As we know, predictions are difficult, particularly about the future! In my previous e-news I discussed some of the factors at play in the local real estate market. At the time it was anyone's guess as to how early 2023 was going to play out. By this time however we have enough of the year behind us to see some consistency.
The most consistent factor we’re seeing at this time is the extremely low level of homes for sale in every category, at every price point. If you’re thinking of selling, and can arrange your life to sell your home and not worry too much about buying your next home, you'll be sitting in a good place indeed. But of course who doesn't worry about buying their next home?
You do have some options that could allow you to be relatively worry free while you look for your next home. The most realistic of these is to temporarily rent while you search. Many sellers are resistant to this stop-gap option. But before you dismiss this out of hand for your situation, please contact me to discuss. This strategy has worked well for several of my clients, and can be a viable “Plan B” stress-reliever in any type of market.
If you’re comfortable temporarily renting, you'll have time on your side to pick and choose your next permanent home, vs scrambling with the ticking clock of your current sale nearing completion, and therefore perhaps compromising with your next home. Or you can just stay where you are, and wait and see! This is what most homeowners seem to be doing these days.
Usually with my e-news I present my own analysis of the current market situation. However the most recent news release from The Real Estate Board of Greater Vancouver succinctly addresses the situation so well that I thought I'd quote a few lines from it directly below (italics), with some of my commentary added.
With listing activity remaining below historical norms, home sales in Metro Vancouver have mounted a surprising comeback, rising near levels seen last spring, before eight consecutive interest rate hikes eroded borrowing power and brought home sales activity down along with it.
Across all detached, attached and apartment property types, the sales-to-active listings ratio for April 2023 is 32.7 per cent. By property type, the ratio is 24.4 per cent for detached homes, 40.1 per cent for townhomes, and 37.4 per cent for apartments. Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period [a so-called “buyers’ market”], while home prices often experience upward pressure when it surpasses 20 per cent over several months [the quintessential “sellers’ market”].
These sales ratios are indicative of a very strong sellers’ market, particularly for townhouses and condos. Any desirable property priced and marketed properly will quite likely see multiple offers. This is just the classic supply/demand conundrum. And keep in mind these ratios are averages across Metro Vancouver. Homes in many neighbourhoods will have much higher demand vs supply than even these relatively high numbers. Virtually every deal I've been involved with this year has been a multiple offer scenario.
“When we released our market forecast in January, we were one of the only organizations taking the contrarian view that prices were likely to appreciate in 2023,” Andrew Lis (REBGV Director of Economics and Data Analytics) said. “And what we’re seeing unfold so far this year is consistent with our prediction that near record-low inventory levels would create competitive conditions where almost any resurgence in demand would translate to price escalation, despite the elevated borrowing cost environment. At the crux of it, the issue remains a matter of far too little resale supply available relative to the pool of active buyers in our market.”
Nothing stays the same forever. But at this point it’s difficult to comprehend when our current low inventory / high demand situation might ease. Stay tuned.