the rennie review - August 2023

vancouver ’ s housing market, under the macroscope As the vice on housing supply loosens, and the one on demand tightens, Vancouver’s housing market is moving in the direction of more balance. Despite this, interest rates and home prices are conspiring to make housing more expensive.

more expensive to own (thus, some are listing their homes for sale) and more difficult to sell at the price they desire. To put a finer point on the recent impact of interest rates (and changing prices), it cost $550 per month to borrow $100,000 (at a 4.39% five-year fixed mortgage rate over a 25-year amortization) at the beginning of this year; as of today, that same loan costs $595—an 8% increase. Compound that by the rising price of homes—the composite benchmark price in the Vancouver Region is up 10% from the start of 2023—and it’s easy to understand why we’re seeing our housing market evolve the way that it is. With home sales having sluggishly gotten out of the gate in August while new listings remain elevated compared to last year, we anticipate that our housing market will continue to be driven by macro-ality—i.e. interest rates (and jobs, though we’ve run out of space here so we’ll leave a discussion on the latter for another day)—for the rest of this year and into next.

As we anticipated in this column last month, housing sales in the Vancouver Region slowed in July while inventory, as a result of decreased demand (and more new listings), continued to expand. Directionally, these changes are mostly in line with the expected seasonal trend; the magnitude of the market adjustments, however, reveal the “macro-ality” in our market—that is, the outsized influence that inflation (indirectly) and interest rates (more directly) are imposing. Let’s consider some specific numbers. Home sales across our market dipped by more than 1,000 between June and July, landing at just over 3,700 last month. While sales typically do decline between these two months (by 9%), this year the drop was 22%. In other words, a good number of buyers just ghosted last month—way more than is typical.

On the inventory front, listings rose for the 6th straight month—the first time that’s happened since 2019. Furthermore, while inventory typically remains stagnant into and through the summer months (in fact, contracting by 0.1% between June and July, per the past 10-year average), it rose by more than 3% this past month. This provided a bookend to an interesting trend that emerged through the first half of the year: MLS inventory in the Vancouver Region rose more in Q2 (by 23%) than in Q1 (11%) for only the 4th time in almost 35 years (and one of those times was during the first few months of the pandemic). These changes we’re experiencing are clearly atypical, reflecting less a seasonal cadence and more the tightening vice grip of interest rates: buyers are finding it more expensive (read: difficult) to purchase, and owners are finding it both

Copyright © 2023 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of August 3, 2023. All data from Real Estate Board of Greater Vancouver and Fraser Valley & Rennie. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of companies. E.&O.E. 4

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