The July figures are out from the Fraser Valley Real Estate Board and it’s clear the housing market is being impacted by the rising interest rates and unrelenting inflation, as we haven’t seen trends like this for years.
Market activity slowed in July far more than a normal seasonal decline seen this time of year. The stats show that sales were down 22.5% compared to June, and a staggering 50.5% compared to the same month last year. Percent of original sale price saw a month over month decline for detached homes and townhomes, as they fell by 2.5% and 1% respectively, whereas condos remained static compared to the previous month. Days on market increased across all product types with condos and detached homes leading the charge at 16.7% & 14.3% respectively, followed by townhomes at 5.3%. Benchmark pricing decreased across all product types for the third consecutive month – the results were as follows:
- Detached Homes: -3.5%
- Condos: -2.0%
- Townhomes: -2.7%
Last but not least, the sales to active ratio for townhomes and single-family homes were 18% and 12% for July, landing both product types firmly in a balanced market.
There has been a significant shift in buyer sentiment in the past few months; before, buyers were more willing to offer on a property that may have compromised a few of their fundamental wants or needs. Now, buyers have the ‘luxury’ of time back on their side, allowing them to make considerations such as location, features and lot size, while actually having a subject period on their offer without having to get into a bidding war.
What does this mean for development land?
Even considering the rise of interest rates, the potential of a looming recession and inflation in British Columbia being the highest in Canada (8.1% compared with Canada’s 7.7%), development land in the Fraser Valley is still a hot commodity without any steep discounts. What has continued, however, is the ability for buyers to have a chance at participating in this segment of the market as properties are making it back to the market and, as they remain available for an extended period of time, sellers are allowing for longer due diligence periods, longer completions, and in some cases they are adjusting their pricing expectations in order to still get a deal done. How long will this be the case for? No one can be sure, but while some buyers sit on the sidelines and have trepidations about acquisitions, others have swooped in and continued with their long term acquisition strategy at far more attractive terms.
View the Fraser Valley Real Estate Board’s entire stats package for July 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.