As expected, multiple rate cuts weren’t enough to increase market activity in the Fraser Valley, with August sales being the second slowest we’ve seen in a decade.
Real Estate Landscape in the Fraser Valley
Jordan here with your Fraser Valley real estate market update for September 2024.
We actually just saw our 3rd consecutive ¼ point rate cut, as the Bank of Canada tries to steer the economy towards that elusive soft landing while avoiding the recession some would argue we’re already in.
With inflation targets coming in below expectations, I’m hearing sub 3%, they have a little more runway to take the pressure off without too much concern that they’ll blow past inflation targets even if they heat the economy up more than they’d like. This is obviously welcome news to beleaguered borrowers, but we are still a ways away from benefiting from the downstream effects.
First, let’s talk stats, and then I’ll get into what I’m seeing out in the wild.
The Fraser Valley Real Estate Board recorded 1,067 sales in August, down by 13% over last month and by 30% over the 10-year seasonal average. August sales were the second slowest seasonally adjusted sales in a decade.
Inventory levels in the Fraser Valley dipped slightly in August with active listings at 8,626, down 1% from July, but 37% higher than August of 2023.
New listings dropped nearly 20% in August, to 2,778, largely because Sellers have decided to wait for the stronger fall season. With a sales-to-active listings ratio of 12%, overall market conditions are just shy of a buyer’s market. The market is considered balanced by the Real Estate board when the ratio is between 12% and 20%.
The last time the Fraser Valley dipped into buyer’s market territory was spring 2020.
Even Langley townhomes, which has been on of the strongest performers took a significant dip last month, moving from strong sellers into balanced, and seeing sales fall by 40% month over month.
Oddly enough, Chilliwack condos was one of the only markets in the Valley that saw both an improvement in sales and prices. I have a strong feeling that it’s due to it being the most affordable product in the most affordable market area, and people are choosing value as they continue to be squeezed financially. As rates drop further, this is likely a market to watch for healthy value gains. If you’d like to see more in depth stats, check out our market areas page.
Across the Fraser Valley in August, the average number of days to sell increased slightly with a single-family detached home taking 33 days, while for a condo it was 32. Townhomes took, on average, 28 days to sell.
Inventory up, sales down, days on market up, so it’s no surprise to see benchmark prices in the Fraser Valley dipped again in August, with the composite Benchmark price at $992,800.
- Single Family Detached fell to $1,523,500, down 0.4% compared to July 2024 and down 0.4% compared to August 2023.
- Townhomes fell to $846,300, down 0.3% compared to July 2024 and down 0.1% compared to August 2023.
- Apartments fell to $546,200, down 0.9% compared to July 2024 and down 0.8% compared to August 2023.
So we’re continuing this slow downwards trajectory, at least for now. These aren’t massive drops, but each month adds up, and we’re moving towards more affordable price points. With rates continuing to fall, we’ll reach and then surpass that equilibrium point where buyers en masse decide that now’s the time. We’re not quite there yet though.
Anecdotally, lenders are competing harder than ever to maintain market share, and we have seen fixed rates start falling as a result. RBC Rate Ware In a recent interview Dave Mckay, an executive with RBC called the rate war they’re in “historic”. RBC Record Earnings Sounds a little hyperbolic to me, considering their recent earnings call also lead to historic share prices with a 3rd quarter earnings of 4.49 billion. That’s up $630 million over last year, so you’ll forgive me if I don’t shed a tear for the big banks. Either way we’re officially back in mid 4’s for many borrowers.
Bond Yields Speaking to a trusted broker colleague of mine, he expects rates to have a 3 in front of them by Halloween, pushed down by falling bond yields. He also cautioned that the weatherman has better luck with predictions, so take that with a grain of salt. I guess we’ll see pretty quick here.
That brings us back to the equilibrium point I mentioned. I’ve had a lot of clients this past year that want to move up, either in size of home, or to a location that suits them better but just can’t make the numbers work because of the rates. There are some that have purchase price as the main hurdle, but for most it’s rates. So they’re planning to wait on rates to drop in order to make their moves. This is the safest, and most financially prudent course of action. Unfortunately it’s also what everyone else is doing, and I personally prefer to be proactive rather than reactive when it comes to real estate. I actually just acquired another property for my personal portfolio, closing on it at the end of the month. Did I buy at the absolute lowest point in the market? Maybe, maybe not, but I know that I got good value for a great property today because I wasn’t competing with a bunch of other buyers that have been waiting to make moves for years. Bear in mind, the demand for real estate hasn’t changed, only the ability by which a consumer base can satisfy that demand. I see it as a bit of a stretched rubber band.
So that was a long winded way of saying, things are slow now, but I don’t expect them to stay that way forever. The question is when do we bottom out and begin the upward climb on sales and prices. My gut is telling me that it’s sooner rather than later, but as fans of the Chosen will tell you, soon is the most imprecise word in the world. If I had to put money on it, and I sort of just did, I’d say bottom in about 3-4 and then a strong climb come Spring 2025.
But that’s just my opinion, what do you think? Do you think we’re near the bottom of the market, or is there a long way to go? Do you believe fixed rates will be in the 3’s by Halloween? I’d love to hear from you.
And as always, if you have any questions Fraser Valley Real Estate, whether that’s buying, selling or investing; give me a call. Thanks!
