The Vancouver Life Real Estate Podcast

In October, Vancouver’s real estate market exhibited mixed signals. Despite a continued decline in home prices, with the benchmark HPI dropping for the fifth consecutive month by 0.6%, a surprising surge in sales emerged. Total sales jumped 43% from September and 32% year-over-year, marking October 2024 as the third-highest sales month of the year and the most active October since 2021. Experts suggest that the rate cuts so far, combined with optimism for further reductions, may have spurred buyers back into the market. This sentiment sharply contrasts with 2022 when rising interest rates deterred buyers.

The recent U.S. election results, with Trump securing the presidency, bring significant economic implications for Canada. Key among these is the potential for new tariffs on Canadian imports to the U.S., which could add $30 billion in economic costs, with Canadian manufacturing and consumer prices bearing the brunt. This inflationary impact could strain housing affordability, as higher import costs would drive up construction expenses, potentially limiting new builds and pushing home prices higher. To counter these risks, the Bank of Canada might reduce rates further, which could increase Canadian homebuyers' purchasing power but also encourage some to enter the market amid potential economic downturns. 

Affordable housing targets in Canadian cities like Ottawa and West Vancouver face substantial setbacks due to escalating construction costs and financing issues. Ottawa has fallen short of its 500-unit annual goal every year since 2020, citing a funding gap of $931 million and a 150% increase in construction costs since 2021. West Vancouver also anticipates falling short of provincial targets, estimating that only 58 affordable units will be built in 2024—well below the province’s target of 220. This affordability gap points to ongoing challenges for both public and private sectors, with limited options for expanding affordable housing despite rising demand.

The “17 Villages” initiative in Vancouver seeks to create a gentler approach to housing density, adding low-rise residential buildings, townhouses, and multiplexes within 400 meters of established retail streets. This feels like a European-inspired model that will anchor neighborhoods with walkable retail and community amenities, allowing young professionals and families to stay in these areas at potentially lower costs. Unlike high-rise developments, these “villages” aim to enhance neighborhood character, create small business opportunities, and offer diverse housing options without dramatically altering community aesthetics.

Touching on the October stats, Vancouver’s real estate inventory fell by 7% month-over-month to a five-month low but remains 25% higher than last October and 26% above the 10-year average. With over 5,400 new listings—a 17% annual increase—the market has seen an influx of choices for buyers, while inventory is the highest for October since 2014. The sales-to-active listings ratio rose back to 19%, with townhomes and apartments now moving into seller’s market territory. Detached homes saw a slight uptick in demand, but overall, the market remains balanced, favoring neither buyers nor sellers strongly.

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Contact Us To Book Your Private Consultation:

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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

In a climate of economic turbulence, Canada’s economy is showing signs of a downturn that could significantly affect Vancouver’s real estate market. The Bank of Canada recently reduced its interest rate by 50 basis points, following weaker-than-expected inflation and a rise in business insolvencies. 

While these rate cuts may offer mortgage relief, they’re also weakening the Canadian dollar, which has hit a 20-year low against the U.S. dollar, potentially increasing imported inflation as time goes on. Meanwhile, Canadian GDP has remained stagnant, with annual growth forecasts now below 1%, well below the anticipated 2.8%. This slower growth could prompt further rate cuts as the Bank seeks to stimulate the economy.

Employment trends are also concerning, especially among young men, with unemployment for this demographic rising sharply, indicating possible downward pressure on inflation. We touch on declining sales in manufacturing and a troubling inventory-to-sales ratio that's been further emphasized by the challenges facing Canada’s economy.

Housing offers a mixed picture: as mortgage payments drop and rates fall, consumer confidence is on the move up. Sales volumes are expected to increase next year by 10%-20%, but the government’s recent immigration cuts could also reduce that demand, especially for rentals. The new targets project significant reductions in Canada’s temporary resident population, potentially leading to Canada’s first-ever years of negative population growth, impacting GDP, tax revenues, and the housing sector's stability. This would be a first for Canada after non-permanent residents hit an all-time high of 3 million people. 

The Vancouver housing market stands to be directly affected. Dropping interest rates may ease some home-buying pressures, but declining immigration and job losses in construction and housing services could lead to a long-term housing shortage and potential tax increases as governments try to offset reduced revenues. For buyers and renters alike, this evolving economic landscape could spell both opportunities and challenges, making it a crucial topic for those involved in Vancouver real estate.

