Monday, December 11, 2023 / by Derek Turci
2023 in the Review Mirror
It feels like just yesterday I was wrapping up my last year in review, and here we are again, ready to delve into the highs and lows of another eventful year in real estate.
Chapter 1 - A Rocky Start
The year started off with a fizzle with January being one of the slowest months on record with only 1,031 total sales for Greater Vancouver; less than half the sales from January '21! The preceding months hadn't been a walk in the park either, with a fall market that barely materialized and quickly sputtered out as interest rates continued to climb.
However, a glimmer of hope appeared in early February. Buyers, enticed by the allure of significant discounts and stable rates, made a swift comeback. In the blink of an eye, prime deals were snatched-up, and inventory levels plummeted. This set the stage for the next chapter.
Chapter 2 - Where have All the Houses Gone?
The market swiftly transformed from a bust to a boom, with buyers scrambling to snatch up the last of the lingering deals. Those who hesitated found themselves in a barren wasteland of scant inventory. A new listing became a coveted oasis, triggering the return of the MULTIPLE OFFER SITUATION! Buyers once again found themselves competing, being forced to waive subjects and bid well above asking price. Before long, prices were nearing pre-rate hike levels, and home sellers were back in the driver's seat. However, the Big Bad Bank of Canada had other plans...
Chapter 3 - Where Have All the Buyers Gone?
Wanting to take a few more pokes at the inflation dragon, the sadistic BOC raised rates two more times. Sticker shock ensued as prospective buyers, now having to qualify at over 9% thanks to the stress test, received disappointingly low pre-approvals combined with shockingly high monthly mortgage payments. Sales slumped and inventory piled up, but prices remained stubbornly high resulting in buyers exiting the market.
Chapter 4 - The FutureAh yes, it's time to pull out the dusty, trusty crystal ball! As always, no one knows what the future will bring but here are some things I'd take into serious consideration.
1) Rates and Recession: Canada is teetering on recession and this will influence whether rates will continue to go up, remain stable or go down. Remember that home prices are inversely related to rates. Once rates start coming down, you can expect prices to go up.
2) Pent-up demand: One thing we can confirm with absolute certainty is that there are a lot of buyers who are "waiting to see what's going to happen." History doesn't necessarily repeat itself, but it sure does rhyme! Buyers who sat on the sidelines last October to January sure regretted their decision by February. The same can easily happen next year.
3) Immigration: Another thing we can count on is that there will be more people living in Canada next year than this year and these new comers will be looking for homes. This may not have an immediate impact on housing demand as most immigrants have no credit score, no work history and little savings. However, in a few years, we can expect new immigrants to have a more pronounced impact on demand. In 2022, Canada brought in 437,180 immigrants and built 261,850 homes. Do the math.
4) Elections: Canada will go to the election polls on October 25, 2025, so get ready for a year of dry, boring, Canadian political ads! As the parties battle it out, they'll be vying to get an edge in the polls by dangling promises of tax cuts, housing strategies and other buzzwords guaranteed to annoy and bewilder the average Canadian. The shiny objects presented to us will likely have an impact on how the real estate market will perform next year.
Chapter 5 - OpportunitiesI hate to see great opportunities go to waste. I truly want all of my clients and friends to succeed in fulfilling their dreams of building a wealthy foundation for their family's future. I believe that 2024 could be a year of great opportunity and here are some of the top reasons why.
1) Discounted Homes: With November sales 33% lower than the 10-year seasonal average, and inventory building up, buyers have the highest levels of selection since 2021. This creates a rare opportunity to shop around and get a fantastic price.
2) Time to Upsize: Home owners who have lived in their home for a while are in the best position to buy up, especially if they currently own a townhouse. Townhouses are the most sought after type of home and still sell fast if priced right creating an opportunity to sell in a strong market and buy in a slow one.
3) The Smart Money: In real estate, it pays to be a contrarian as long as your investment timeline is long enough. Our wealthiest clients got that way by buying real estate when everyone told them not to and selling when everyone was panicking to buy. The smart money is made when fear runs high, the economy looks bleak and the "experts" forecast doom and gloom. December & January are when smart investors are best positioned to time the market and buy when everyone else is too busy getting ready for the holidays. But just like Black Friday, these deals won't last for long!
We hope you found this newsletter fun, informative and valuable. We wish you all a happy holiday season and a successful new Year!