For the third month in a row, we have continued to see the market take a complete 180 degree turn from the record breaking sales and increasing prices we saw over the pandemic, and both prices and sales numbers continue to decrease.

June 2022 saw a total of 1,281 sales, a decrease of 5.8% compared to May 2022 and a 43% decrease compared to June 2021 and coming in with 32% fewer sales than the 10-year average.  Couple this with the 3,110 new listings received in June 2022 (8% more new listings than June 2021 and 9% fewer than May 2022) to bring the total inventory up to 6,074 it is safe to say that the inventory crisis we saw for the last year is over.

With sales down and listings up, it brings us to the sales to active listings ratio.  Overall, for all property types, 20 out of every 100 homes listed were sold in the month of June 2022.  Anything above 20% is a sellers’ market, 12%-20% is a balanced market, and below 12% is a buyer’s market.   If we break this down a little further, it shows that demand is a bit higher on the attached side of things, as single family detached is selling 13/100 homes listed, condos are selling 31/100 home listed and townhouses 27/100 homes listed.  It is also worth pointing out that certain areas and home types actually fell into a buyer’s market (North Surrey single family only homes 7/100 homes listed sold)

There are likely many factors that have led the market to where it is, and with interest rates on the rise, it is probably safe to say that interest rates are a driving factor of the changes. Without getting into complicated math, an $800,000 mortgage with a $200,000 down payment costs an additional $900/month for mortgage payments today than it did just 5 months ago.  While prices are slipping, affordability is actually staying somewhat stable as monthly payments on today’s lower prices are very similar to the monthly payments buyers who got into their homes at a higher price a few months ago.

Overall, I do expect affordability to remain somewhat stable over the next few months, meaning that any more interest rate increases will likely cause house prices to fall further.  We still have not seen the effects of the most recent 1% prime interest rate hike announced earlier this week, but I do suspect that it may actually stimulate some activity in the market for the short term, as buyers who are locked in at a lower rate will quickly start to run out of time to purchase at their lower rate. 

Many people think that there may be more drastic price decreases on the horizon, which I will say is certainly a possibility, but I do not personally believe this will happen.  There is a lot of speculation in our market and every time things have slowed down like this in the past, they pick up again within a year or two. I think that the history of our market, and the fresh memory of many homeowners seeing their net-worth shoot up recently will keep enough interest for speculators to keep the market afloat.  Couple this with fewer people qualifying for mortgages, rentals could increase quite drastically in the near future, which would also stimulate investors to pick up more properties keeping the market prices up.  Last of all, there is still a lot of demand and a lot of people looking to purchase their first home despite what is happening to the market. With all these factors together, I think we will see prices continue to slip by smaller amounts for the next few months before reaching stability again next spring.

Overall this does not mean it is a bad time to buy or sell.  If you are both buying and selling, it is mostly all relative as your lower price you sell for will also result in a lower purchase price for your next home.  If you are looking to sell, it is not going to be quite as lucrative as it would have been a few months ago, but you will likely net more today than you will next month.  If you are just looking to purchase, it may be better to do so sooner than later if interest rates are to rise any more than they already have.

In a market like this, a personal plan for your next move is more essential than ever, so be sure to reach out if you are thinking of making a move any time soon. It’s never too early to start planning!