Also, we are welcoming your questions!! With these complex dynamics at play, what questions do you have about the market or where you find yourself today? Message us directly or post them in the comment section below, and we’ll provide informed insights in next week’s episode!

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

In this episode, the podcast hosts dive into one of the most transformative housing policies in British Columbia’s recent history—the Small Scale Multi-Unit Housing Initiative, introduced under Bill C44. This policy marks a significant shift in how housing developments are approached, aiming to address the critical shortage of homes in the Lower Mainland by automatically rezoning single-family and duplex lots to allow for higher-density developments. By opening up these properties for multi-unit construction, the policy seeks to tackle the housing crisis, create new investment opportunities, and provide much-needed jobs in the construction industry.

However, the initiative has sparked heated debate. While it promises to inject new housing stock into the "missing middle" market, not all stakeholders are on board. Many neighborhoods have adopted a Not In My Backyard (NIMBY) stance, pushing back against the increased density and potential changes to their community dynamics. Some municipalities have leveraged the policy to increase Development Cost Charges (DCCs) and Amenity Contribution Charges (ACCs), which could make the process more expensive for developers, adding layers of complexity to what seems like a streamlined solution.

To unpack the real opportunities and challenges presented by this policy, we are joined by James Livingston, founder of Lightwell Developments. As someone deeply embedded in the development space, James offers listeners a rare behind-the-scenes look at how companies like his are capitalizing on the deregulation. His firm specializes in working with homeowners who might not have the knowledge or the capital resources to redevelop their property on their own. James explains how Lightwell’s business model allows these homeowners to partner with developers by turning their properties into multi-unit dwellings and potentially earning more than they would through a traditional home sale—without the hassle of open houses, showings, or putting their home on the market.

The episode then shifts to the criteria Lightwell Developments uses when scouting properties. James breaks down what makes a lot ideal for redevelopment, from its size and location to zoning regulations and municipal cooperation. 

The discussion moves beyond the homeowner’s perspective to explore the broader market implications of the Small Scale Multi-Unit Housing Initiative. While many developers, architects, and investors are enthusiastic about the changes, some argue that the policy doesn’t go far enough to meet future density demands. James provides his take on the policy’s strengths and limitations, discussing whether it can truly solve the housing crisis or if more drastic measures are needed to fulfill Metro Vancouver’s long-term housing requirements.

To round out the conversation, the episode addresses another key audience—INVESTORS who may not own property but want to invest capital. James outlines the financial mechanics of investing in his multi-unit development fund, from expected returns to minimum investment amounts and typical timeframes. He provides insights into how this growing sector offers attractive opportunities for investors looking to diversify their portfolios and tap into the high demand for new housing in the region.

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Inflation has cooled down, with a rise of just 1.6% in September, significantly lower than August’s 2.0%. Outside of the COVID-era disruptions, this marks the lowest inflation figure in 5.5 years, dating back to February 2019. Back then, the overnight rate was 1.75%, 2.5 basis points lower than today’s rate. The drop in shelter costs, which dipped from 5.3% to 5.0%, contributed to this inflation slowdown. However, the Bank of Canada’s core inflation measure, which excludes volatile components, remained steady at 2.3%.

What’s striking is that this inflation print came in below market expectations of 1.8%, significantly reshaping interest rate forecasts. Analysts are now predicting a 70% chance of a 50 basis point (bps) rate cut at the BoC’s meeting on Wednesday, with a further 25 bps reduction anticipated for December. If this scenario unfolds, the overnight rate could end 2024 at 3.5%, and markets expect it to drop to 2.5% by October 2025. Such a drastic forecast has led many mortgage brokers to advise clients to consider variable-rate mortgages, anticipating a steady decline in rates over the coming year.

At present, the BoC’s overnight rate stands at 4.25%, about 150-200 basis points above what is considered neutral. Given the state of inflation and a rising unemployment rate, there seems to be little reason for the BoC to delay a rate cut on Wednesday. This could also alleviate some of the pressure on Canada’s bond market which has been feeling the strain from high rates, though the Canadian dollar will be the sacrificial lamb.  

