Inventory remains low in Metro Vancouver* while home sales dipped well below monthly historical averages in January.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 1,022 in January 2023, a 55.3 per cent decrease from the 2,285 sales recorded in January 2022, and a 21.1 per cent decrease from the 1,295 homes sold in December 2022.
Last month’s sales were 42.9 per cent below the 10-year January sales average.
“Due to seasonality, market activity is quieter in January. With mortgage rates having risen so rapidly over the last year, we anticipated sales this month would be among the lowest in recent history,”
said Andrew Lis, REBGV’s director, economics and data analytics.
“Looking forward, however, the Bank of Canada has said that it will pause further rate increases as long as the incoming economic data continues to support this policy stance. This should provide more certainty for home buyers and sellers in the market.”
There were 3,297 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in January 2023. This represents a 20.9 per cent decrease compared to the 4,170 homes listed in January 2022 and a 173.4 per cent increase compared to December 2022 when 1,206 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 7,478, a 32.1 per cent increase compared to January 2022 (5,663) and a 1.3 per cent increase compared to December 2022 (7,384).
For all property types, the sales-to-active listings ratio for January 2023 is 13.7 per cent. By property type, the ratio is 10.2 per cent for detached homes, 13.4 per cent for townhomes, and 16.7 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
“We know the peak for prices in our market occurred last spring. Over the coming months, year-over-year data comparisons will show larger price declines than we’ve been reporting up to now,” said Lis. “It’s important to understand that year-over-year calculations are backward-looking. These price declines already happened, and what we are seeing today is that prices may have found a footing, even if it’s an awkward one sandwiched between low inventory and higher borrowing costs.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,111,400. This represents a 6.6 per cent decrease over January 2022 and a 0.3 per cent decrease compared to December 2022.
Sales of detached homes in January 2023 reached 295, a 52.6 per cent decrease from the 622 detached sales recorded in January 2022. The benchmark price for a detached home is $1,801,300. This represents a 9.1 per cent decrease from January 2022 and a 1.2 per cent decrease compared to December 2022.
Sales of apartment homes reached 571 in January 2023, a 56.6 per cent decrease compared to the 1,315 sales in January 2022. The benchmark price of an apartment home is $720,700. This represents a 1.1 per cent decrease from January 2022 and a one per cent increase compared to December 2022.
Attached home sales in January 2023 totalled 156, a 55.2 per cent decrease compared to the 348 sales in January 2022. The benchmark price of an attached home is $1,020,400. This represents a three per cent decrease from January 2022 and a 0.8 per cent increase compared to December 2022.
*Editor’s Note: Areas covered by the Real Estate Board of Greater Vancouver include: Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.
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In its first decision of 2023, the central bank raised its policy rate by 25 basis points to 4.5 percent. The key rate for the Bank of Canada is the highest since 2007.
The global economy remains in a state of high inflation with a broad base. Many countries are experiencing lower inflation as a result of lower energy prices and improved global supply chains. Despite slowing economies, the U.S. and European economies have proven more resilient than expected at the time of the Bank’s October Monetary Policy Report. As a result of China’s abrupt lifting of COVID-19 restrictions, the growth forecast for the country has been revised upward. As a result of China’s abrupt lifting of COVID-19 restrictions, the growth forecast for the country has been revised upward. A significant source of uncertainty remains Russia’s war on Ukraine. While financial conditions remain restrictive, they have eased since October, and the Canadian dollar has been relatively stable against the US dollar.
According to the Bank, the global economy will grow by 3½% in 2022, slow to about 2% in 2023, and 2½% in 2024. This projection is slightly higher than October’s.
Recent economic growth in Canada has been stronger than expected, and the economy remains in surplus. There is still a tight labour market: unemployment is near historic lows, and businesses report difficulty finding employees. There is, however, increasing evidence that restrictive monetary policy is causing a slowdown in economic activity, particularly in household spending. There has been a significant decline in housing market activity since the first half of 2022, and consumption growth has moderated since the first half of 2022. Consumer spending and business investment are expected to slow as the effects of interest rate increases work their way through the economy. As a result of weaker foreign demand, exports are likely to suffer. Supply will be able to catch up with demand as a result of this overall slowdown in activity.
The Bank forecasts that Canada’s economy will grow by 3.6% in 2022, slightly stronger than was projected in October. By the middle of 2023, growth is expected to stagnate, before picking up later in the year. GDP growth is expected to be about 1% in 2023 and about 2% in 2024, little changed from October.
Due to lower gasoline prices and, more recently, moderating durable goods prices, inflation declined from 8.1% in June to 6.3% in December. Even with this progress, Canadians continue to face high inflation in essential household expenses, such as food and shelter. Inflation expectations remain elevated in the short term. Although year-over-year measures of core inflation are still around 5%, 3-month measures have fallen, suggesting that core inflation has peaked.
It is expected that inflation will decrease significantly this year. It is expected that lower energy prices, improved global supply conditions, and higher interest rates in 2024 will bring CPI inflation back to 2%.
The Governing Council decided to increase the policy interest rate by 25 basis points due to persistent excess demand pushing prices upward. Quantitative tightening by the Bank complements the policy rate’s restrictive stance. While assessing the impact of the cumulative interest rate increases, the Governing Council expects to hold the policy rate at its current level if economic developments follow the MPR outlook. The Governing Council is prepared to increase the policy rate further if necessary to restore inflation to the 2% target, and remains committed to restoring price stability for Canadians.
March 8, 2023, is the next scheduled date for announcing the overnight rate target. On April 12, 2023, the Bank will publish its next full economic and inflation outlook, including risks to the projection.
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