The topic of today's newsletter is, as you may expect, The Market.
It has become evident over the past few months that change has finally come. In the industry, we've been seeing/hearing and feeling that new weather was on the horizon and now the numbers are starting to show it.
Let's look at some of the causes:
- Prices literally doubling across the lower mainland over the past 3-4 years.
- Interest rates rising.
- Speculation tax.
- Foreign owners tax.
- Mortgage rule changes / stress test.
All of these things put downward pressure on the buyers ability to purchase. Even with the extremely strong demand, there is only so much people can afford. Speaking of demand, I should clarify something. At this point, when looking at the recent statistics, the detached market (single family dwellings) is the first to feel these changes simple because of the price. For the majority of cities across the lower mainland, the detached market is now operating in a balanced or buyers market. In contrast, the attached market (condo's & townhomes) are actually still operating in a sellers market and are quite hot.
This is all relatively fresh, but it takes time for people to accept reality and subsequently see these consequences in the marketplace. What happens is this: since there are now less buyers, this means less demand which means more inventory. What happens when there is more inventory for the buyers to choose from? The Sellers will reduce their price in order to be competitive. This is the nature of supply and demand.
Right now, we are floating, amidst change. Sales volume has dropped off considerably, April was over 20% below the 10 year average. If the volume doesn't pick up, it's just a matter of time before we see prices start to come down.
If you are thinking about selling in the near future, my advice would be to do it soon. I know, typical sales pitch right? But that's just my opinion for the given scenario!
Thank you for reading and for your business, we really do appreciate it!!