In this episode we take a look at what our economy is doing from a National perspective. Some of the key take aways here include signs that we are seeing inflationary pressures beginning to ease, Bond Yields are continuing to come down and housing starts are beginning to increase again while we deal with sky rocketing rental increases. 

Home sales in the month of June and no doubt in the month of July are down by a serious margin (-33% in BC and -36% in Ontario) and continue to stall out the market. While prices are coming down, it appears as though inventory is holding strong and hasn’t risen with only 3.1 months of inventory on the market. With strong national unemployment at 4.9% and record levels of immigration (over 400k) the fundamentals still look strong. 

Locally speaking, we have entered into a Balanced market which is something we haven’t seen since January 2020! The median home price is also holding strong at 900k - although we suspect that will continue to fall as the Fed’s continue to raise rates throughout the rest of the year. BC is down 33% in home sales year over year and while BC’s inventory climbed +21% - the GVRD’s inventory remains largely unchanged. 

It’s crazy to think that just a year ago, households were paying just 2.5% average interest rates across ALL outstanding debt....credit
 cards, auto loans, mortgages, HELOCs....all of it but with higher interest on credit cards, rising levels of insolvencies (still low but rising), negative wage growth, falling prices and more expensive mortgages - Consumer confidence in Canada’s housing sector has fallen off the map. If you bought a house today with prevailing rates, you are paying 55% more in payments for the same home than you would have just 10 months ago.

Activity levels across major real estate offices is down on average by 15% and climbing - this is mostly because of the rising costs of borrowing and the continued cooling of home sales across the country. With the re-sale property market accounting for nearly 10% of our country's GDP, it’s all but certain that a recession for part of 2023 is on our doorstep with the Central Banks attempt to control inflation.  



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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Travis Darke from IG Wealth Management sat with us this week to discuss where he is seeing the smart money being invested during these uncertain times.      We look at which type of investments benefit from a rising interest rate environment and how a long term focus is till the most prudent strategy.

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Dan Wurtele, PREC, REIA

604.809.0834

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Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Wednesday's 100 basis point hike to the overnight interest rate brings the total increases this year to 2.25%.   This will understandably have a profound impact on housing prices.     

The monthly payments to purchase the same home in January compared to today are up $1,100, or 52%.   The rising rates have already seen around a 20% decline in prices in the GTA, and here in Vancouver, around 11%.

The full effects of the recent rate hike have yet to be felt.   Plus, current indications are that rates will be raised to 3.75% by year end, adding another 1.25% before the Bank of Canada levels off.    

The word Recession has become predominant recently, though the robust job market is doing its best to hold it at bay.  June produced the lowest employment rate in recorded history, coming in under 5% for the first time ever.  

There is no question property prices are going to go lower in Vancouver - current estimates point to 15% HPI.  With the cost of borrowing up, this isn't making homes more affordable, as monthly payments for the lower price home are as high as the higher priced home with lower rates.      Cash buyers are the real winners here.

www.thevancouverlife.com

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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

The Bank of Canada surprised everyone this morning raising interest rates a full 100 basis points - the largest single increase in 24 years.   

We’ve now seen rates increase by  2.25% in just 5 months, radically transforming the lending landscape and housing.

Buying power is down over 20% and mortgage payments compared to January of this year are upwards of 50% higher.  

Understandably, this is going to drastically affect house prices.   Already down 13% from the February high, you can expect prices to drop further - likely to the tune of 20% or more.

Mychal Ferreira, the number 1 mortgage specialist for the Bank of Montreal in Canada, joins us on this episode to discuss how the recent rate hikes affect those with existing mortgages, those about to renew and for people thinking about buying a home. 

Buckle up, things are changing fast.

Contact Mychal Ferreira

https://www.linkedin.com/in/mychalferreira

https://www.instagram.com/mychalferreira/

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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Home sales dropped 35% from this time last year in the Vancouver area,  and a full 43% in the Fraser Valley.   Toronto saw a similar decrease at 41%.    This is the third consecutive month of declines where the sales sit at 23% below the 10 year average.       The landscape is now vastly different than it was 3 months ago when buyers lined up to compete for the same home.  Now, homes are sitting, prices are dropping, properties can be negotiated, and yet, buyers aren't interested.   Of course the rising rates have been the largest contributing factor, but oddly, all the cries for more homes and less competition have been heard, and the buyers are gone.  

