Hey Friends, 👋

Hope everyone is off to a fantastic start this year! 🎉

This January, we’ve seen prices continue to drop in almost all categories, 📉 but, interestingly, sales volume has increased overall, pushing sales ratios back into a more “balanced” market 🔄 (depending on the price point!) and we’ve got some brand new forecasting from top Economists that might just surprise many of you! 😲

…So, let’s dive into the stats! 📊

Home Prices

In the Fraser Valley, we’re marking the 7th consecutive month of decline in home prices. But, there’s a silver lining! 🌥 This month saw the smallest decrease since the downtrend began, signalling a potentially brighter outlook for prices compared to last month across All Detached and Attached housing combined:

January: -0.3% 🟢
December: -1.5% 🔴
November: -1.1% 🔴
October: -1.4% 🔴
September: -0.9% 🔴
August: -0.9% 🔴
July: +0.5% (but started declining halfway through the month) 🔴➡️🔴

What’s really intriguing is that while Detached and Townhomes dipped in prices, Condos actually saw an increase last month (+0.3%). 📈 Though marginal, this aligns with everything we know about interest rates driving prices down and the lower price points being more resilient – it checks out! ✅

Now, like every month, we also want to focus on how many and what kinds of homes are selling! 🏘️ As I stated earlier, Condos have actually slightly increased in price. 📈 Continued ahead!

Sales Volume & Sales Ratio: While January saw prices drop by 0.3% overall 📉, it saw Sales Volume increase (Detached & Attached Combined) from 731 sales in December 2023 to 841 in January 2024. 🚀 This marks a 53% INCREASE over January 2023 (547) and ranks this January as the 12th slowest month out of the last 20… (Or better described as the 8th fastest month!). 🏎️ This is encouraging news for those who were wondering when sales numbers would start to recover from the record-breaking lows of Fall 2022 to Winter 2024! 🌟

And then Sales Ratios 📊 (The number of listings that sell as a % of active listings in any given area) actually increased to an overall 22.9% from 19.1%. 📈 (Note: last month it was reported 20.2% but adjusted after EOM 🔄).

This is an overall encouraging stat 🌟; however, next, we’ll look at what is selling to dig in further! 🔍 What’s not broken down in this graph below, however, are the different ratios in different price points, or areas… (Stay tuned for the full breakdown below!) 🧐

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 🏡

What the big difference is this month compared to last month is sales ratios increased dramatically in nearly every price/area category! 📈 Last month we had very few homes sell in the higher price points, and while that’s still largely true, we’ve seen the $2M – $2.5M market open up with 7 sales in that price range this month! 💰

This pushed the AVG PRICE up 10% because the higher price points finally unlocked and brought that average much higher! 🚀 Keep in mind this is not meaning prices themselves have gone up 10% but that just the average sale price moved up that much higher. This is really great news for anyone with a more expensive home who was looking to sell last year and couldn’t – now the conditions are starting to improve in most price points! 🏡✨

Next Up is Langley Condos:

 

Even better news for Langley (And all Fraser Valley) Condo and Townhome owners! 🎉 Sales ratios have jumped up to highs that haven’t been seen since Aug/Sept 2023 when we were falling from the highs of Summer…and we’re still seeing that number seem to increase. Some price points have sales ratios as high as 68% and some areas of Langley are 53% sales ratio across all Condos / Townhomes! 📊

Lastly, let’s have a look at Inventory out there!

Active Listings:

While we saw somewhat encouraging news in pricing, sales volume, and sales ratios, we saw a very slight decrease in inventory (3821 in December to 3667 in January, or a 4% decrease). This ranks as the 7th lowest inventory month that we’ve on record (compared to December being the 8th lowest inventory December on record!) 📉 It’s hard to derive any big patterns from the inventory decrease last month; however, much of the decrease was due to increased sales activity this month so this was to be expected. I think this will start to change quickly as more and more sellers realize the sales ratios are rapidly improving and it might be a much better time to consider selling! 💡🏡

My Forecasting:

I’ll do my best to keep it short (but we know I never do lol)

1 & 2. Interest Rates/Inflation:

While last month most of the big bank economists were expecting 4-6 rate cuts for the year and expecting the first one to be between April to June…this month, things have shifted! 

While many of the top Economists in Canada are still predicting rate cuts could start as early as June, you don’t hear April being mentioned nearly at all anymore… 

Have a look at what some key voices are saying below, just within the past week:

• Tiff Macklem, the Governor of the Bank of Canada, recently announced that inflation remains higher than desired and economic growth has not slowed enough to warrant a cut. “We may still need to raise rates,” Macklem said, echoing caution that has characterized previous hold decisions.  Bank of Canada Holds Interest Rate 5202 – Financial Post
• BMO: Canada’s GDP Shows Robust Growth, Potentially Delaying Rate Cuts: “Canada’s economy is growing faster than anyone expected. GDP was expected to contract in the final quarter of 2023, but it showed moderate growth. BMO believes if correct, and they stressed ‘if’ due to frequent revisions, this could delay rate cuts. Great news for the economy, not so much for real estate developers.”  Canadas GDP Shows Robust Growth Potentially Delaying Rate Cuts BMO -Better Dwelling
• RBC: Canadian Real Estate Markets To See Rising Sales But Lower Prices: “Canada’s largest bank is forecasting more home sales, but not rising prices. RBC is forecasting residential resales will recover and get a boost from lower rates in the second half of the year. However, more inventory and stretched affordability make it difficult for them to see prices climbing anytime soon.”  Canadian Real Estate Markets To See Rising SalesBut Lower Prices RBC -Better Dwelling

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 3.63%, 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 market sentiment and very likely start to increase prices (if not with the first cut, then the second)! If interest rates remain unchanged for now, then it’s hard to say how far away from the bottom of the market we are for prices, but I would predict between 1-4 months given the information we have today. If we start to see listings come to market faster than expected, this could drive prices lower. If we have more measured buyers who have just been waiting on the sidelines…then prices 

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!