March 2022 – Fraser Valley Real Estate Market Snapshot

Normalization, Beware the Ides of March

March 2022 has brought a lot with it. It came in like a lion, however, has not gone out like a lamb. With civil unrest in Europe, rapid inflation, increasing interest rates and of course government intervention (on the wrong issues per usual) are making us all wonder where we will end up.

Let’s start by looking at the latest MLS statistics for March. The market is clearly balancing or normalizing. It is still what would be considered a seller’s market, just not as hot and fast-paced as it was over 2021. This is most likely great news for many buyers; however, sellers have no need to panic as markets as seen over the last year are rare. With inventory is up in all 3 sectors when comparing how many units were available in March compared to February this year. However, when looking at the inventory from March 2021 compared to March 2022 both the condominium and single-family sectors are down by 1% and 2% respectively. The townhome sector is the only one with both months over month and year over year increases in inventory. The number of sales in all three sectors increased in March over the month of February, however, when comparing the number of sales in March 2022 to March 2021 the number of actual sales has decreased in all 3 sectors but most significantly in the single-family sector seeing 34% fewer sales in 2022 than 2021 and 19% fewer townhome sales. Condos decreased but only slightly by 1% when compared to March 2021. Last but not least the average sale prices for each home type have decreased slightly over the last month when compared to prices in February of 2022.  However, when looking at the average price from year to year all product types are up by 27% to 36%.

What does all this mean in the wake of the newly announced federal government budget and the BC NDP’s new cooling-off period announcements?

The answer on these two fronts is probably not much as none of the items set forth are having a real effect on today’s market or even the market, we just had over 2021. There have been very few if any foreign ownership purchasers as covid restrictions and immigration closing made this near impossible for most over the last 2 years. Banning them for another two years is not going to change anything as they have had no impact on our market since about March 2020.

The 5-day cooling-off period won’t affect a hot market.  Most people can’t get a mortgage in 10 days let alone 5 over the last 2 years, same with booking a home inspection or anything else, so giving people 5 days to cool off (not unlike pre-sales where they already have 7 days for this for a decade or so now). It will simply mean accepting a backup offer on the same day as the first offer. Or it could heat the market further. The government is testing open bidding with test cases across the country. Not sure why they are not just studying New Zealand where they already implemented this and could save 90% of the costs associated but that is our government. Let’s see what happened in New Zealand for fun though.  When a property went into multiple offers, they are registered for all to see. This just made it easier for others to outbid each other and made their market increase at an even faster pace. The opposite of the intention.

The first of a series of interest rate increases happened last month and another is pending.  Due to the stress test being 5.25% this has not affected anyone with less than 20% down as prime is still 2.70% and depending on one’s credit will receive a mortgage of plus or minus prime (2.70%) but still must qualify at 5.25% for the government unless you have more than 20% for the down payment.  Interest rate increases are not too bad, and rates are still historically low.  We do need to watch if the government changes or increases the stress test, as this is when the buying power of those with less than 20% down will really start to be affected.

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