LOOKING BACK & AHEAD

As predicted last quarter, prices decreased and began to stabilize in most neighbourhoods. That being said, more interest rates by the Bank of Canada have created concern and uncertainty. Strangely the last increase of .50 versus .75 or higher provided a sense of relief.

Looking Back

As expected, further interest rate increases over slowed sales absorptions. We certainly have seen price points begin to stabilize in most areas in response. We anticipated a number of developers would delay launches and others, especially in the more suburban markets, would forge ahead. We caution people not to compare this year to last year given the outlier that it was but instead to consider the three-to-four-year trend and the 10-year average.

We expressed our perspective on the importance of housing policy and the likelihood it would be a significant influence on the outcomes. This certainly was the case.

We also expressed concerns about voter turnout. It appears British Columbians did in fact vote for change, despite overall voter turnout dropping slightly to around 37% overall. Many communities saw notable changes in both mayors and councillors including two of the largest cities – Vancouver and Surrey.

Various mayors chose not to pursue another term leading to necessary change in the cities of Victoria, Abbotsford, Langley Township, Port Moody, New Westminster, and the District of Squamish. Other incumbent mayors were defeated, often by known people: current and former councillors, and candidates who were elected to another level of government across the Lower Mainland. This was the case in West Vancouver, White Rock, Maple Ridge and the City of Langley, meaning a huge change to regional boards and committees at Metro Vancouver and TransLink. Most campaigns centered on collaboration, public safety, and taking an active role on housing and growth-related issues. This emerged as a key theme amongst many successful candidates as predicted in our last issue.

In terms of immigration and its affect on our real estate market, we have seen only a modest slight increase of plus or minus, about half a percent in 2022 compared to 2021 despite the government’s goals to allow up to 400,000 new immigrants to Canada over 2021. This means immigrants are coming and still laying down roots to prepare to qualify for a home purchase. Based on this we expect to see a slight increase in the rate of foreign ownership in 2023 and 2024, as the market and economy also stabilize. Potentially, up to 2% of all sales, instead of under 1% as we have seen over the past 4 to 5 years.

Looking Ahead

Looking ahead we see more stabilization in the market and do not predict any further interest rate increases in 2022. We predict the Bank of Canada will likely increase rates moderately into 2023 and then may consider a moderate reduction in Summer 2023. If the interest rates remain unchanged for the next quarter, this will also help instill consumer confidence in the market.

Inflation with respect to land prices and building costs, while not significantly occurring yet, could be part of the 2023 story. Although energy prices are not likely to decrease given the current conflict in the East and we do not mean Ottawa. Or do we?

Additionally, we anticipate delayed launches and improved absorption rates in 2023, which will again influence consumer confidence and reducing the uncertainty they have felt over the second and third quarters this year. With an eye on 2023, we predict 2023 overall to be more in line with 2016, albeit at overall prices when 2016 was basically a stable year.

As we head into the holiday season and pressed to sell the last homes of 2022, our teams across the province are asking themselves the following:

What are the implications of the outcomes of the civic election? Which municipalities will become more collaborative with the development industry? Which not so much?

Will the provincial government need to step in as proposed in 2023 to

address the supply issue and expedite approvals? The supply issue remains a real one even though it may appear to be “hiding in the woods” of slower absorptions in late 2022. We expect it to be a big story again a year from now.

Which market areas will be the most active in 2023, and the least? Overall we anticipate a stable 2023.

We invite you to share your predictions with us.

If you have a view you would like to share and/or questions you would like to discuss please contact Jamie at jamie@fifthave.ca.