Sales Volume Down
Vancouver home sales volume dropped 49% from September 2021 to September 2022. However, 2012 and 2018 had seen even weaker sales volumes for the month of September.
The HPI benchmark sales price for a Vancouver detached house is down 8.8% since its peak in February. Condos and townhouses are lagging behind, only down 6.6% from their peak in March and May. Meaning, this could be a good time to sell any suburban investment houses and purchase downtown or surrounding.
Annual Average Sale Prices
March 2022 – $2,631,500
September 2022 – $781,700
May 2022 – $836,800
September 2022 – $1,306,200
March 2022 – $1,395,200
The Bank of Canada has now raised interest rates over 3% this calendar year, with another increase expected at the end of this month. This has been the fasting rate-increasing cycle since the 1980’s. The big banks’ prime rates are moving in synchronization, now sitting at 5.45%, meaning big implications for variable rate mortgage holders.
This might mean it is worth selling now IF the mortgage payments for the next 16-24 months could cause financial stress issues, or if you hold a rental property where your current rental income will not cover these increased rates, especially with rent increased being capped at 2% for the year (well below inflation levels).
As borrowing capacity continues to shrink, a bigger downpayment is needed, which is not a bad thing if you have it. Otherwise, buyers need to target something more modest. We will continue to see the transfer of wealth from our parents generation to ours in the form of larger downpayment.
To put this in to context, if you had a million dollar floating rate variable mortgage at the start of the years, your payments would have now increased by $1,500 per month.
If you have any questions regarding real estate, please reach out to us to talk more about what is best for you—we would be very happy to assist you!