Tariffs – They’re on everyone’s mind right now, as we know they could cause another inflationary event, much like the last couple of years that we are still recovering from. Pair the potential looming tariffs with uncertainty in our own federal leadership, mixed in with all the other economic turmoil, it’s no wonder sales have been slow through the first month of 2025.
 
With 730 residential sales recorded in the Fraser Valley Real Estate market in January 2025, we saw a month-to-month decrease of 16% compared to December 2024, a 13% decrease compared to January 2024, and 21% fewer sales than the 10-year average for the month.
 
 New listings, on the other hand, are up, with January 2025’s 2,883 new listings reaching a year-to-year increase of 51% and an increase of 52% above the 10-year average for the month. All these new listings, paired with below-average sales numbers, have brought total inventory numbers up to a seasonal 10-year high, with 5,396 homes available for sale at the end of January 2025 (57% higher than January 2024 and 67% higher than the 10-year average for January). As I’ve mentioned in past newsletters, we should be seeing inventory increase every year as we continue to build more homes.
 
If we look at both the number of sales and the total active inventory, we get our sales-to-active listings ratio, or how many homes out of every 100 listed actually sell. January is still technically in a balanced market, with 14 of every 100 homes selling. Anything below 12% constitutes a buyer’s market, and above 20% is a seller’s market. If we break this down by property type, we can see that only 10% of detached homes sold, making detached a true buyer’s market. Condos came in at 14%, considered balanced, and townhomes barely maintained a seller’s market with 20%. Townhomes have been the “hottest” selling property type for most of the last several years, likely due to the fact that we see a lot of townhome buyers moving up from a condo or downsizing from detached homes.
 
Overall pricing has remained quite stable, despite the slow activity levels, with prices remaining in the same relative range for nearly two years now. Will things be different this year? That really is going to depend on a lot of different factors. We have seen inventory steadily rise over the last three years since interest rates started increasing in March 2022, due to both lower-than-average sale numbers and higher-than-average new listings. As we know, the laws of supply and demand dictate that prices should decrease if the supply continues to grow and the demand continues to wane. The big question here is: What does the actual demand look like for the coming months?
 
If buyers continue to wait, we could see prices slip through the year, but we do know that there is certainly a lot of pent-up buyer demand, just waiting for something to change. If we suddenly get more typical sales numbers throughout the spring, we will likely see prices increase slightly.
 
Of course, there are a lot of factors working behind the scenes that will have large effects on how the next few months play out. The biggest question on most Canadians’ minds right now has to do with the potential trade war we are facing with looming tariffs. If the tariffs do happen, we are sure to see inflation take off again.
 
Although we just dealt with a large inflationary event over the last few years caused by a high demand for goods, this flavour of inflation could be different. Without getting into the nitty-gritty details of it, inflation caused by artificial price inflation (i.e., tariffs) is more likely to cause interest rates to decrease instead of increase, as they did a couple of years ago. If this does happen, we will potentially see mortgage rates dip back down to “too good to be true” numbers, which could cause another buying surge. The other side to this, though, is that the crunch on the average Canadian wallet will certainly be felt and may cause buyers to be less willing to put the same percentage of income toward housing as we were doing back in the pre-inflation days. We’ve witnessed this happen over the last year as interest rates fell and prices came down with them. From a mathematical viewpoint, we should have seen prices increase as interest rates decreased, but we saw the opposite happen due to buyer sentiment rather than policy.
 
If you are looking to make a move, despite all the uncertainty, it could still be a decent time to do so, depending on your situation. Interest rates are low and forecast to continue to decrease, whether or not a trade war happens. It is, of course, possible that we do see prices decrease further if we continue to see inventory levels build and sales stagnate; however, there will likely be a breaking point when prices are too attractive, causing buyers to jump back into the market.
 
With such a complex market, working with a REALTOR® is more important than ever. If you are considering a move, let’s chat, and we can weigh the options to see whether moving sooner or waiting is the better plan for your situation.