FOR the entire Greater Vancouver Area (GVA), we choose South Surrey and White Rock as a microcosm of the entire market for analysis. There are more than 22 cities and regions in the GVA. Each city has its own characteristics, but they are also interrelated. We can list all the data here, but the trend of the entire market can be condensed into one or two areas for reference, which is enough to explain the whole situation.
Things need to be retroacted from the second half of 2021. Lets start with our own listings as an example, which are also listings in a relatively popular area in South Surrey, Sunnyside Park Surrey, with land value is relatively valuable and stable: Click Here to View Listings.
14427 18, sold for $1,445,000, 34 years old, 0 days on market
14457 18, sold for $1,483,000, 34 years old, 3 days on market
14471 18, sold for $1,489,000, 33 years old, 7 days on market
These three are all single detached, which were sold in January, May and September 2021 respectively, in the same area, on the same street, with the same lot sizes & shapes, and at the same age. 2 of them are two-story structures, and one is rancher. The average floor area is about 2,000 square feet. As you can see, after 9 months since Jan 2021, the sales prices of the three houses are basically the same (1.445 million to 1.489 million). I still remember that after the outbreak of the pandemic in 2020, the whole real estate industries, including the five major banks, generally estimated to see a decline in the housing market in 2021. However, the reality of the housing price was unusually strong for the whole year. Therefore, in the beginning of 2021, some smart buyers who understood the market well began to look around, purchase good value properties and wait for the market to rise.
The Days On Market of all these three properties were in single digits, and basically there were buyers showing up almost on the same day when houses were listed and wrote good offers without any hesitation. Thinking back carefully, ask the vast majority of buyers and sellers on the market during the same period, were they still hesitating, struggling and waiting aimlessly? Suddenly at a certain point of time, at the end of September 2021, it seemed that people felt safe all of a sudden, and then started to frantically rush into the market and pick up good "products" excitedly. The properties that met the fair assessments on the market were swept away in a few days, and then buyers began to enter the stage of bidding wars with subject free offers. This crazy behavior did not last long, and it came to an abrupt end in March 2022. The time overlaped with the Ukrainian-Russian War, the time overlaped with the start of global inflation, and the time overlaped with the time when the government started rising interest rates (a total of 7 interest rate hikes in Canada in 2022, the first time was on March 2, 2022).
Combining the data of the market, and then digging into the bits and pieces of those experiences, we have found some very interesting conclusions. As real estate agents, after all, these figures are experienced by ourselves on day by day business, and it will be easier to understand with statistics. As readers, you may have a lot of question occuring, but it doesn’t matter, you understand as much as you can, and take our suggestions as references, which would be of some helps to your next steps in 2023.
Being rooted in our mind, the housing price in the GVA, in the long run, would be going up for sure, and there are "three unique elements" to support this assumption: land scaricity, population increasing, and environmental aspects. In addition, "high proportion of owner occupied" is also a key element to support and stabilize the local real estate maket, we will find a time to explain this element in detail later. Returning to today's topic, in the past 24 months, the sales volume has dropped from the highest point of 265 sold properties in March 2021 to 18 in December 2022, and the sales volume has dropped almost vertically (see Figure 1 below), but lets look at the price, the monthly average sold price ranges from the lowest point of 1.73 million in January 2021 to the highest point of 2.4 million in April 2022, and then to 1.91 million at the end of December 2022 (see Figure 2 below); and our favorite indicator: Median Sold Price, the median sold price of the market ranges from 1.53 million in January 2021 to 2.13 million in April 2022, and then to 1.71 million at the end of 2022 (see Figure 3 below). These solid numbers existing in the market are very convincing. If you only look at the median sold price from April to December 2022, the figure has indeed fallen by 20%, but if it is compared with January 2021, the price has still increased by 10%. Did you realize such a conclusion in the begining? The following three graphs show the data of South Surrey White Rock in the past 24 months:
The next picture shows all Bank of Canada's interest rate hikes in 2022. On July 13, 2022, the interest rate hike was up to 1%, the largest among the 7 interest rate hikes. From the increase of 0.25% in March 2021 to the most recent increase of 0.5%. What we have seen is a curve of "rushing high and falling back". It is very likely that 0.25% will be raised again on January 23, 2023 (should not be 0.5%), then if there is a second rate hike after that, it would be 0.25% or it may not be happening. We believe that the possibility of raising the interest rate by 0.25% on January 23, 2023 is relatively high, exceeding 70%. The possibility of no interest rate hike is about 30%.
In just one year, interest rates have been raised by 7 times. It already depressed market to a little breathless. However, under this kind of strong macro-control, the real estate market has remained stable in 24 months. The overall sold price increase is 10%, do you think it will look bad again next year? Of course, for those who bought at the peak, a 20% drop in just 8 months is quite terrifying. If those who bought at the peak want to stop their losses, they probably have to wait at least 2 years. People in the stock market should have heard: "If everyone is talking about stocks can make money, it is time to sell"; "sell when you are crazy, and buy when you are fearful" is the secret of success in investment. However it is easy to say, hard to implement, because of the Greed. There are only less than 10% can do it, unfortunately, it is those 10% who make money from the market. We feel now the real estate market is very close to the "time of fear". For those buyers who are still on the sidelines, in fact, now, or in the first half of 2023, it is very likely to be a good opportunity to buy. The upward curve in the past 24 months has been adjusted to a reasonable range, which matches with the fair market value (refer to the blue dotted line on the 3 Figures above), but remeber this all time: DO NOT BID. There is NO the "best house" in the market, because the best house is always next one. It is already perfect to buy a house with a fair market value and 70-80% satisfactory. For those irrational buyers who pursue the ultimate perfection, we do not put them in the database for analysis. After all, there are very few cases, and we do not encourage this kind of behavior, because the real estate market in GVA is too "fragile", the market order will be disrupted immediately by bidding wars and multiple offers. Unfortunately, because of the "three unique elements", this disruption cannot be eliminated, and it will only be repeated regularly once a while. We just do our best to remind everyone to "rational consumption".
Our prediction for 2023: We are optimistic about the overall market in 2023, mainly due to high interest rate and restricted loans, but we will not continue to be bearish, because the inventory in the market is low and very limited, and the number of new constructions is also low and very limited. In other words, if the supply is limited, no matter how bad the macro economy is, as long as there is demand, the support on price will be very strong. There is a high probability that it will return to a range that is matching with the purchasing power of the market, and then there should be fluctuations in a horizontal way till the next bidding war comes. Canada's ban on overseas buyers starting on January 1, 2023 will have very few impact on the GVA real estate market.
Real estate evaluation is the key to open success. As a real estate agent, the greatest value is that you are able to accurately provide a reasonable evaluation that meets the current market. This is very difficult, but thats how you show differences between you and other competitors. Whether it is for buyers or sellers, mastering the evaluation is mastering the market. Following a reasonable evaluation is also an important factor to stabilize a healthy developing market. We expect that 2023 will be a more rational and prosperous year! Stay happy, Stay healty! See you all soon!
JW
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