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The Royal LePage Home Price Update and Market Forecast was distributed to the media early this morning. The release, distributed each quarter, includes price data and insights from experts in 63 real estate markets across the country, as well as national and regional forecasts. The link is to the full article and I have highlighted key points and Market information for Greater Vancouver in the post.

After a stronger-than-anticipated first quarter, upward pressure on home prices is rising. Previously sidelined homebuyers are rebooting their purchase plans in anticipation of tight competition following an expected easing of interest rates later this year.

First-quarter highlights: 

• National aggregate home price expected to rise 9.0% year over year in Q4 of 2024 (up from previous forecast of 5.5%)
• Aggregate home prices in the greater regions of Toronto and Montreal expected to increase 10.0% and 8.5% year over year in Q4 2024, respectively, the highest forecasts of all major regions
• Royal LePage^® expects home prices in the Greater Toronto Area will surpass those in Greater Vancouver in 2024
• Among major regions, Calgary recorded highest year-over-year aggregate price appreciation (9.7%) for the second consecutive quarter; increased 1.9% on a quarterly basis
• 89% of regions in the report recorded quarterly price appreciation in the first three months of the year, ahead of the traditionally busy spring market period

Interest rate cuts and mortgage renewals

“Given the strong start to 2024, the cadence of the market for the balance of the year points to a normally busy spring market that will lead into an uncomfortably busy fall. It is clear we are rapidly transitioning away from a buyers’ market and back to an environment where the seller has the upper hand,” noted Soper.

By the end of 2026, almost all mortgages taken out before the Bank of Canada started raising its key lending rate in March of 2022, will have transitioned through a renewal cycle and into an elevated borrowing rate environment.^[1]

“Homeowners who took advantage of the historically-low mortgage rates at the beginning of the decade have soberly accepted that their upcoming renewals will mean higher borrowing expenses. We do not see this as a material drag on the housing market. Two years into the post-pandemic period, about half of mortgages have rolled off those record lows, and Canadians continue to meet obligations to their lenders, with the national mortgage default rate remaining at near historic lows. Further, income growth and the period of flat home prices have helped to mitigate the impact of increased mortgage costs. People will go to great lengths to hang onto their homes, so we can expect a pull-back in discretionary spending, including on travel and entertainment,” said Soper.

Forecast

Royal LePage is forecasting that the aggregate price of a home in Canada will increase 9.0 per cent in the fourth quarter of 2024, compared to the same quarter last year. The previous forecast has been revised upward to reflect a stronger-than-expected first quarter.

Nationally, home prices are forecast to see strong price appreciation through the second and third quarters, and taper off in the final months of the year, as is the seasonal norm. 

The full article gives Canadian Market Regional Summaries with both Survey Charts and Forecast Chart. Here is the summary for Greater Vancouver.

Greater Vancouver 

The aggregate price of a home in Greater Vancouver increased 3.4 per cent to $1,238,200 year over year in the first quarter of 2024. On a quarterly basis, the aggregate price of a home in the region increased 1.5 per cent.

Broken out by housing type, the median price of a single-family detached home increased 5.3 per cent year over year to $1,750,000 in the first quarter of 2024, while the median price of a condominium increased 4.3 per cent to $778,600 during the same period.

“Heading into spring, the Vancouver market has been steadily gaining momentum, though not at the feverish pace that other markets across Canada have seen as of late. Desperately needed housing inventory has been building, pushing the reserve of homes up from 8,000 listings at the beginning of the year to closer to 10,000,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “We are not in a full on sellers’ market yet, but most housing segments are moving toward a sellers’ market and desirable, well-priced properties are being quickly snapped up, often in multiple-offer scenarios, a sign of pent up demand and that home prices will continue to increase as we head further into the second quarter. Buyers are coming off of the sidelines and are ready to compete.”

Ryalls added that the sentiment among developers remains lukewarm, as builders wait for more certainty on consumer appetite and the state of the Canadian economy before launching additional pre-construction projects. With interest rates anticipated to drop later in the year, development activity is expected to pick up as market conditions improve.

In the city of Vancouver, the aggregate price of a home increased 2.8 per cent year over year to $1,402,400 in the first quarter of 2024. During the same period, the median price of a single-family detached home increased 6.4 per cent to $2,253,300, while the median price of a condominium increased 6.3 per cent to $844,500.

“The gentle upswing in activity we’ve experienced in the first few months of the year is expected to continue throughout the months ahead, likely resulting in a moderate increase to home prices,” said Ryalls. “We predict that many buyers will attempt to enter the market in the near future in anticipation of a surge in demand when interest rates eventually drop.”

