As interest rates have been coming down for the first time in four years, a long-awaited recovery in the real estate market has been expected but slow to materialize. October 2024 emerged as a pivotal month for British Columbia's real estate market, with significant signs of recovery and renewed activity across the province.
Provincial home sales experienced a remarkable rebound in October, marking a return to more typical sales activity for this time of year. The month's sales volume jumped from approximately 25% below the 10-year average in September to just 6% below the 10-year average in October.
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New listings were down in October and the total number of active listings in BC plateaued around 40,000 units. Experts consider this inventory close to the optimal level for long-term market balance.
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Over the past several months, slow sales and high inventory have led the provincial market into the “buyer’s market” end of the “balanced market” spectrum. The trend was even more pronounced on Salt Spring, where we recently left “balanced market” territory and entered a “buyer’s market”.
Last month, with an increase in sales and a relatively consistent inventory of homes available, October market conditions (both provincially and locally) returned to a more balanced state, where buyers and sellers are on a more even playing field.
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Price growth remains modest, with the average residential price up only about 1% year-to-date, reflecting a relatively stable pricing environment. While prices were up slightly, the prevailing trend for prices in 2024 remains flat.
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The Bank of Canada lowered its overnight policy interest rate by 50 points on Oct. 23, 2024, bringing it from 4.25% to 3.75%. Given that a change greater than 25 points is relatively rare and is typically only seen in urgent conditions, this move was an aggressive attempt to reignite the economy. Further rate cuts are predicted for the next Bank of Canada rate announcement on Dec. 11th, but whether it will be by 25 points or another whopping 50 points remains to be seen.
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On December 15th, new federal mortgage rules will take effect, which increase the maximum home price eligible for an insured mortgage from $1 Million to $1.5 Million. This means that buyers will be able to put as little as 5% down on properties worth up to $1.5 million, significantly increasing the accessibility of a wide range of homes to buyers.
As we approach the final weeks of 2024, the real estate market appears poised for continued stabilization and gradual recovery. With interest rates trending downward, expanded mortgage accessibility, and market conditions returning to a more balanced state, early indicators suggest potential for increased buyer confidence and market activity in the coming months. The combination of lower borrowing costs and more favourable market dynamics could set the stage for a more dynamic real estate landscape in 2025.
To gain a more comprehensive understanding of how the current market dynamics may impact your particular real estate goals, don't hesitate to reach out to me.
Gina Jacobsen, PhD
REALTOR®
(250)539-0828
gina@ginajacobsen.com
Sources:
British Columbia Real Estate Association Economics
Victoria Real Estate Board MLS® STATISTICS
Canadian Real Estate Association
Bank of Canada
The Globe and Mail
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