Key Insights from Dexter’s September 2024 Report

• Bank of Canada expected to cut rates by 0.5% in October

• Sales in Metro Vancouver decline for the fifth consecutive month

• Highest number of Vancouver condo listings since 2012

• Buyers should act now before competition increases as rates fall further

September 2024 was a month of promises and uncertainty. The Bank of Canada cut its interest rate for the third consecutive time, and the U.S. followed suit with its first rate cut, a bold half-point reduction. Economic indicators point to another 0.5% rate cut from the Bank of Canada in October. Meanwhile, British Columbia heads to the polls in late October, adding political promises into the mix, particularly around housing affordability.

Buyers, however, seemed hesitant in September, waiting to see how these economic shifts would unfold. Sellers, on the other hand, flooded the market, with listings surging to their highest level since 2019. This created a window of opportunity for buyers to take advantage of the increased inventory before the anticipated rate cuts spark renewed competition.

For homeowners with variable-rate mortgages or lines of credit, September’s quarter-point cut reduced borrowing costs. While some expected a half-point reduction, it leaves room for further cuts in the Bank of Canada’s final two meetings this year. With inflation lagging, more aggressive cuts could bring the rate to 3.5% or lower by early 2025. However, buyers hoping for large fixed-rate drops may be disappointed, as bond yields—already factoring in expected rate cuts—have caused fixed rates to decline by more than 1.5% from their highs. Variable-rate mortgages now present the most significant savings, offering an advantage to buyers who act before spring competition intensifies.

Sales Trends and Market Dynamics In Greater Vancouver, 1,852 properties were sold in September, continuing the decline from 2,418 in June, 2,333 in July, and 1,903 in August. This marks a 4% drop compared to September 2023. Despite high listing volumes, many buyers are waiting for further rate cuts and government housing measures. The federal government's upcoming extension of mortgage amortizations and increased thresholds for insured mortgages offer some relief—but not until December, pushing even more buyers toward the spring market.

Sales were 26% below the 10-year average, with inventory levels offering buyers more choices than they've had since 2019. September brought 6,228 new listings to the market, a significant 48% increase from August and the highest number of new listings since May. Sellers were eager to enter the fall market, but buyer reluctance meant more homes sat unsold.

Condo and Detached Markets Greater Vancouver ended September with 14,932 active listings, up from 13,812 in August. Condos, in particular, saw the biggest jump in listings, with 39% more inventory year-over-year. Vancouver’s westside condos have the most active listings since 2012, sitting with 10 months of supply—partly driven by changes to rental and short-term rental regulations. On the east side, where prices are $200,000 lower on average, sales increased, leaving just five months of supply.

In the detached market, months of supply rose to 11, pushing some areas into a strong buyer’s market. As political debates and rate cuts dominate October, affordability remains the key issue for many. Buyers who act now can take advantage of the current inventory before the spring rush, while others will have to navigate a market primed for more competition as rates drop further.

September offered buyers increased choice, but the clock is ticking before the next rate cut triggers more activity. The market may be quieter now, but savvy buyers should move before the spring rush hits.

For more detail on your area contact me via email-kit@kitbrown.ca or by cell 778.828.9891

• Detached home sales in August down 18% to July

• Active listing counts declined except for Richmond, Coquitlam and Port Moody

• Lowest number of monthly sales since January

• Buyers ready for more interest rate cuts

August 2024 was a month of taking a break! Sales and listings slowed as many enjoyed the summer weather before the busy fall market. After five months of rising listings, August saw a sharp decline, reducing available homes.

The Bank of Canada reduced its key interest rate for the third straight time, lowering costs for variable-rate mortgage holders. While a half-point cut was expected, there’s still room for more reductions, with rates likely to drop further by year-end. Meanwhile, the U.S. has hinted at a September rate cut.

Fixed-rate mortgages, linked to bond yields, may not see an immediate drop, but further rate cuts could bring relief. With falling rates, buyer interest is expected to pick up, and 2025 will see many five-year mortgages up for renewal.

August sales hit 1,903, down from 2,333 in July and 2,831 in April. This marks the fourth month of declining sales. Buyers seem to be waiting for further rate relief, and while sales are down 26% from the 10-year average, there’s a sense that demand is building.

The number of new listings also dropped for the fourth consecutive month, with 4,199 new listings in August, down from 7,229 in April. Inventory is now closer to a buyer’s market, and many areas have shifted from seller’s markets.