Housing starts in Canada have taken a significant hit, dropping 16% year-over-year (y/y). In Vancouver, this trend is even more pronounced, with a 23% decline in year-to-date housing starts. Toronto fares even worse, with condo starts down by 70% y/y, marking a three-year low. With a rolling 12-month condo pre-sale figure of just 6,000 units—an all-time low—developers are pulling back hard on new construction. With construction costs still high and no immediate relief in sight, this reduction in supply is likely to exacerbate Canada’s already tight housing market in the long term.

Another worrying trend is the increasing number of business closures. Last month, Canada saw a 1% drop in active businesses, the largest month-over-month (m/m) decline since the pandemic. The number of active businesses fell from 938,000 to 929,000, with construction companies leading the exodus—643 construction businesses shut down in September alone. This points to a broader economic slowdown, particularly in the housing sector, which is reliant on steady construction activity. New business openings also hit a four-year low, signaling reduced optimism among entrepreneurs.

All eyes are now on the BoC’s rate decision on Wednesday. With inflation easing and housing construction slowing dramatically, a rate cut seems increasingly likely. However, businesses are still struggling, and new policies may be needed to stimulate growth and prevent further economic downturns. The BoC’s decision will set the tone for the remainder of 2024, and possibly 2025, as Canada navigates these uncertain times.

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

With the election just one week away, housing remains a pivotal issue for voters across Canada. This week, we take a close look at the New Democratic Party’s (NDP) housing policy, following last week’s review of the Conservative Party’s platform. The NDP’s 66-page action plan is packed with ambitious goals, focusing primarily on improving affordability for first-time buyers. One of their key initiatives allows first-time homebuyers to pay only 60% of a home’s price upfront, with the remaining 40% deferred until the home is sold or 25 years have passed. This program also offers government-backed supplementary financing, making it easier for Canadians to enter the market. In addition, the Attainable Housing Initiative (AHI) seeks to ease the burden of market-priced homes by funding 40% of the costs for 25,000 new units, particularly on Indigenous lands.

While the NDP’s proposals aim to increase access to housing, they do little to address the root cause of the affordability crisis—soaring home prices. For example, even with the government’s assistance, buying a $620,000 studio or a $1.3 million two-bedroom unit in Vancouver remains daunting. Some argue that the plan, while helpful for thousands of families, fails to lower the overall cost of homes, especially in cities like Vancouver, where prices are already hugely inflated compared to other North American markets. The NDP’s strategy is focused on making market-priced homes more accessible, but it doesn’t tackle the larger issue of the unsustainable growth in housing costs.

In other housing-related news, the Canadian Mortgage and Housing Corporation (CMHC) has announced a new policy that allows homeowners to add suites to their properties with up to 90% loan-to-value financing, set to launch in 2025. This move is part of an effort to increase housing density, but with a $2 million property value cap, its impact may be limited in high-cost areas. Meanwhile, rental rates have fluctuated across the country, with notable decreases in cities like Vancouver and Burnaby, while places like Quebec City and Saskatoon saw rent increases. Mortgage arrears are also on the rise, hitting 0.2% nationwide, the highest since May 2021, signaling growing financial pressures on homeowners.

Speaking more to rental rates, they have shown significant decreases across several major Canadian cities. Vancouver saw an 11% drop year-over-year for both one- and two-bedroom units, and Burnaby registered similar declines. However, Quebec City and Saskatoon experienced price hikes, with one-bedroom rents rising by 22%. This fluctuation in rental prices suggests that affordability issues continue to evolve across different regions, with some areas benefiting from decreased demand while others face rising costs.

As housing continues to be a central concern for many Canadians, both the NDP and Conservative platforms offer paths toward improved accessibility. However, neither party has yet introduced a comprehensive plan to lower home prices significantly. Voters must weigh whether these measures—focused on providing access rather than addressing affordability at its core—are sufficient in tackling Canada’s housing crisis as they prepare to cast their ballots. Tune in and find out how we feel about the NDP platform.

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

With the BC provincial election approaching on October 19th, housing policy has become a focal point for both major parties—the NDP and the Conservatives. Each party has released its housing platform, but the Conservative Party’s approach has sparked significant debate due to its "ambitious" tax-cut promises and plans to further streamline housing development.

