Frantic winter market is cooling off
After a long period of multiple bids, over-asking sales prices and no-subject offers that saw condo and house prices rising month after month, April is showing a distinct slow down. Open house attendance is dropping off and viewing appointments are slowing down. Condo prices that were attractive in February are now proving to be too high for most buyers. Month to month comparisons for January 2022 to March 2022 show an active market, but a closer look at the number of houses listed and sold in the last four weeks tell a different story. I predict this market shift will show up in markets all across Metro Vancouver.
The numbers tell the story
My market is primarly Vancouver East and Vancouver West. The listings and sales from March 14th to April 11th 2022 show the emergence of a very different market compared to January and February 2022. From March 14th to March 27th there were 123 houses and 427 attached homes sold across the City of Vancouver. Compare this to the period of March 28th to April 11th, where 58 houses and 179 attached homes were sold. This is a dramatic shift which isn’t captured in our monthly statistics for February and March.
What’s behind the market shift?
I always want to be cautious when speculating about causes and effects, but in this case I am quite confident of the causes:
- Inflation – Currently hovering around 5.7% and not showing signs of easing for a while
- Fuel prices – Driven up by the war in Ukraine and pushed higher by profiteering and taxes
- Uncertainty about rule changes proposed by the provincial government. Specifically the proposed cooling off period for buyers
- Interest rates – Have risen once this year already and are proposed to rise a few more times this year
- General concerns that the current market conditions are unsustainable re housing starts and affordability
What comes next for the metro vancouver market?
I think people are taking a wait-and-see approach right now. And I think that’s wise. Changes like we see currently in our country and our world seem to roll through the markets and then some kind of balance returns. Will we see significant long-term drops in Vancouver home prices? Canadian economic growth is predicted to be somewhere around 3.5% for 2022 and our new job rate was 73,000 for March, mostly driven by new full-time jobs. I think this indicates that there is fundamental strength in the Canadian economy which will bring people back into the house market. Since little has been done to address our chronic shortage of new homes, I believe prices will sag for a while but will remain high in Vancouver. We simply cannot meet the demand, and demand drives prices despite affordability.