The Fraser Valley Real Estate Board has released their report for the month of August and the trend towards a “balanced” residential real estate market continues. The rising inventory levels and slowing sales have pushed benchmark prices back in line with what we saw last fall.
Sale price as a percent of list price is down, yet again, across all product types and days on market has seen substantial increases, between 23.8% and 37.5%, with detached homes leading the way at 37.5%. These trends may be typical for this time of year, but it may also be a part of a larger trend that we’re seeing this year. The Bank of Canada’s most recent interest rate hike and the fear of a looming recession are both factors in this lack of sales activity that are not part of the seasonal norm.
Benchmark price saw a month-over-month decrease across all home types as well, however they remain well above where they were the same time last year. The month-over-month changes were as follows:
- Detached homes: -5.1%
- Townhomes: -3.9%
- Condos: -2.1%
With the anticipation of a further interest rate hike before the end of the year, we expect the residential market will remain quieter into the fall. Many prospective buyers are trying to wait out this market uncertainty with hopes that their borrowing power may return.
WHAT DOES THIS MEAN FOR DEVELOPMENT LAND?
As we mentioned last month, the current market conditions have divided development land buyers into two camps. There are those that are being more cautious (or perhaps feeling the pain of the interest rates) and those that are being more bullish during this time.
The bullish group has a strong interest in putting properties under contract while the opportunity for (slightly) relaxed terms still exists, especially if they can get a longer completion period allowing some time for them to navigate financing etc.
The cautious group is a product of the times. The impact of increased interest rates to battle high rates of inflation has been felt strongly by those looking to finalize financing for project completions in the short to mid-term. Banks and private lenders are tightening their belts and being far stricter when analyzing deals for lending qualification.
Where will this go? We have yet to see, but we’re watching the market closely and will continue to share our insights and opinions on what we are seeing in the market.
View the Fraser Valley Real Estate Board’s entire stats package for August 2022 here.
This representation is based in whole or in part on data generated by the Fraser Valley Real Estate Board which assumes no responsibility for its accuracy.