The Conservatives introduced the "Rustad Rebate," a tax cut that exempts rent, mortgage interest, and strata fees from BC income tax, starting at $1,500/month in 2026 and increasing to $3,000/month by 2029. While this would save a typical BC taxpayer around $105/month in its first year, critics argue that this rebate is a token gesture that does little to tackle the root causes of the housing affordability crisis.

A standout promise is to drastically shorten the permit approval process, with a 6-month window for rezoning and 3 months for building permits. However, we have concerns over whether the province has the resources and expertise to enforce these timelines across multiple municipalities, particularly when recent efforts by Vancouver’s Mayor Ken Sim have shown limited success in expediting permits under a similar framework.

Here are the Conservative Proposals in Brief:
1. Rustad Rebate: Offers BC residents tax deductions for housing expenses, but savings are marginal compared to soaring housing costs.
2. Permit Approval Timelines: Promises to expedite housing approvals but lacks clarity on implementation and enforcement.
3. Repeal of NDP Regulations: Aims to remove certain building codes that allegedly increase construction costs but provides no detailed analysis.
4. Support Transit-Oriented Communities: Emphasizes building complete communities near transit hubs, but developers already incorporate these elements without government mandates. So..?
5. Infrastructure Fund: Proposes a $1 billion annual fund for municipalities, yet doesn’t address the revenue shortfall from proposed tax cuts. Where is the money coming from?

September Market Stats

The latest market data for September is out and its status quo in the housing market as prices continue to drop. Key highlights include:

The benchmark price dropped for the 4th month in a row, down 1.4% month-over-month and 7% below the peak in April 2022. At $925,000, the median price fell by $20,000, marking a total drop of $70,000 over four months.

Despite rising inventory levels, buyer sentiment remains cautious as quality listings are limited. With election day approaching, it remains to be seen if either party’s housing plan can reverse this trend and provide relief to struggling homeowners and prospective buyers alike.


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Connect With Us To Talk Real Estate:
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Investor Event Details

Attendees can join via Zoom for free and $19.99 for the in-person Earls brunch (with mimosas!).
 
Your Zoom invite link: https://us02web.zoom.us/webinar/register/2017234937769/WN_yAKmdWahQuO3nlHVVtQamg
 
Your In-person invite link: https://www.eventbrite.ca/e/earls-yaletown-brunch-learn-real-estate-investment-summit-tickets-1007751209997?aff=DanRyan

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Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

This week’s discussion focuses on the current state of the housing market and its central role in the upcoming provincial election. With housing affordability and availability at critical levels, this issue has become a focal point for voters and policymakers. We’ll break down the latest developments, key political stances, and potential implications for homeowners and prospective buyers. The provincial election is just around the corner, and it’s no surprise that housing has emerged as the primary battleground. 

After decades of underbuilding, BC finds itself facing a severe housing shortage, with estimates indicating a shortfall of hundreds of thousands of homes. The current party in power, the NDP, has attempted to address this issue through various initiatives, such as the Missing Middle Policy and Transit-Oriented Area (TOA) regulations. These measures aim to increase density by allowing for multiplex units on single-family lots and permitting high-rise developments up to 20 stories near transit hubs.

However, the path to achieving these goals is anything but straightforward. While the province has pushed these initiatives forward, many municipalities have been resistant. Cities like Langley, West Vancouver, and North Vancouver have outright rejected the Missing Middle reforms, opting to maintain lower density levels despite provincial pressure. Even in cities that have embraced the policy, such as Richmond and New Westminster, restrictive Floor Space Ratio (FSR) limits have made it economically unfeasible for developers to build larger multi-family homes, leaving the intended impact on housing supply minimal at best. 

Burnaby, on the other hand, has adopted the provincial rules and has positioned itself as a more builder-friendly environment. However, increased municipal fees have made margins razor-thin for developers, which dampens the enthusiasm for new projects. This lack of alignment between provincial aspirations and municipal realities has resulted in an unattractive building environment, hampering the overall effectiveness of these policies. 

To further complicate matters, the leader of the BC Conservative Party, John Rustad, has voiced strong opposition to the Missing Middle and TOAH reforms, labeling them as “crazy,” “authoritarian,” and “hardcore socialist.” He has vowed to repeal these initiatives if his party comes to power, which would potentially undo years of planning and hundreds of building permit applications that have been submitted to bring much-needed housing to the market.

