Slower housing sales and rising inventories tip market conditions in favour of buyers, but caution is the watch word for both sides of real estate transactions in Metro Vancouver.
“Will prices come down further?”
That’s the top question on the minds of home hunters who walk into realtor Adil Dinani’s office in Coquitlam these days.
After several months of cool sales and rising inventory in Metro Vancouver’s real estate market — with a big jump in June — it seems like a reasonable assumption that conditions have tipped in favour of buyers.
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But the answer to that common question is a little more complicated, according to Dinani.
“Generally, our response to that is no,” Dinani said. “And this is not just based on a gut feeling, it’s based on trends in the market. We’ve had now numerous months of price stability.”
To Dinani, that means “the market is creating a base,” where people feel comfortable, but that comes with a caveat.
Conditions are “segment specific,” Dinani said. Inventories of condos are rising more quickly with large numbers of buildings under construction coming to completion, and plenty of presale buyers looking to sell their units.
However, detached homes and duplexes that are in good locations and “sharply priced” are still seeing multiple offers, Dinani said.
“This is the caveat. If this trend of listing inventory continues and is not met with an increase in buyer activity or a drop in interest rates, then we could see some price softness,” Dinani said. “We’re seeing that in the condo market.”
In the Greater Vancouver Real Estate Board area, realtors saw 2,418 sales in June, 23.6 per cent below the 10-year average for June, but inventory shot up 42 per cent in the same month to 14,182 homes, about 20 per cent above the 10-year average.
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In the Fraser Valley, which includes Surrey, that real estate board reported 1,317 sales in June, down 30 per cent from the 10-year average, and inventory jumped 41 per cent to 8,350 homes during the month.
Sales have been quiet, but Surrey-based realtor Mylyne Santos said she is seeing “a handful of buyers now,” seeking mortgage pre-approvals.
“I think it’s a buyer’s market for sure,” she added. “They just have a lot more options and there’s not many competitions out there.”
Dinani said would-be buyers still need to be patient, but with different strategies depending on which segment of the market they’re looking in.
If they’re looking at condos, “you can be aggressive (with offers) out there,” Dinani said. “Because there’s certainly more supply coming online, especially over the next year.”
For more “ground oriented” townhomes, duplexes and even detached homes, “you just have to be more astute and prudent,” he added.
The most desirable listings will still attract multiple offers, so buyers need to be wary about getting carried away and chase prices, Dinani said.
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“My advice is not to be overly aggressive,” he added.
“Buyers want to know (that) what they’re going to buy today is not going to be worth less tomorrow,” Dinani said.
Surrey realtor Manny Chehil of Sutton Group West Coast Realty said buyers who are already in the market need to know where they want to move to and their “motivations have to be clear.”
“If there’s a reason to sell, you sell,” Chehil said. “Otherwise … I tell people you should think twice before you list.”
Anyone looking to list their property needs to be prepared for a sale to take longer than they expect, said Santos.
“The days of properties selling within a week, within two weeks (are gone),” Santos said. “You have to price very sharply and you have to have no competition in that particular market range. Otherwise you do have to wait a month or two.”
“(My advice) is really intelligently pricing your home based on data versus emotion,” Dinani said.
That means taking into account the desirability of their neighbourhood, proximity to schools and other amenities.
“Sometimes you can push the market envelope a little bit,” Dinani said. Otherwise, “intelligent pricing will capture attention and you need attention in this market.”
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Mortgage interest rates that soared to highs of six to 6 1/2 per cent from lows of below three per cent a couple of years ago raised the cost of borrowing for everyone, including existing homeowners who have seen mortgage payments “balloon,” Chehil said.
The pressure on rates that put a chill on the market, however, cracked June 5 when Bank of Canada Gov. Tiff Macklem cut their key interest rate by a quarter of a percentage point signalling an end of inflation-fighting increases.
Santos said the quarter-point decrease “doesn’t really make a huge, huge deal,” but it does catch people’s attention.
“It only takes a quarter (point drop) to spice up some interest,” Santos said. “So another drop … would stir it up a little more.”
Dinani noted a single quarter-point decrease in the rate did little to improve affordability, but signals have people watching for a second rate cut at the Bank of Canada’s July meeting and potentially another in the fall.
“If all else remains the same, if we see two, three, four rate cuts and a meaningful drop in the prime lending rate, then I think you could see some of these buyers that have hit pause on their search, jump off that fence,” Dinani said.
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