Tuesday, September 5, 2023 / by Derek Turci
August 2023 Real Estate Insights: Unraveling the Impact of Rate Hikes on Sales and Prices in Greater Vancouver
Your Market Update for August 2023
Sales activity slid for three consecutive months over the summer period following the typical seasonal cycle of the GVRD. In August, sales totalled 2,296 for Greater Vancouver which is 22% more sales when compared to the same time last year and 14% below the 10-year average.
With 2 recent rate hikes coinciding with the aforementioned seasonal cycle, it's hard to say with full certainty how much of the slowdown can be blamed on the Bank of Canada's ruthless campaign to curb inflation and how much is simply because of the typical lull we experience over the summer months.
As Andrew Lis, REBGV’s director of economics and data analytics said. “It’s been an interesting spring and summer market, to say the least. Borrowing costs are fluctuating around the highest levels we’ve seen in over ten years, yet Metro Vancouver’s housing market bucked many pundits’ predictions of a major slowdown, instead posting relatively strong sales numbers and year-to-date price gains north of eight per cent, regardless of home type.”
REBGV Median sales price May 2023 & Aug 2023
The Impact of Recent Rate Hikes on PricesIt's now been some time since the last rate hike so we can see if they've had any real impact on median prices. Median prices remained mostly flat with only a slight decrease from May to August which seems to fly in the face of basic common sense. Certainly, the recent decrease in prices doesn't come close to matching the reduction in buying power that's been caused by buyers having to qualify at higher rates. So, how is it that purchasing power keeps dropping, yet prices continue to remain relatively stable?
Aug 2023 Inventory levels are 50% less than Aug 2012
Reduced sales activity doesn't necessarily translate to reduced prices if there's a shortage of supply. We are still experiencing extreme inventory shortages with nearly 11% fewer listings in August when compared to the same time last year. To put this in perspective, in August 2012, there were 18,821 active listings in Greater Vancouver. In August 2023, there were 9,447 active listings. Meanwhile, the population of Metro Vancouver in 2012 was 2.347 million people. Today, it's estimated at 2.657 million. That's a 13.2% increase in population and a 50% decrease in inventory!
With another announcement scheduled for tomorrow, we'll have to see if this trend continues or if we'll finally start seeing a slip in prices.