December 2023 Market Update and 2024 Predictions

Here is the market update for December 2023. The New Year has sprung and hope you enjoyed some downtime with your loved ones over the holidays. It was wonderful having some family in town and spending time enjoying good drinks and eats! Now – it is time to tackle 2024 starting with a market update! Jump to the bottom to see my 2024 market prediction.

OVERVIEW

The year over year numbers show price appreciation for all categories of housing. Prices are up approximately +5% for Greater Vancouver¹ and +6.9% for Fraser Valley² when compared to 2022. Looking further into the numbers and it reveals, each category of housing has actually experienced small price declines in each of the past three months… except for Apartments in the Fraser Valley which have remained relatively flat! As always, if you want more detail or information for a specific neighbourhood or property, reach out – always great hearing from you.

BREAKING IT DOWN

First, an explanation I go over almost every post:

SALES TO ACTIVE LISTING RATIO: Simply put, this ratio is calculated by dividing the number of sales by the number of active listings for a given period (usually monthly).

• When this factor is below 12% for a sustained period there is usually downward pressures on home prices (think “buyer’s” market).
• Between 12-20% is considered a balanced market.
• Over 20% for sustained periods generally provides upward pressure on home prices (think “seller’s” market).

Now that that is out of the way, on with the analysis.

GREATER VANCOUVER

• Detached homes have spent the past 3 months in balanced market territory with a Sales-to-Active ratio of around 12% since September 2023.
• Townhouses and Apartments remain resilient with Sales to Active ratios of approximately 22% and 21% respectively which puts them in seller’s market This has remained relatively unchanged over the past 3 months with the exception of a small dip into balanced territory (18%) for Apartments in November 2023

FRASER VALLEY

• Detached homes have spent the past 3 months either in balanced territory or flirting on the edge of Buyers market territory (below 12%)
• Townhomes have spent the past 3 months in the Fraser Valley in Seller’s market territory (above 20% sales to active listing ratio). Apartments on the other hand have remained in Seller’s market territory but have been flirting on the edge of Balanced market territory.

So what does that all mean? Where are the opportunities? First, let’s review some other factors that may impact the market in 2024.

• Bank of Canada (BoC) Policy Interest Rate: The BoC has maintained its policy interest rate at 5.0% for the past 5 rate decisions. Most economists anticipate rate cuts starting in 2024 perhaps in the 2nd or 3rd quarter. Some financial institutions have already made adjustments to their lending rates (Source: com)
• Approximately 50% of Canadian mortgages are up for renewal in 2024 – 2025 at rates that are higher than when they were originally signed (Source: com)
• Pre Sale Properties: Pre-sale properties that were purchased in 2020 – 2021 are now coming online. Some of these properties will be placed on the market as the interest rate environment is vastly different than it was 3 years ago.
• BC Government Speculation Tax was expanded to 13 more municipalities in November 2023 and may impact housing (Souce: BC Government)
• The BC Government has amended the rules for Short Term Rentals which adds additional restrictions and conditions with some changes going into effect in May 2024 (Source: BC Government)
• Towards the end of the 2024, the Foreign Buyer Ban (Officially called the Prohibition on the Purchase of Residential Property by Non-Canadians Act) is set to expire on December 31, 2024 – unless extended by the Federal Government

SO FINALLY, WHAT DOES THAT ALL MEAN?

Here is my prediction: The spring market will not be a strong as previous years but the resilience in the market will continue. We will see increased inventory as mortgages renew and more pre-sales are also listed on the market but – this increase in inventory is compared to the current low inventory levels experienced in 2023 – therefore still a tight market. There will be stiffer competition due to falling mortgage rates and the entrance of additional buyers looking to enter the market which will impact housing values. There will be  opportunities for the assignment of pre-sales and in some markets for Apartments and Townhouses.

In other words, it may be a good time to enter the market before things start warming up (figuratively and literally). I love talking about this stuff so feel free to reach out with any questions or your thoughts. Happy 2024 everyone!

1 – The Real Estate Board of Greater Vancouver consists of the areas of Bowen Island, Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

2- The Fraser Valley Real Estate Board consists of the communities of Abbotsford, Langley, Mission, North Delta, Surrey and White Rock