Royal LePage is forecasting that the aggregate price of a home in Greater Vancouver will increase 5.5 per cent in the fourth quarter of 2024, compared to the same quarter last year. The previous forecast has been revised upward to reflect a stronger-than-expected first quarter.

Royal LePage House Price Survey Chart: rlp.ca/house-prices-Q1-2024

Royal LePage Forecast Chart: rlp.ca/market-forecast-Q1-2024 

The Bank of Canada announced a lending rate hold on April 10, keeping its overnight rate at 5%, citing expectations of future economic growth despite concerns over persistently high inflation. While there’s been some easing in Consumer Price Index and core inflation, the Bank of Canada remains watchful for sustained downwards trends.

There is growing anticipation in financial markets that this decision signals the end of stability, with expectations rising for rate cuts starting in June. Job data from March showing the highest unemployment rate in three years and inflation below target levels support this view.

Despite the hold, the Bank of Canada is committed to carefully monitoring economic indicators to ensure stability and balanced growth, with market participants eagerly awaiting further policy adjustments in response to changing economic conditions.

Here is a link to the full announcement.

Let’s discuss any further questions or how this lending rate hold affects the sale of your home, or a future purchase.

The quantity of homes listed for sale on the MLS® in Metro Vancouver surged by almost 23 percent compared to the previous year, presenting increased opportunities for homebuyers searching for their ideal property this spring.

According to the Greater Vancouver REALTORS® (GVR), residential sales in the area reached 2,415 in March 2024, marking a 4.7 percent decline from the 2,535 sales reported in March 2023. This figure stood 31.2 percent lower than the 10-year seasonal average of 3,512.

In March 2024, Metro Vancouver saw 5,002 newly listed properties (including detached, attached, and apartment properties) for sale on the Multiple Listing Service® (MLS®). This indicates a notable uptick of 15.9 percent compared to March 2023, when 4,317 properties were listed. However, this figure fell short of the 10-year seasonal average by 9.5 percent, which stands at 5,524 properties.

In Metro Vancouver, the total number of properties currently listed for sale on the MLS® system stands at 10,552, marking a substantial 22.5 percent increase compared to March 2023 when there were 8,617 listings. This figure also exceeds the 10-year seasonal average by 6.3 percent, which sits at 9,923 listings.

Examining the sales-to-active listings ratio for March 2024 across all property types—detached, attached, and apartments—reveals a ratio of 23.8 percent. Broken down by property type, this ratio stands at 18.2 percent for detached homes, 31.3 percent for attached properties, and 25.8 percent for apartments.

Analysis of historical data indicates that downward pressure on home prices tends to occur when the ratio remains below 12 percent for an extended period, while upward pressure on home prices is often observed when the ratio surpasses 20 percent over several months.

Here is a snapshot showing a Sellers market in March 2024;

The BC Government has added information about how the BC home flipping tax applies to presale contracts to their website.

Please see some of the added information below;

Presale Contracts

If you enter into a presale contract to purchase a property under development, and you buy that property (i.e., you close on the property once it is complete), for the purposes of the 2 year window of the tax, you will be considered to have acquired it on the date you entered into the presale contract.

If a person is assigned a pre-sale contract and then closes on the built property, the acquisition date of the built property is the date they were assigned the contract.

When you assign a presale contract to another person within 2 years of entering into the presale contract, you will pay tax on any profit received from the assignment.

Examples:

• You enter into a presale contract on June 1, 2025 for a condo that will complete on March 1, 2027. If you buy the condo when it is completed on March 1, 2027, you will be considered to have acquired the property on June 1, 2025
• A person enters into a presale contract on June 1, 2025 for a condo that will complete on March 1, 2027. On December 1, 2025, the person assigns the right to buy the property to you. If you buy the condo when it is completed on March 1, 2027, you will be considered to have acquired the property on December 1, 2025

The Greater Vancouver housing market is off to a robust start in 2024, demonstrating
remarkable strength. February witnessed a continued surge in home sales, reaching a total of
2,063, an impressive 45% increase from the previous month and a notable 14% rise from last
year. This heightened sales activity has led to an uptick in property prices, with the average
home fetching $1,279,711 a monthly escalation of $27,319 and a yearly gain of $56,770.

The first two months of this year have proven to be unexpectedly bustling, particularly with eager
buyers entering the market. Consequently, sellers have responded by putting more properties on
the market, resulting in a substantial influx of new listings totaling over 4,550. As a result,
Greater Vancouver now boasts a total of 9,153 active listings.

