The summer months are not typically the busiest months of the year for real estate activity; however, this summer has seen particularly low activity. With only 960 sales in the Fraser Valley Real Estate Board for the month of August 2022, we have seen a month to month decrease of 2.4% compared to July 2022, and a 51.3% decrease compared to a year ago in August 2021.  This is also 35% fewer sales than the 10 year average for the month of August.

New listings have been a little bit lower than we expect to see for this time of year, though not as drastically as sales number.  August 2022 saw 1,843 new listings come to market, down 16% compared to July 2022, and down 6% compared to August 2021. This is 20% fewer new listings in August 2022, compared to the 10 year average for the month.

These lower than average numbers make sense based on the current economy we are in. With quickly increasing interest rates, we can likely assume that prices will continue to drop accordingly.  Monthly payments on a home purchased in March 2022 (the peak of the market for prices) compared to monthly payments on a home purchased today are not that far off from each other based on the change in purchase price assuming the buyer is putting down 20% as a down payment. (Using Fraser Valley HPI benchmark prices and average bank posted 5 year mortgage rates, the average home would cost buyers $4,100 per month in March compared to $4,350 monthly today with a lower purchase price)

Market affordability (think monthly payments as opposed to purchase price) tends to fluctuate with supply and demand, prices go up when supply cannot match demand, prices drop when demand can’t keep up with supply, and things generally remain stable when supply and demand are balanced. In the Fraser Valley Real Estate Market, we measure this supply and demand with what is called the sales to active ratio. This compares the number of homes sold in a given month compared to the number of homes that are listed for sale. Anything from 12%-20% is considered a balanced market, below 12% is a buyer’s market and above 20% is a seller’s market. Overall the Fraser Valley is in a balanced market, however, if we break things down by property type we are actually still technically in a seller’s market for condo’s and townhomes, each with a ratio of 25%. Detached homes have seen the biggest slowdown overall and are currently sitting at the threshold of a buyer’s market with 12% sales to active ratio. This disparity is likely due to affordability, as detached homes tend to be more expensive than attached homes. Anyone who can afford to buy a detached home can also afford a townhome, but that is not necessarily true the other way around.

So, what does all this mean for you?

As I always say no matter what the market is doing, the best time to make a move is when the time is right for you. If you are just looking to buy a home, the ratio of interest rates vs purchase price is going to dictate the best time to do so, and as we already touched on earlier, these numbers have recently been aligned quite closely. This means that today could be a lucrative time to buy as prices are down, but there is not necessarily a ton of pressure to rush into a purchase as affordability (interest rates vs purchase price) are remaining somewhat stable.

If you are looking to sell and upsize, now could be a good time to do so also, as you likely have increased the equity of your current home to help with downpayment on your next place. Depending on the structure of your current mortgage, you could be in for some fairly drastic increases in monthly payments with the new mortgage, but if your current mortgage is up for renewal soon, you are going to see that on your current home as well.

If you are considering downsizing, I would actually suggest you make a move happen sooner than later. If you are downsizing it is more likely that you are going from a detached home to a townhouse or condo, and as we already touched on, houses are dropping quicker than other home types. It is also more likely in this scenario that you will not be getting a large mortgage, as you will likely be using the proceeds from the sale to finance most of your purchase. If prices of your home are dropping faster than what you will be buying into, and we are not concerned about high interest rates, you will likely net more money in your pocket today than in the future.

In all of these situations above, we are just making assumptions based on recent trends. I don’t have a crystal ball to see into the future, so I cannot make bold predictions on what will come. Whatever your real estate plans are, be sure to get in touch soon to start making your unique plan to make your next move as stress free as possible.