Perhaps sidelined is a better term.     With rates rising at the fastest rate in history, with the Bank of Canada increasing further next week, there is a feeling of 'shell shock' in the industry.   Buyers have pulled back to see where things will settle.  On top of this, many people have seen a tremendous amount of wealth eroded in the stock market.    Lastly, we're about to enter the typically slower summer months where minds shift away from real estate and more towards enjoying the weather.

In this episode we look into the June numbers, share predictions on where prices are going next, and discuss recent Mortgage Rate Drops,  yes DROPS, that are already taking place in the States.

www.thevancouverlife.com 

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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

February 2022 has proven to be the most recent peak of property prices in Vancouver, which have since dropped 10%.  (That is in reference to the Median & Average prices - the HPI, a lagging indictor, will follow in the upcoming months.)   The majority of this drop happened last month, to the tune of around 5%.

Inventory though was a surprise in June, after increasing by 14% in April and 10% in May, it only increased by 2.5% in June.   Plus, we're now going into what looks to be a fairly typical summer where activity levels will be low - and new listings few and far between.     This could keep the sales ratio just at or above the sellers market position for the next couple months.

But will anyone buy?   And will prices keep going down?     Global wealth is being eroded, at the estimated amount of $13 Trillion year to date, and this is definitely being felt in Vancouver as well.    Plus, we are less than 2 weeks away from another rate hike, further diminishing buying power.   There will be more pain in the system before things turn around. 

So what's next?   More inflation?  A recession?  Stagflation?   Right now it could go any one of those routes - and yet, here comes more money printing.    Have we really not learned our lesson yet? 

www.thevancouverlife.com 

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Dan Wurtele, PREC, REIA

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Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Inflation hit a 40 year high this week reaching 7.7%, with food and fuel driving the gains. Mortgage rates continue their northern ascent with fixed rates at or above 5%, and variable expected to rise to the realm of 4.5%. Mortgage payments on your typical Canadian home are up $1,000 per month, or 60% in just 9 months. Yet the Bank of Canada is set to raise rates at the July 13th announcement with 90% of Economists predicting a 0.75% increase. This will affect housing deeply with prices and sales already falling fast.

National homes sales are down 25% from last year and HPI prices ticked down for the second month in a row - not seen since 2019.

Meanwhile, job vacancies in Canada surpassed 1,000,000 - and Permanent Residencies were handed out to 64% more people than last year to date.

CMHC stated that 5.8 million homes are needed by 2030 just to start bringing prices down, while the actual is predicted to be closer to 1.5 million - meanwhile the Canadian Government is looking to put 3.6 million new people into the country over the same timeframe.

So while the focus is all on inflation right now, when the cycle turns back up, the housing shortage issue will be there ready and waiting.

www.thevancouverlife.com

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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

Vince Taylor is our guest on this episode and he brings with him an immense amount of knowledge, and experience, in the real estate market.  Having seen 5 major market cycles in his life, and as someone who bought his first Vancouver home for $67,000, Vince provides an almost contradictory outlook on the market then what you will hear on the news.  He gives his opinion on how prices will fall, and when and by how much they will rise after, he shares the key fundamentals that point to his predictions and shares where the true opportunities are in this type of market.  

For more information on Vince Taylor, President of Pilothouse Projects, please visit: https://pilothouseprojects.com/

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www.thevancouverlife.com

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Dan Wurtele, PREC, REIA

604.809.0834

[email protected]

Ryan Dash PREC

778.898.0089
[email protected]

www.thevancouverlife.com

Inflation hit a 40 year high in America this week, reaching 8.6%.    The ramifications of this were instantly felt with the stock markets dropping sharply.  Canada's next CPI announcement will almost certainly print higher when they announce on June 22nd.    Should there be an increase, a 0.50% increase at the July 13th seems like a lock, with rumours already spreading that the BoC may go with 0.75%.   This puts the overnight rate between 2% to 2.25% up from 0.25% earlier this year.    Understandably housing is being impacted - sales are down 34% in 3 months in Toronto, and Vancouvers median price is down 10% from the February peak.   With inflation still rising, but housing dropping fast, how much further can rates rise before things really break?

www.thevancouverlife.com

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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

The effects of the interest rate hikes are being felt as home prices dropped 5% in May.    This was prior to the June 1st hike of an additional 0.5% that will further add downward pressure on prices as purchasing power has been eroded to the tune of 15%.   Inventory surpassed 10,000 for the first time in 10 months and detached homes entered into a Balanced Market for the first time in 2 years.    We did into the May numbers and let you know what to expect in the upcoming months, plus we give our insights into how much we expect prices to fall for the remainder of 2022. 

www.thevancouverlife.com 

_________________________________

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