Thanks for checking out my monthly real estate update for South Delta and the Real Estate Board of Greater Vancouver (REBGV).
Here is a link to the complete set of charts and graphs – it may be useful to refer to them as you read through this piece!
Here is a link to the Real Estate Board of Vancouver (REBGV) Monthly Market Report.
Prices
As market participants consider selling and/or buying one of their first thoughts is likely ‘what is happening with prices?’ We measure price trends with the Home Price Index (HPI).
There is a definite current trend of decreasing prices, but the magnitude varies between housing types and possibly local areas.
Here are HPI charts for the REBGV for the 3 main property types.
- Clearly detached HPI has decreased the most and apartments the least.
- What about the differences between various areas in the REBGV and elsewhere?
Here is a chart of when HPI was last at the level it is at currently, for the areas I follow.
| Detached | Attached | Apartment | |
| REBGV | Oct 2021 | Jan 2022 | Jan 2022 |
| Ladner | Sept 2021 | Dec 2021 | March 2022 |
| Tsaw | Oct 2021 | Dec 2021 | March 2022 |
| Richmond | Dec 2021 | Jan 2022 | Jan 2022 |
Since these times the index has increased to a peak then returned to current levels.
- When will price levels ‘bottom out’?
- how much further will prices decrease?
- What will this matrix look like in 3, 6, 12+ months?
Tsawwassen detached had a comparably good November with 21 sales, but HPI was still down 4.6% from October, a huge drop (55% annualized!).
- Maybe that is why they had lots of sales – motivated sellers?
- possibly this could be a sign of times to come?
The following are some of my own reflections and forecasts regarding the dynamics of our real estate market.
Sales
There are various potential buyers:
- equity shuffles of current owners
- the typical basis of the sales that are currently transpiring
- those that are able to buy – but will choose carefully how, and more importantly, when they will do it
- investors – both large and small
- intergenerational wealth repositioning
- Those that would like to buy – but are now unable
- Under what circumstances will ‘affordability’ return to them?
- First time buyers
- Move up buyers – especially those increasing debt loads
- Cash flow sensitive investors
- Under what circumstances will ‘affordability’ return to them?
Sales are what they are and that will likely continue at the pace we have seen recently – but external demand may not rematerialize for awhile!
Listings
The recent volume of listings been limited by owner choice – so far
- since spring 2022: ‘I won’t list now if I don’t have to – not in this market’
- Sellers may be broken into 2 simple demographic groups:
- those repositioning within the market
- those exiting the market
- the early months of 2023 could be markedly different from the seller approach we have seen in the last 6 – 9 months
- in the next 12 – 18 months our market will likely be driven not by owners that want to sell but by those that have to sell
List/Buy Dynamics
- in the ‘hot, multiple offer’ market it was buy first, then sell
- we are now seeing a return to the classic MO of selling first then buying
- looking ahead to 2023, an increase in the volume of listings that are not absorbed would not be surprising
Seasonality
My view is that further interest rate increases from the Bank of Canada with will trump our typically ‘more robust’ spring market.
What is next?
The dynamic between demand and supply described above will certainly continue to affect prices
- the main external influence will be the Bank of Canada
- a perception of opportunity will emerge
- a return to the ‘classic’ real estate market
- participants will have more time to make careful, informed decisions
There is much more to come – and I will be following it closely and telling the story!
Best wishes to all for a safe and happy holiday season!
email: dbauck@deanbauck.com