In regulatory news, the Office of the Superintendent of Financial Institutions (OSFI) announced this week that it will be easing stress test requirements for homeowners looking to renew their mortgages. The new policy, which goes into effect on November 21st, allows homeowners to do a straight switch to a new lender without undergoing the stress test, provided they are not looking to extend their mortgage’s amortization period.

We finish up this weeks episode with a quick look into how the housing market performed in September as we tee up next weeks stats episode. 

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

This week has been monumental for Vancouver's real estate market, with several key factors influencing housing and the broader economic landscape. Inflation has officially hit 2%, marking a significant milestone for the Bank of Canada (BOC) as it reaches its target for the first time in nearly four years. While the broader inflation rate stands at 2%, if the mortgage interest component is excluded, inflation would be just 0.9%, signaling a rapid decline in core inflation metrics. However, rental inflation remains elevated at 8.6%, though this is expected to decrease in the coming months as rent prices have been falling for about a year, potentially pushing inflation even lower. As a result, markets are now pricing in rate cuts at every BOC meeting until at least the summer of 2025, with an estimated 1.75 basis points reduction by July 2025. The five-year bond, crucial for mortgage rates, is now trending downward at 2.7%, the lowest in over two years.

On Wednesday, the U.S. Federal Reserve made a notable move by cutting its benchmark interest rate by half a percentage point, the first such reduction in over four years. This marks a shift from controlling inflation to supporting a slowing labor market. The Fed's decision to lower rates from 5.3% to 4.8% signals a major adjustment as inflation in the U.S. has fallen from a peak of 9.1% in mid-2022 to 2.5% in August, aligning closely with the Fed’s 2% target. Policymakers have indicated further cuts this year, with more anticipated in 2025 and 2026. 

Adding to the shake-up, the federal government of Canada announced that it will increase the price cap for insured mortgages from $1 million to $1.5 million, a surprise to both the industry and policymakers. While many in the real estate sector championed the change, it's important to examine who this adjustment really benefits. Although extending the amortization period to 30 years from 25 years helps reduce monthly payments by about 9%, it also increases the long-term interest paid by homebuyers, with an additional $80,000 paid over the life of a mortgage. 

More critically, this move likely pushes the price band of homes in this range up by 9%, doing little to address affordability. Historically, the CMHC was designed to help veterans and lower-income buyers, but this increase will likely push prices higher, benefiting banks and investors more than first-time homebuyers. With the minimum down payment on a $1.5 million home being $125,000, this policy change seems to cater more to affluent buyers, as only 15% of Canadian households could qualify for such a mortgage. Despite these hurdles, this adjustment will create more demand in the $1 million to $1.5 million price band, potentially driving prices higher, which contradicts the notion of increasing affordability.

This week’s developments reflect the complex and often contradictory forces shaping the Vancouver real estate market. Inflation is cooling, but rate cuts are on the horizon, and new policies, like the increase in the insured mortgage cap, seem to be helping banks more than first-time homebuyers. Housing starts are down, and developers are grappling with higher fees, all while household debt continues to climb. The fall real estate market in Vancouver appears to be on shaky ground, and without significant changes to housing policy or economic conditions, the outlook remains uncertain.

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

In this episode, we dive into one of the most significant housing policy changes in British Columbia's history: the Small Scale Multi-Unit Housing (SSMUH) legislation and the province-wide densification of single-family home lots - but this time, with 3 different Architectural firms. This is likely the largest rezoning initiative we’ll witness in our lifetimes, and with such a massive shift comes a lot of uncertainty. What does this mean for housing affordability, development timelines, and the future of our cities?

To help unpack these complex topics, we are joined by leading voices from three prominent architectural firms in BC, all members of the FIELD COLLECTIVE, a collaborative group of small architecture practices. Together, they will share their insights on the SSMUH initiative, its implications for housing design, and how their industry is responding to these new policies.

Our guests today include Tony from TOAD Design, Jenny and David from 2 by 2, and Daichi from Bobo Arch. We’ll hear about their personal journeys in architecture, as well as how their firms are navigating this new legislative landscape.

One of the central issues of this conversation revolves around the province’s recent introduction of pre-approved housing designs. These designs are intended to streamline the development process, cutting down on costly and lengthy permitting times. But will this initiative actually drive down housing costs? Or could it result in more uniform, less site-specific designs that lack creativity and adaptability? Tony, Jenny, David, and Daichi will explore whether these pre-approved models offer real solutions or if they’re just another example of top-down policy lacking industry consultation.

