As we transition into the fall season and look back on the summer, we see that home sales have continued to be slow. While there were some indications of recovery in July, sales have slowed down again in August, and were 10% slower than the same period last year.
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With slow sales, we've seen a considerable increase in total inventory as homes are sitting on the market for longer. Active listings have been on the rise and are at their highest in 5 years.
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While the market is still considered to be in balanced territory, we're now approaching the lower end of the balanced range, which is closer to a Buyer’s market. Aside from the beginning of the pandemic in early 2020, this sales-to-active listings ratio is at its lowest in 5 years.
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Home prices have shown a slight decline compared to last year. However, when looking at the year-to-date figures, we're still seeing a modest increase. This suggests that while there's some downward pressure on prices, the market is generally holding steady.
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The interest rate landscape is shifting in favour of home buyers. The Bank of Canada has continued its trend of rate cuts, with expectations of further reductions in the coming year. This trend is making borrowing more affordable for potential homeowners.
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The federal government has announced significant reforms to make home ownership more accessible. These changes include increasing the insured mortgage cap to $1.5 million, extending the availability of 30-year mortgage amortization periods, and making it easier for homeowners to switch lenders at renewal time. These reforms are designed to help more Canadians, particularly younger generations, enter the housing market.
With a prolonged period of slow sales, interest rates on a downward trend and reformed mortgage rules on the horizon, increased market activity is anticipated in the coming months. Historically, the fall market often sees a surge in buyer interest, and this year may be no exception.
The current market conditions present significant opportunities for buyers. With stable prices and decreasing interest rates, affordability is improving. Furthermore, the new mortgage rules provide more flexibility, especially for first-time buyers and those looking at new builds. Finally, high inventory is allowing for greater selection and reduced competition.
As we're in balanced market, there are also great opportunities for sellers. Well-priced homes continue to attract interest. Also, with the potential for increased activity in the fall and the new mortgage rules making buying more accessible, sellers may see more potential buyers in the coming months.
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®
(604)961-1322
ginajacobsen.com
Sources:
British Columbia Real Estate Association Economics
Victoria Real Estate Board MLS® STATISTICS
Canadian Real Estate Association
Department of Finance Canada
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