It’s hard to believe we’re at the end of 2022 already! The year passed quickly but also brought some big changes to the world.
Real estate is more than a home – it’s a major investment. I treat it as such and feel that understanding the economic environment is a key part of my job. To put what’s happening today into context, and have any hope of planning for the future, we have to understand where we’ve been.
We started the year with an incredibly competitive real estate market, with January and February holding the momentum of 2021’s all-out frenzy. Everything changed when Russia invaded Ukraine on February 24th. Although it may not have been immediately apparent, this was a major moment that began shifting investor sentiment in 2022.
Inflation had been running higher than the Bank of Canada’s 2% target since the summer of 2020 and by January 2022 the annual inflation rate had hit 5%. The Bank raised rates for the first time since before the pandemic on March 2nd, but this was too late and inflation headed above 8% by June. Since then, inflation has been “sticky” at around the 7% mark.
As a result, the Bank of Canada has gone on a rate raising rampage, quickly sending rates from the lowest they’d ever been to a level that hasn’t been seen in nearly 20 years. It’s been a shock to the system.
At the end of February, I recommended to my upcoming listings that they list at the beginning of March rather than at the end. In each case, these sellers obtained their targeted sale price and comparable product which was listed even just a few weeks later sold for significantly less, after sitting on the market for months.
Since March, prices have been on a long, slow decline. But that’s not the whole picture and there are some interesting nuances worth understanding. CIBC economists published a summary of the key features of the Canada-wide market “correction” at the end of November, noting:
– Home sales had fallen for eight straight months before October brought a small uptick. Not only is that the longest stretch of falling sales on record, it is also the steepest.
– Inventories haven’t increased as quickly as one would think. The economists say sellers continue to sit on the sidelines with hardly any signs of distressed selling. “The abnormal behaviour of supply this time around has, so far, worked to limit the magnitude of the price decline,” they said.
– Home sales might be slowing but the rental market has never been tighter. With an estimated 700,000 people coming into Canada this year “demand for rental units is at a record high,” they said.
– The majority of housing markets in Canada are expected to be balanced by 2023 as sales and prices decline. The Greater Toronto Area, Greater Vancouver Area, Calgary, Regina and Winnipeg are already in balanced markets “in what is being called a healthy development.”
In terms of the Whistler and Squamish markets specifically, these ended the year in line with recent months. Whistler saw 34 sales in November, which remains significantly lower than the 5-year (2017-2021) November average of 72 sales. Of these sales, 88% sold for under the asking price, 6% sold for the asking price, and 6% sold over the asking price. In Squamish, there were 24 sales in November, of which 92% sold for under asking and 8% sold for the asking price. The 5-year average from 2017-2021 is 51 sales in November.
Real estate markets tend to go up quickly and come down slowly. Looking ahead to 2023, it’s tough to say what will happen (a crystal ball sure would be useful). My feeling is that prices will continue their slow decline, as the market continues to absorb the effects of higher interest rates. That doesn’t mean it’s a bad time to sell, if you’re planning on buying back into the market in the near term. Beautiful product is still selling quickly, if priced right. In many ways, if you put the extra effort into making your home shine, this is a good time to make a move as there is significantly more to choose from and without all the stress of being in a competitive environment. This is especially true if your mortgage is portable.
I hope you have a lovely holiday season and I look forward to helping you with your real estate needs in 2023. I’m always available for a conversation and am happy to help in any way I can. Happy New Year!
– Lindsay
For more updates and information, follow me on Instagram @squamish_whistler_real_estate
Call me: 604-612-1484
Email me: lindsay@lindsaymcivorrealestate.com