A just-released report on rising interest rates gives potential buyers and sellers an idea of the impact already seen in the Vancouver area, and results vary by city.
HouseSigma brokers say those involved in the local real estate market are seeing price drops, longer listing periods and some homes not selling at all.
In a report on Thursday, the company said the median selling price across the Vancouver area fell to $922,000 in May.
That’s down 12.11% from what sellers were getting for their homes in February ($1,049,000).
HouseSigma blames the Bank of Canada’s overnight lending rate, which was recently increased by 0.5%, to 1.5%.
This is the third increase this year, after similar movements in March and April. The report’s authors tried to track the impact on the country’s hottest real estate market and found that while some buyers had already locked in a lower rate earlier this year, the data suggests changes are afoot. In progress.
Looking at the median selling price across the region, it was close to the $1.05 million mark before the rate hikes began.
In March, that median fell to $980,000, and in April it was $976,000, followed by another drop in May.
NOT ALL CITIES ARE IMPACTED TO THE SAME SCOPE
According to the June 2 report, some communities have seen a bigger decline than others. While the average for the area is down 12.11%, sellers of single-family homes in Maple Ridge got almost 15% less for their homes in May than in February.
New Westminster also saw a shift in favor of buyers with a change of 14.71%.
Sellers in Surrey were also hit harder than average, while those in Langley were near average.
Port Moody sellers also recorded a double-digit decline, albeit below average.
“We are now starting to see the full effect of rising interest rates on buying and selling habits,” HouseSigma broker Hao Li said in a press release on the report.
“These double-digit declines in single-detached home averages in areas like Surrey and Maple Ridge highlight the pullback that is occurring in the BC market.”
But the data also suggests that it’s still good to be a seller in one area: West Vancouver.
In this community, the median sale price has actually increased significantly from February. Shoppers paid a median of $3.52 million, up 13.55% from what they paid in February.
See a larger version of the integrated chart on the HouseSigma blog.
HOUSES DO NOT SELL AT ALL
In addition to the price at which homes are selling, the report looked at whether they are selling at all.
Terminated listings, meaning listings that have essentially expired — they haven’t sold for a specified time and have been removed — are up 121% from February.
According to HouseSigma, 2,331 homes fell into this category at the time. By March, 3,095 registrations had been terminated. In April: 3,590. 5,141 other registrations were terminated in May.
Li said there were several reasons for this, one of which was that sellers decided the offers they received weren’t good enough. They can then choose to remove it and re-list the property to attract a new set of potential buyers.
Sometimes, too, sellers pull the property off the market because it has been idle for a while, thinking they might try again when conditions change or at another time of year.
WHAT THIS MEANS
According to Li, this suggests a sharp turn since the height of the pandemic when buyers rushed to find options, “rising prices at a rate we’ve never seen before.”
Now it seems buyers aren’t feeling rushed and think they might get a deal or find a better option if they wait, Li said.
“Since the Bank of Canada began raising rates, buyers have steadily taken a more wait-and-see approach to buying a home, and sellers have had to adjust their selling price expectations,” Li said.