Is The Hot Market Coming Back?
Restrictions have lifted (to an extent), Open Houses are back, and Covid rates on all accounts are coming down. So what does that mean for Real Estate moving forward? Are we just seeing a temporary lull and should expect a bounce back to the frenzy we’ve been seeing last year/early 2021?
To answer that question, we really need to discuss WHY would the market bounce back? What is taking place out there that suggests we should see that type of activity take place.For example, when Covid struck, people immediately saw the need for more space due to lockdowns, interest rates became very low so it was even cheaper to borrow money, the unfortunate circumstance that some were cash strapped and needed to sell, as well as inventory levels being extremely low. These are all tangible events that caused the ‘WHY’ when discussing the heated market.
So flipping that the other way, what’s happening around us that is showing signs of the market spark back up again? A common one we hear is foreign buyers eventually being allowed back into the country and starting a wave of fresh purchases. The question on this front being - “Is it enough”. Yes it’s true when borders do open up, more visitors will be able to enter the country, but a lot of the foreign buying was curtailed when the 20% foreign buyers TAX was implemented, amongst other taxes. During the pandemic, we also saw a lot of foreign buyers using local representatives to purchase property. In today’s day and age, FaceTime, Matterport, video and online open houses allowed those not present to have a good look around a home.
Let’s move on to lending money a.k.a Mortgages. We’ve seen the new implications for lending money come into affect from June 1, 2021. As well as a slight creep up in fixed term interest rates in March. Given how cheap lending has been lately, it’s highly unlikely anyone was ‘holding out’ for this reason to buy further down the road.
The age old line of Inventory vs. Demand is also a big factor. We’ve definitely seen demand slow down while inventory has been more strong as of late. We’d expect more inventory to come to market over the next few months as we head into Fall as well. Typically one of our busiest periods of the year in Vancouver real estate. It’s not uncommon for sellers to hold off listing their property until the fall whilst they enjoy summer.
These are all elements that are not pointing towards an upward trend in the market. Naturally this is not an exhaustive list of what can affect a market, but they are pretty solid points to look at when trying to determine what the market will do. Those who needed bigger homes have bought them, buyers who wanted low interest rates have already taken advantage of them, the worst of Covid from a financial standpoint is done, and those in need of selling during the virus have done so.
If anything, the market is actually looking to level out at a more stable/buoyant level. Hence why we are now seeing the brakes being pumped when looking at market climate. Now things are not at a desperate level by any means. The market is still strong and property is still selling at more consistent/normalised rates.
If anything, the market is actually looking to level out at a more stable/buoyant level. Hence why we are now seeing the brakes being pumped when looking at market climate. Now things are not at a desperate level by any means. The market is still strong and property is still selling at more consistent/normalised rates.
If you’ve been watching and waiting for the market to drop for a while, unfortunately your luck is out. On average home prices increased 14.5% year over year (June 2020 - June 2021). So even if you see the market drop 5% over the next year, you’re still out by 9.5% compared to where you could have been.
Now Jay and I always say we don’t have a crystal ball, so anything COULD happen. It’s pretty safe to say the busiest time is behind us, and we will not be seeing the market climb back to those heights anytime soon. Our money is on a stabilized market that takes us to the end of the year.
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Until next week,
Jay Mcinnes
T: 604.771.4606
Jay@mcinnesmarketing.com
Ben Robinson
T: 604.353.8523
ben@mcinnesmarketing.com