July 2023 – Fraser Valley Real Estate Market Snapshot

July 2023, More Market Uncertainty

Bank of Canada’s Rate Hike

In mid-July, the Bank of Canada (BOC) increased the prime interest rate to 5%, hinting at a potential further increase in September. Despite inflation dropping to 2.8% after the July hike and stabilizing at 3.3% by August, interest rates are expected to rise until inflation approaches the BOC’s goal of 2.5% by mid-year 2025.

Impact on Home Buyers

The rate changes reduce the buying power of every potential homebuyer. Continued supply chain issues have also kept the cost of new supply relatively unstable. Additionally, the “summer slowdown” phenomenon sees fewer people considering moving during this time, impacting market activity.

Market Performance in July

July saw a decline in sales by 42% compared to June 2023, primarily due to rising interest rates. However, sales are up by 35% compared to the same time last year, resulting in increased single-family inventory available for sale.

Performance of Multifamily Options

Townhomes and condominiums experienced a summer dip in sales compared to June but showed improvements from July 2022. The average price of a townhome remains unchanged from July 2022, while condominiums experienced a slight increase of about 1%.

Outlook for August and Beyond

A further slowdown is expected for August, with potentially minor price drops. Interest rates are anticipated to remain stable, but the possibility of further increases exists. Municipalities are awaited to share their plans for updating approval processes to increase supply and moderate price increases.

Anticipated Government Actions

The provincial government’s announcement of each municipality’s target for increasing supply is eagerly awaited. Implementation of these targets could add supply to the market but may also put downward pressure on home prices once executed. Observations will continue to monitor the unfolding developments.