🏡 This month’s market stats are about as clear as mud… but I’ll do my best to break it down for you… 🙈

Real Estate Tips | April 7, 2022 | written by Corbin Chivers

Happy April!

I hope you had a great month.  We sure felt things shift over here in March, so I’m going to do my best to give you my take on it all, and I’ll give you a forecast and some important information to chew on!

If you don’t want to be bored to death then scroll to the bottom for my forecast LOL!

First off – This was the FIRST MONTH in 23 months of insanity where we’ve FINALLY seen prices actually DROP!  And they didn’t just level off – prices are down and  between 5% – 12% in the majority of the Fraser Valley.
** One thing to note here is that the HPI (Housing Price Index) doesn’t actually reflect this but Median and Average Prices DO. Call me to explain the difference 🙂 **

We’ve seen inventory go up dramatically (242% as an average) since our record-breaking LOW in December until now which also has Sales to Actives Ratio from a peak of up to 200% – 1100% in December 2021 to 30% – 60% now (a “balanced market is under about 25%” and a sellers market is anything over that)!

What the biggest shock for us has been is the RATE of increase which is happening much faster than historical norms.  If this were to continue then we’d see a Buyers market very soon – within months.

Secondly – the next question that everyone is asking me is WHY is the market suddenly shifting so fast in the opposite direction?!

There are several reasons however I’ll lay out the main ones below…

 

1. Interest Rates:

  • They have gone up once in March and will go up again in April.
  • Economists on both sides of the aisle are predicting we’ll have another 2-3 increases after April this calendar year.
  • The economists that accurately predicted the 3 we had 2009 are also predicting another 2-3 for a record number of increases possibly this year of 4-5.

What this means is:

  1. We have the media disseminating this news in a very negative way and we are left with the market behaving on that bad news, and
  2. We have the bad news itself where we are going to see the cost of borrowing potentially go up 20%-30% from where it’s at now which will be a huge negative impact on prices.
2. ‘Cooling Off Period’:

I’ve posted extensively on this on my Facebook and Instagram (please follow us on both btw! 🤣)
Here’s a link to one of the most recent articlesI shared about this:
https://www.theglobeandmail.com/canada/british-columbia/article-bc-to-impose-cooling-off-period-for-home-buyers-the-first-of-its-kind/?fbclid=IwAR0IUPJEIXTWclqU3-4_LMj0U9kIAiAezaly5moyf9YZ2e4tjl12N8hyh64

Essentially we already have a “Cooling Off Period” in Brand New Construction – There is law that states a buyer may have 7 days to back out of any purchase they make if they write an offer on a brand new home.  The idea is that buyers may be at a disadvantage while buying unrepresented through a sales centre and this ensures they have more time to do their due diligence and that they won’t be pressured into a sale through mis-representation etc.  Reasonable people can agree or disagree on this law….

NOW… the NDP Government wants to do this to ALL sales…even standard RESALE listings where both parties have full representation and mutually agree to a firm sale… now the buyers would have 7 days to WALK AWAY for NO REASON at all!  This would add an unprecedented amount of uncertainty to the markets and would completely change Real Estate contract law as we know it by institutionally shifting power from sellers to the buyers arbitrarily.

You can probably tell I’m a “huge fan” of this policy…😠😠😠!!

This is something that no other democracy in the world has to my knowledge!  They will be introducing this legislation for vote this Spring, and based on every article I’ve read and every interview I’ve watched – this seems very likely to pass (at best we see a watered down version, and at worst we see this fully go into effect).

This will cause a bigger disruption to the market than we’ve likely seen in a while if it comes to pass so we are just hoping it doesn’t LOL!  (But not very hopeful given the Gov’t!)

3. Foreign Buyers Tax Increase

This one hasn’t been officially touted recently by the NDP but they have acetdotelly said they want to take this tax from 20% to 30% in many interviews and were big fans of the original tax after they implemented the first one back in 2018.

Ok so if you’re looking at the computer a little bit like the gif of Biden up above… then here’s the summary 🤪 …

  • The market is likely going to continue to cool as we get further into Spring.
  • From a price standpoint I predict we’ll see numbers continue to fall from the 10% range to likely 15% – 20% by Summer.
  • The Government is going to pull some big levers here to do this on purpose.
    • Remember – the 2 years of the HOTTEST MARKET EVER was just the result of Government pulling levers that artificially INCREASED the market.
    • Remember the “lowest interest rates in recorded history” back in Spring 2020?
    • Remember the moretorium on evictions which took 25% to 50% of listings “off the market” essentially for several months while the owner-occupied listings sky rocketed?
    • Remmeber the banks allowing mortgage deferrals for up to 6 months?  That was mostly fraud and abuse for the people deferring it as they weren’t in the cohort of people who actually lost their jobs or their wages.  The big COVID releif bills that added more money to the money supply than ever before…causing record inflation where we have MORE money chasing after (in this case) record-low GOODS (homes!).

I could go on and on but here’s how this can affect you:

  1. If you’re buying AND selling – then this matters less to you as are buying in the same market.  The advice here is to SELL immediately – negotiate a longer close – and then not be in a huge rush to buy as we see inventory increasing faster and faster leading to a better buying environment .
  2. If you’re ONLY selling – Sell tomorrow LOL!  There is no doubt in my mind that we’ll see things soften for some time to come so if you were considering selling now or in the near future – then sell NOW!  If it was either selling now or in 2-3+ years however then I wouldn’t be in the same rush.
  3. If you’re ONLY buying – I would carefully monitor the market and the kind of homes you’re interested in…but I wouldn’t be in any rush to buy immediately!  Prices at best may level off and at worst will likely drop a bit more but inventory (and the choices you’ll have) will only increase giving you at least a better selection and likely a lower price.

Hope that was clear as mud 🤣🤣🤣!

If this makes you scratch your head then the best thing to do is give me a call directly so I can help you with your own personal Real Estate situation!

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