Market News 2023-07

In Metro Vancouver's housing market, the benchmark price for all home types increased in June 2023 due to high buyer demand and limited inventory. The apartment segment showed significant strength, with prices nearing the peak of 2022 and sales surpassing the region's ten-year seasonal average, unlike the attached and detached segments. Despite a decrease of 7.9% in total listed homes from June 2022, there's a continued month-over-month price increase across all segments due to insufficient resale inventory relative to the pool of buyers.

In June, the Fraser Valley real estate market experienced a 51.1% year-on-year increase in sales due to high demand and low supply, despite anticipated rate hikes. The number of new listings increased slightly by 2.8% compared to last year but active inventory was 8.2% less than June of last year, further fueling price increases. The benchmark prices for single-family detached homes, townhomes, and apartments all rose compared to May 2023, but showed decreases when compared to June 2022.

In response to higher-than-expected inflation and strong economic growth, the Bank of Canada is expected to increase interest rates, potentially causing a slowdown in the economy as higher rates impact household debt-service costs. Despite an expected slowdown and possibly brief recession, the economy has proven resilient so far, though the real policy interest rate increase to 2% could test this resilience, with the possibility of rate cuts in 2024 if the economy weakens and inflation trends back toward the 2% target. BCREA: 'we are forecasting the average five-year fixed mortgage rate to stay above 5 per cent this year, likely rising back to 5.3 per cent before eventually declining in the fourth quarter of 2023. Variable rates are forecast to rise to 6.9 per cent, factoring one more rate hike by the Bank of Canada in July. However, if the economy weakens as expected and inflation resumes its path toward 2 per cent, we may see rate cuts by the central bank early next year.'