Active listings have dropped slightly, signalling that the peak for 2024 may have passed. With 13,812 listings at month’s end, buyer choice will likely shrink as we move through the rest of the year.

The political landscape in B.C. has also shifted, with the B.C. United leader stepping down. Housing will be a major focus in the upcoming election, but whether either party can effectively address supply issues remains to be seen. The NDP's efforts over the past eight years have had minimal impact, and the current regulatory environment continues to challenge future housing supply.

For the full report of any or all specific neighbourhoods, please contact me @ kit@kitbrown.ca or 778.828.9891.

• Market Trends: High interest rates have slowed the economy and real estate sales. Active listings increased, with the second highest number of new July listings since 2008, creating buyer opportunities.

• Economic Overview: The Bank of Canada made a second consecutive interest rate drop in July, lowering it to 4.5%. Both Canadian and U.S. economies are slowing, affecting stock markets and bond yields. The U.S. is expected to begin rate cuts in September, potentially boosting buyer sentiment.

• Sales Data: In July, Greater Vancouver saw 2,333 properties sold, an 18% decrease from the 10-year average. Active listings reached 14,326, up 39% from last year. The sales to listings ratio is 41%, indicating a balanced market.

• Listing Trends: New listings in July were 12% above the 10-year average, with 5,689 new listings. Active listings are up significantly year-over-year, indicating more seller activity.

• Price and Inventory: The House Price Index in Greater Vancouver decreased by 0.8% month-over-month. Detached home listings increased by 30% year-over-year, townhouses by 49%, and condos by 47%.

• Regional Insights:

  • Vancouver Westside: 416 units sold, active listings at 3,040, HPI down 0.9% month-over-month.

  • Vancouver East Side: 263 units sold, active listings at 1,468, HPI down 1.2% month-over-month.

  • North Vancouver: 201 units sold, active listings at 740, HPI down 1.0% month-over-month.

  • West Vancouver: 59 units sold, active listings at 733, HPI down 1.2% month-over-month.

  • Richmond: 255 units sold, active listings at 1,563, HPI down 0.7% month-over-month.

The autumn market is shaping up for potential interest rate declines, offering promising conditions for buyers and sellers.

The first Bank of Canada rate cut since 2020 – now what?

• The Bank of Canada cut interest rates for the first time since 2020, providing a small relief for variable-rate mortgages and lines of credit. This could be a signal for buyers to re-enter the market, with more rate cuts potentially coming in July.

Active listings in Greater Vancouver are up 46% from last year

• Greater Vancouver saw a significant increase in active listings, up 46% year-over-year, with a notable rise in townhouses and condos.

Buyers are being patient; sales dipped in May

• Despite the influx of new listings, sales dipped in May, with buyers showing patience. Total sales in Greater Vancouver were down 20% from May 2023 and 3% from April 2024.

Watch the Micro Markets closely

• The market activity varies significantly across different areas and property types. For example, detached houses on Vancouver’s West Side remain competitive, while condos under $1 million are slower to sell.

Prices are relatively flat and some are down in the last 6 months

• Overall, prices have remained flat or have decreased slightly over the last six months, influenced by the increased supply and cautious buyer behavior.

Market Insights

• Sales and Listings Trends: Active listings in Greater Vancouver reached 13,600 by the end of May, up from 12,491 in April and 10,552 in March. New listings in May were 6,484, down from the April peak but still robust compared to historical averages.

• Micro Market Variations:

  • Vancouver Westside: Sales increased by 6% from April but were down 20% year-over-year.

  • Vancouver East Side: Sales decreased by 5% from April and 9% year-over-year, with active listings up 45% from last year.

  • North Vancouver: Sales were almost flat from April, with active listings up 55% year-over-year.

• Inventory and Supply: The overall months of supply in Greater Vancouver increased to 5 months, indicating a balanced market, though specific areas like North Vancouver and Port Coquitlam remain more competitive with lower months of supply.

• Buyer and Seller Dynamics: Buyers are cautious, likely influenced by the high-interest rates and anticipation of further rate cuts. Sellers, motivated by various factors including regulatory changes and capital gains, have increased listing activity, providing more options in the market.

Conclusion

The Greater Vancouver real estate market is in a state of flux, with a significant rise in listings and cautious buyer activity. The recent rate cut by the Bank of Canada could shift the dynamics, potentially spurring more buyer engagement in the coming months. However, the market's micro-variations mean that both buyers and sellers need to stay informed and adaptable to the ongoing changes.