The Greater Vancouver region has had a slow start to real estate in 2023, with home sales in the area totaling just 1,022, according to the Real Estate Board of Greater Vancouver (REBGV). Sales have fallen below last year’s January numbers, which is to be expected but are 40.2% below the long-term average.
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Vancouver Sales Slashed in Half Year-Over-Year
Sales in Vancouver are down 55.3% year-over-year, and 21.1% from December. Interest rates were historically low at the start of 2022, meaning the cost of borrowing was far lower than it is now. The early months of last year were a bit of an outlier and while 2023 is expected to see some sort of normalcy, the usual winter trend of a slower market coupled with much higher interest rates has caused such a large dip below the long-term average. Andrew Lis, REBGV Director, economics and data analytics, said, “Due to seasonality, market activity is quieter in January. With mortgage rates having risen so rapidly over the last year, we anticipated sales this month would be among the lowest in recent history.”
Inventory Remains Low in Spite of New Listings Boost
Supply in Vancouver is still low, despite a slight bump month-over-month. The number of homes currently for sale in the area totals 7,478, a 1.3% increase on December’s 7,384. It’s also up 32.1% compared to last January, but this is of course with the caveat of vastly different interest rates. Inventory has stayed low in spite of a big jump in new listings this month, with 3,297 homes listed for sale. A lesser-mentioned cause has been the rise of the rental market. Rental prices have risen as it’s seen as a less expensive, short-term alternative to buying a home many. Geoff Pershick, real estate agent at eXp Realty, said, “The vacancy rate in Vancouver is low, and more and more homeowners are choosing to rent out their properties instead of selling them because rent prices keep rising.”
While still down compared to last year, when the market was ripe for selling, it’s a huge 173.4% increase in December’s 1,206. Pershick explains, “Demand in Vancouver is so high and there is rarely enough inventory to meet the demand. This means that anything that is listed at fair market value sells very quickly.”
What is Expected for the Vancouver Market in 2023?
REBGV predicts that sales for 2023 will remain roughly in line with 2022 figures, while home prices might see a slight bump over 2022’s year-end numbers by December. The board cited interest rates as the major factor in their sales predictions, stating that “sales activity in Metro Vancouver has tended to slow considerably and can take upwards of 24 months to recover to levels seen before the tightening cycle began.” With interest rates likely to remain on the higher side in the face of stubborn inflation, sales numbers are likely to come in similar to 2022 in each property type.
The board has also noted that in spite of the falling house prices, we can expect them to rise again during 2023. Prices in 2022 fell from the high of $1,374,500 seen in March to $1,114,300 by December as a result of the interest rate changing rapidly throughout the year, but with greater potential consistency in the rate, REBGV notes that many sideline buyers and sellers may be tempted to step back in. It also referenced the area’s rapid growth in population and higher immigration targets as reasons why demand is likely to continue increasing.
Pershick has advice for those struggling to enter Vancouver region’s competitive market: “Lack of inventory keeps prices high, and since the rental and resale markets are currently quite depressed, prices will likely stay high. Anyone that is looking to own land and have a little more space but can’t afford a detached home should consider the duplex market. It’s often overlooked and offers many of the same benefits a detached house does, along with the potential for passive income. My advice to anyone struggling to buy is to remember that property value appreciates over the long term. Purchasing a property that may not be your forever home but that gets you into the market is still a sound investment.”
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