Home Buying, Market Intelligence, Peerage Partners, Real Estate News
August 2023, Summertime Blues
On September 7, 2023, the Bank of Canada (BOC) maintained the prime rate at 5%, keeping it unchanged since the last increase in mid-July. Future rate increases appear imminent as the BOC battles inflation, aiming to reach 2.5% by mid-2025. Nevertheless, they have provided Canadian consumers a slight break for the back-to-school season.
With rates held steady for now, there is confidence that buyers can plan and purchase a home before the next increase. Buyers are cautioned to thoroughly assess their financial situation and consult with a mortgage broker. This will help them secure the most favourable rate and make an informed decision on whether to opt for a variable rate (bearing the risk of potential rate increases and higher payments) or a fixed term (bearing the risk of rates potentially decreasing before the term ends). This ensures their financial position can accommodate the change in payment and that they are prepared if rates go down.
As mentioned in last month’s issue, August is typically the slowest month of the year in any real estate market, next to December. This makes the statistics for this month not surprising at all, with sales down anywhere from 3 to 15 percent depending on the product type compared to last month’s sales. However, sales for all three product types are up between 12 and 36 percent compared to August 2022, indicating a stronger market for 2023 overall despite the expected dip in August sales.
Interestingly enough, when comparing last month to this month, single-family home prices have seen an overall increase of about 1%. On the other hand, both Townhomes and Condominiums have experienced minor price decreases of 0.3 to 1.4 percent, most likely to incentivize a summer sale. Year over year, all three product types have shown an increase in average value by 3 to 7 percent. The average price of a single-family home in the Fraser Valley is about $1.56 million for August 2023.
We anticipate no significant market changes for the first half of September, with the focus shifting towards back-to-school preparations, settling back after vacations, and embracing the ‘get back at it’ attitude that is common during this time of the year. We expect to see the market pick up sometime in mid to the end of September as typically seen in normal Fraser Valley real estate markets.
Just like last month, we are all still eagerly awaiting updates from targeted municipalities regarding their plans to update and create efficient approval processes, aiming to bring more product to market simultaneously or increase supply to help moderate price increases overall. While this could positively impact supply, it may also put more downward pressure on home prices once strategized and implemented. We will have to wait and observe what unfolds, and we will provide a more comprehensive update next month.
Market Intelligence, Peerage Partners, Real Estate News
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Home Buying, Market Intelligence, Real Estate News