Have Home Prices Hit Bottom? 📉📈
Have home prices in the Fraser Valley hit their lowest levels, or, was this last month a one-off? Should we expect to see home prices continue to decline as we move into the Spring market?
For the first time in almost one year, benchmark prices for all asset classes (Detached, townhomes, and condos) across the valley increased. We have not seen an increase in sale prices since March 2022.
Some factors that I believe have attributed to these home price increases include low levels of inventory, and, the Bank Of Canada’s recent decision to hold rates. We continue to struggle with low inventory levels across the Valley. Low inventory begets low inventory. When there is nothing for people to purchase, people do not want to list their homes. Consumer uncertainty has also been in the air. When this is the case, most people will more than likely hold off on their plans to move.
Bank of Canada held the key lending rate at 4.5%
The Bank Of Canada met on March 8, 2023, and announced that they would not be raising the key interest rate. This is the first time in almost 12 months that they did not raise rates. Variable rate holders are obviously happy about this as many have been feeling the pressures over the past year.
The Bank of Canada says it takes about 18 months for interest rate increases to actually have an effect. While yes, this could be the last rate increase in a while, people that are currently locked in and have to renew their mortgages in the near future are definitely going to feel financial tightening.
Sales
Sales across the valley are also up. When looking at the Fraser Valley, there were a total of 898 sales in the month of February.
Absorption Rate
If you have been following along with my market updates, you have heard me talk about Months Of Inventory (MOI) as a means to measure market conditions. Another way to measure what type of market we are in is by looking at the Sales-to-Active Ratio. The Sales-to-Active ratio is the Fraser Valley Real Estate’s preferred method to measure the absorption rate (how fast homes are selling). This gives us a good indication of what type of market we are in (Buyer, Balanced, or Sellers).
- 1-11% indicates a buyer’s market
- 12-20% equates to a balanced market
- 21% or higher is considered a Seller’s market
In February, detached homes came in at 16.9% (Sellers market), Townhomes, 35% (Sellers market) and condos 26.3% (Sellers market).
These are quicker absorption rates than we have seen in recent times.
Active & New Listings
February showed 4,408 active listings in the Fraser Valley Board. This is an increase of 7% month-over-month, and an increase of 16.3% year-over-year. However, it is still below where we need to be. In a truly healthy market, we should be sitting closer to 6,000 active listings.
New Listings, Fraser Valley
February new listings were up by 5.7% over last month to 1,938, but 48.2% lower than this time last year.
Days on Market
Properties spent between 7 and 12 fewer days on the market compared to last month, another sign that the market may be picking up.
Median days on market fell to 15 days on the market for all property types in the Fraser Valley.
A Personal Experience on Home Prices
I currently have a 2 bed, 2 bath townhome for sale in Guildford, Surrey. We priced the property at the last sale price in the complex, which was a similar unit, if not more renovated than ours. We received multiple offers on it in less than one week. I cannot disclose the price as it is still in the accepted offer stage, but it is close to asking. So, even though we are seeing multiple offers, the sale prices are not going exceedingly over asking in most cases.
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