Finally, we’ll get a preview of PLEX APPEAL, an open-air exhibition organized by the FIELD COLLECTIVE as part of the upcoming Design Vancouver Festival. This event will showcase innovative designs enabled by the new multiplex zoning rules, offering the public a firsthand look at what the future of housing in BC could look like.

Tune in to this episode for an insightful conversation on one of the most pressing topics in housing today. Learn how the SSMUH legislation and pre-approved designs could reshape the real estate landscape, and gain valuable insights from some of the brightest minds in BC’s architecture community. Plus, get all the details on PLEX APPEAL, and find out how you can attend this exciting event later this month!

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Plex Appeal Exhibition
September 28 - 29, 2024
Main & 21st Public Plaza
www.plexappeal.ca

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Tony Osborn, Architect AIBC, MRAIC, LEED APTony Osborn Architecture + Design Inc.#203 - 119 W Pender St, Vancouver BC  V6B 1S5o 604 283 5877 x100m 604 363 [email protected]

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David Tyl
Architect AIBC
Co-Founder
Twobytwo Architecture Studio
mobile: 604.317.7715
[email protected]
www.twobytwo.ca

The C4X project: www.twobytwo.ca/c4x
Instagram: @twobytwostudio


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Daichi Yamashita
Architect AIBC | Passive House Designer
Bobo Architecture | www.boboarch.ca
604-440-1374
instagram.com/bobo_architecture/ 

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

In the first week of September, the Vancouver real estate market received an update that reflects significant shifts. August numbers reveal that home prices have dropped even further, with detached homes now firmly in a buyer’s market—a term seldom used in Vancouver. Compounding this, the Bank of Canada (BOC) cut interest rates for the third time, and all indicators point to more cuts ahead. As we move into the traditionally active Fall market, many wonder if September will mark a turning point, leading to a rebound in prices, or if the downward trend will continue throughout 2024.

A closer look at the BOC's rate cut decision reveals that inflation has eased, with recent data showing inflation at a 40-month low. The central bank has reiterated its goal of bringing inflation down to 2%, and Governor Tiff Macklem’s dovish comments suggest that additional cuts are likely if economic data continues to support them. The financial markets have already priced in another 25-basis-point rate cut in October and a full reduction by December.

Interestingly, the BOC acknowledged the upward pressure on inflation from housing and shelter costs, even though national trends show rental rates and home prices have been falling for months. As these lagging indicators catch up, inflation is expected to ease further. Macklem also hinted that while inflation may drop, housing prices could begin to rise again as interest rates fall and market activity strengthens.

Bond markets have also responded to the recent rate cut, with the Canadian five-year bond dropping to an 18-month low of 2.84%, signaling that fixed mortgage rates could follow suit in the coming weeks. Additionally, contrary to expectations, the Canadian dollar has strengthened against the U.S. dollar following the cuts—a potential signal that the U.S. Federal Reserve might also be gearing up to reduce rates at their upcoming September meeting.

Turning to Vancouver's August real estate statistics, the market saw continued slow sales with a total of 1,896 transactions, marking a 17% year-over-year decline and a 23% drop from July. This represents the fourth consecutive month of falling sales, making August 2023 one of the weakest on record. 

The sales-to-active listings ratio sits at 14%, down 3% from last month and marking the fifth monthly decline in a row. We use this metric to determine if we are in a Buyers or Sellers' market. Detached homes are seeing a ratio of just 9%, deep in buyers' market territory. Meanwhile, the MLS® Home Price Index (HPI) recorded its third consecutive monthly decline, down 0.2% month-over-month and 0.9% year-over-year, bringing the benchmark price to $1,195,900.

While the median price has fallen to $945,000 and the average price to $1,252,000—both back to January 2024 levels—the HPI remains a more stable indicator, smoothing out some of the month-to-month volatility.

As we head into Fall, the big question remains: will inventory continue to rise as sales volumes decrease, as seen after the previous rate cuts, or will the market stabilize? With 1,050 new listings and 205 sales recorded in the first two business days of September, the upcoming weeks will be critical in determining the trajectory for the rest of the year.

_________________________________

Contact Us To Book Your Private Consultation:

📆 https://calendly.com/thevancouverlife

Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com