope you found this helpful, and as always, please reach out if you’d like to chat about your own Personal Real Estate Situation, and I’d love to help you out! 🙌
And if you’re interested in how much YOUR Home is worth – Please Reach out today for a No Obligation Home Evaluation! 🏠
Cheers! 🥂
