2023 Home Sales Decline Below Long-Term Averages and Inventory Remains Low in Metro Vancouver
The Metro Vancouver Real Estate Market experienced a slowdown in January 2023. Home sales have dipped well below monthly historical averages and inventory remaining low. According to the Real Estate Board of Greater Vancouver (REBGV), residential home sales in the region totaled 1,022 in January 2023. This is a significant 55.3% decrease from the 2,285 sales recorded in January 2022. It is also a 21.1% decrease from the 1,295 homes sold in December 2022.
Last month’s sales were 42.9% below the 10-year January sales average, but this is not surprising given the current market conditions. According to Andrew Lis, REBGV’s director of economics and data analytics, “Due to seasonality, market activity is quieter in January. With mortgage rates having risen so rapidly over the last year, we anticipated sales this month would be among the lowest in recent history.”
However, there is hope for the market moving forward. The Bank of Canada has stated that it will pause further rate increases as long as the incoming economic data continues to support this policy stance. This should provide more certainty for home buyers and sellers in the market and help the market recover.
In terms of inventory, there were 3,297 detached, attached, and apartment properties newly listed for sale on the Multiple Listing Service (MLS) in Metro Vancouver in January 2023. This represents a 20.9% decrease compared to the 4,170 homes listed in January 2022, but a 173.4% increase compared to December 2022 when only 1,206 homes were listed. The total number of homes currently listed for sale on the MLS system in Metro Vancouver is 7,478, a 32.1% increase compared to January 2022 (5,663) and a 1.3% increase compared to December 2022 (7,384).
The sales-to-active listings ratio for January 2023 was 13.7% for all property types, which includes a 10.2% ratio for detached homes, 13.4% for townhomes, and 16.7% for apartments. Generally, a downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices experience upward pressure when it surpasses 20% over several months.
According to Lis, “We know the peak for prices in our market occurred last spring. Over the coming months, year-over-year data comparisons will show larger price declines than we’ve been reporting up to now.” He goes on to explain, “It’s important to understand that year-over-year calculations are backward-looking. These price declines already happened, and what we are seeing today is that prices may have found a footing, even if it’s an awkward one sandwiched between low inventory and higher borrowing costs.”
The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,111,400, representing a 6.6% decrease over January 2022 and a 0.3% decrease compared to December 2022.
Detached home sales in January 2023 reached 295, a 52.6% decrease from the 622 detached sales recorded in January 2022, with a benchmark price of $1,801,300. This represents a 9.1% decrease from January 2022 and a 1.2% decrease compared to December 2022.
Apartment home sales reached 571 in January 2023, a 56.6% decrease compared to the 1,315 sales in January 2022.
Despite the decline in sales, the Vancouver real estate market remains competitive and sellers are still seeing success in the market. While it’s true that the number of sales has decreased and inventory remains low, the number of newly listed properties has increased compared to the previous month, and the total number of homes currently listed for sale on the MLS® system in Metro Vancouver is up by 32.1 per cent compared to the same time last year. This is good news for home buyers who are looking for more options and variety in their search.
It is important to note that the sales-to-active listings ratio for January 2023 is 13.7 per cent, which is above the downward pressure threshold of 12 per cent. This means that even though sales are down, the market is still active and prices are not likely to experience significant downward pressure.
Even though we’ve seen an increase in mortgage rates over the past year, the Bank of Canada has announced that it will pause further rate increases as long as the incoming economic data supports this policy stance. This provides much-needed certainty for home buyers and sellers in the market and can help boost confidence in the Vancouver real estate market.
Overall, the current state of the Vancouver real estate market can be best described as a market in transition. It is a good time for home buyers to take advantage of the lower prices and wider selection of homes, and a good time for sellers to be strategic in their pricing and marketing efforts.
As a real estate agent in Vancouver, it is important to stay informed about the latest market trends and conditions. By doing so, you can provide valuable insights and guidance to your clients, helping them make informed decisions about buying or selling a home in the Vancouver area. Whether you are a seasoned veteran or a new agent, it is always a good idea to stay informed and stay ahead of the curve in the ever-changing real estate market.