Thursday, January 4, 2024 / by Derek Turci
Your Market Update for December 2023
Welcome to 2024!
We hope you all had a fantastic holiday season, and that your new year is starting off with a bang! For all you sci-fi fans out there, we are now living almost 9 years after Back to the Future 2, 5 years after Blade Runner took place, and we're only 4 years away from 12 Monkeys!
As expected, December was a slow month with a total of 1,336 sales in Greater Vancouver. This figure was 3% higher than the same time last year. Currently, detached homes favour buyers at 12%, while condos and townhouses slightly favour sellers at 22%. Overall, the region is balanced at 18%.
Although these numbers may seem as bleak as a summer's day in Blade Runner, there are signs that things might be starting to shift.
Stable Rates & Increased Buyer Activity
We noticed an uptick in buyer activity shortly after the Bank of Canada made its rate announcement. This was especially true in the Fraser Valley and is reflected in the Sales-To-Active Ratios, which increased from 14% in November to 19% in December.
Low Inventory & Pent-Up Demand
Inventory levels in Greater Vancouver and the Fraser Valley took a nosedive in December, dropping from a combined total of 16,553 in November to 11,472 in December—a 36% drop. While it's normal for inventory to dip during the holidays, these numbers put us almost on par with last year's low levels. Additionally, a large number of buyers are currently on the sidelines.
Steady Correction
Home prices have been gradually slipping since September, especially in the Fraser Valley. The average detached home peaked in August at $2.346 million in GV and is now down to $2.064 million. In the Valley, the average detached home peaked at $1.663 million in June and is now sitting at $1.441 million. These represent average sales price changes of -13% and -14%, respectively.
Balanced Market
We're currently in a balanced market, making for a low-stress house shopping experience. Buyers have plenty of selection and can negotiate on price and conditions, making this an attractive time to start looking. We suspect more buyers could be encouraged by these favourable conditions over the next few months.
The Stand-Off
This market reminds me of an old western where the two opposing sides form up for the final stand-off. The sides in this case are buyers and sellers, and the characters have had to endure many struggles. Now they are faced with the following:
- Prices are down.
- Market conditions are attractive to bargain hunters and investors.
- Many sellers have endured numerous price drops.
- Inventory suddenly dropped.
- Many buyers are on the sidelines due to affordability challenges.
- Expectation that the worst of the rate hikes is behind us.
- Expectation of future rate drops.
In our opinion, it might just take a few small flinches to set things off. Rates drop or even just remain stable, leading to a rush to the market like we saw last February. Alternatively, buyers may simply continue to stay away, resulting in further correction. I guess we'll just have to see who draws first!
