February 2023 – Fraser Valley Real Estate Market Snapshot

February 2023…A blast from the past. Does it feel like 2019 to anyone else?

When reviewing this month’s statistics in detail, you will see year over year comparisons with the number of sales being eerily close to the absorptions experienced back in February 2019. This month’s report clearly indicates the market bottom and the start of a new rising market for all product types across the board.

Some areas are still doing better than others, simply based on the amount of supply of any particular product type in a particular neighbourhood. Those with homes to sell in areas with less supply are having an easier time of it than those in neighbourhoods with more competing supply available. In some cases, there have even been a few multiple offer situations arise again on homes in areas with scarcity. Townhomes are now in high demand among buyers, which means sellers have the upper hand in the market, while other types of properties are experiencing a more balanced market.

That being said, the numbers are all on the up and up when compared to last month. To achieve the higher absorption rates observed from Q4 2022 until the end of February 2023, prices have been reduced by 14 to 25 percent compared to the same period last year.

The Bank of Canada has refrained from increasing interest rates, but has not yet decreased them either. However, there are speculations in the news that the Bank of Canada might reduce interest rates in the near future. If rates start to decrease, this will help with affordability by increasing the borrowing power of many. This could give those who have been pushed out of the home buying market a new opportunity at ownership altogether, being able to upgrade their potential home purchase or simply to see lower payments than anticipated on the home of their choice.

As we all get used to this new landscape of new rules and regulations, we will get familiar and comfortable with new processes and systems aimed at protecting buyers and sellers, while improving the integrity of our industry as a whole. While most of the changes now in place do not actually help buyers as advertised by our government, we can use these new laws to make ourselves better by delivering more qualified buyers to sellers. Time wasters now have a repercussion to sellers. Subject clauses are still needed to ensure buyers have sufficient time to arrange important items such as financing, home inspections, etc.

Currently, foreign buyers are banned from purchasing homes for a period of two years. This is unlikely to have a significant impact on the housing market, at least in British Columbia where less than 1.5% of all home sales over the last hot market were made by foreign buyers. What it will do is make it harder for developers to continue to bring supply to the market by limiting where they can gain corporate funding from to buy and develop land to create more housing for local buyers.

As the market conditions improve and interest rates start to come down, a major supply issue may arise in the next couple of years, resulting in a new market with elevated costs and limited supply due to the partial restriction of our supply funding.  The well-intentioned policies of our current government may ultimately have an adverse impact on all of us by reducing the available supply as demand surges. We will have to wait and see.