Jay Mcinnes

Mobile: 604-771-4606

EMAIL

Ben Robinson

Mobile: 604-353-8523

EMAIL

Chase Nelson-Murray

Mobile: 604-671-5362

EMAIL

October Real Estate in Vancouver = Delusional Sellers

OCTOBER REAL ESTATE IN VANCOUVER = DELUSIONAL SELLERS

This won’t come as a surprise when I say this, and if it does, welcome back from the rock you’ve been living under for the last 6 months, but the housing market is cooling - Canada wide. We’ve known for a while, long enough that the “nay-sayers” cannot argue it anymore. Well now it’s been some time since the market shift took place, we need to look forward into what this means for buyers and sellers.
We face an interesting market currently, as usually we have one of two factors taking place. Either prices are rising and people cannot afford to buy, which puts us comfortably in Sellers market territory. Or prices are coming down and buyers are waiting to jump on low pricing, known as the buyers market. Well now we have pricing coming down (for Sellers), but interest rates rising (for buyers) making these cheaper homes actually more expensive. It’s like pushing the break while hitting the accelerator. Eventually one is going to give. I’m not sorry to say it, but I’m looking at you sellers!!
Eventually this plays out for buyers. Interest rates will hold, and eventually reduce as inflation comes into line. Supply induced inflation is getting significantly better over time, this allows the Bank of Canada’s monetary policy moves, a.k.a. Interest rate hikes, bond selling, foreign currency purchases etc, to start working in our domestic economy i.e. inflation caused by Canadian fiscal policy itself.
When this is the case, and inflation starts ticking in the right direction, that means the BOC will start reducing interest rates, freeing up the door for buyers to step into the market where they could not before. You’d think this would help sellers. This is only the case if enough buyers enter the market and push us to sellers territory. Considering we are 33% off even reaching the 10-Year average, we have a long way to go to push us back into sellers territory.
On top of this, interest rate hikes will very likely not be dropped until Q4 in 2023, possibly Q1 in 2024. So everyone on the market is either going to just sit there and build up days on market, or come off and retry at a better time. The challenge being, what happens with pricing until that “better market”. Obviously pricing adjusts downward. The reality - There are buyers out there, a lot more already than the board numbers give credit. But there is no inventory for them. So as a seller you are fighting in a declining market, with next to nothing inventory i.e. competition to you. Put simply, you have very minimal competition against your property, buyers are out there as they can’t physically find the inventory to purchase, and you’re STILL not selling? Yep, the problem is you, more specifically your expectations. 
Even though housing prices themselves have come down already, it’s never been more expensive to purchase given elevated interest rates. So even if your $1,000,000 dollar home has gone down 15% to $850,000, with today's interest rates, it’s more expensive to purchase that $850,000 home. So in a correcting market, you’re essentially asking for more than when the market was red hot?! It makes no sense! Your expectations make no sense.
As for the numbers, the Home Price Index sits at $1,148,900 (combined), that’s 0.6% decrease since last month, a 9.2% decrease over 6 months. The Sales-to-active listings ratio sits at 19.3%, we were achieving the mid 40’s earlier in the year. In fact total listings are up 22.6% year over year and we are still seeing all of the metrics trend downwards. Don’t forget these numbers are also delayed and don’t represent the live market. As we’ve discussed, the trend is downwards so expect these numbers to decrease further as we head into winter and the holidays, let alone any economics at play.
The Detached market has already been knocked for six. We’re seeing the condo/townhouse market now see days on market build, a telling sign price adjustments are on the way. So where does that leave us?
Sellers, your expectations will need to be adjusted or you will just sit there. Emphasis on the just sitting there part, this isn’t a game of “I can wait until the right buyer comes around” or “It will just take me longer to sell but I’ll get my price”. To make matters worse, your community neighbours and fellow sellers WILL adjust expectations, so you’ll see their homes sell for less, further cementing a lower market value. Then you’ll inevitably fall into the fun old game of “Chasing the market down”.
In review, jump in the puddle and get it over with, before that puddle becomes the deep blue abyss. You’ll thank yourself, and me, looking back on this in 10 years. The biggest issue that sellers face in any market is their own expectations. As we’ve said countless times, market value is market value, regardless of whether you’re happy about it or not. You’ve also had the last two years to be not just happy about it, but over the moon. At this point, the agonising truth is you missed the market. It’s never fun to realise, but don’t get too caught up and do yourself a double disservice. You can still win, it’s just a win and not a WIN!