Prospective buyers who had been biding their time in anticipation that lower interest rates would
lead to an easier path to home ownership in the latter half of 2024 may be met with a different
reality, as a recent article in The Globe and Mail suggests interest rate decreases could
potentially exacerbate the already soaring home prices. “As the bank inches toward easing
monetary policy, shelter price inflation and a jumpy real estate market remain the key challenge.
Rising mortgage-interest costs, which are directly tied to the bank’s past rate decisions, are the
single biggest driver of overall inflation. But interest-rate cuts, which would offer some relief to
homeowners with mortgages, will likely push home prices higher, further eroding housing
affordability.”

A closer examination of specific property types reveals the widespread nature of buyer activity in
the market. The detached housing sector saw a strong uptick in sales, totaling 565, a 45%
increase from the previous month. This surge in demand propelled the average sales price to
$2,166,302, representing a $61,779 jump from the preceding month.

Similarly, the condo market experienced a surge in sales totaling 1,094, a substantial 46%
increase month-over-month. This surge pushed condo prices to $827,544, marking a 6.3%
increase compared to last year and reaching the highest level in the past 21 months.

Townhomes also saw a surge in sales, totaling 316, an increase of 44% from the previous
month. With an average sales price of $1,133,478, townhomes experienced a $51,644 increase
in comparison to last year.

Here are the monthly statistics for Vancouver Real Estate Detached Home Sale Prices in February 2024;

See below the monthly statistics for Vancouver Real Estate Condo Sale Prices in February 2024;

Here are the monthly statistics for Vancouver Real Estate Townhouse Sale Prices in February 2024;

The Bank of Canada left its interest rate unchanged on March 6, announcing the interest rate is being held at 5%

The Bank of Canada Interest Rate hold at 5% is the fifth consecutive decision to hold the interest rate. Although some people may have thought interest rates may drop, the Bank of Canada says its “too early” to cut interest rates. Officials at the Bank of Canada have signalled the benchmark interest rate might be high enough. The discussion shifting now to how long the interest rate needs to stay elevated to bring inflation down to the Bank of Canada’s mandated target of 2%. Here is the full article.

What the Interest Rate hold means for the Real Estate Market in BC?

There are early indications that the Real Estate market is getting busier heading into the spring market. The interest rate hold announcement may come with lowering mortgage rates. Mortgage rates have slowly decreased since their peak in the fall of 2023. The interest rate hold announcement will increase confidence among real estate speculators.

For Real Estate Buyers and Sellers, this may be the time to make a your move into the market. Whether you are looking to downsize, upsize, relocate, or simply discuss local market conditions. This may be the right time to make a call to your local Real Estate Professional.

In the 2024 provincial budget, the BC Government is making three significant changes to the Property Transfer Tax Framework.

Here are the three changes;

1.      Increase the Fair Market Value Threshold for the First Time Home Buyer(FTHB) Exemption. Currently, the First Time Home Buyer full exemption applies to properties with a fair market value of less than $500,000. A partial exemption for properties with a fair market value of $500,000 to $525,000.

As of April 1st, 2024, the First Time Home Buyer exemption will apply to properties in a slightly different way. If a Property has a fair market value of less than $835,000, Property Transfer Tax is not payable on the first $500,000, but payable on the difference. For example, if a fair market value of the property is $700,000, Property Transfer Tax would be 2% of $200,000 ($700,000 less  $500,000). This change of not paying Property Transfer Tax on the first $500,000 saves the purchaser a total of $8,000.

If a property has a fair market value between $835,000 and $860,000, then only a partial exemption applies. The of a partial exemption are not yet confirmed by the BC government.

If a fair market value of the property is over $860,000, then there is no First Time Home Buyer Property Transfer Tax exemption. Here is a link to the details in the BC Budget announcement.

2.      Increase the fair market value threshold for the Newly Built Home Exemption

Effective April 1, 2024, the fair market value threshold to claim the Newly Built Home Exemption will be increased from $750,000 to $1,100,000. A partial exemption is also available for properties with a fair market value just above the threshold. The phase out range is $50,000 above the threshold, so properties with a fair market value of greater than $1,150,000 will not be able to claim the Newly Built Home Exemption. Here is a link to the details in the BC Budget announcement.

3.      Purpose-Built Rental Exemption

The 2023 Budget included a limited exemption for purpose built rental buildings that may limit the tax payable on values over $3,000,000. The 2024 Budget builds on this exemption and provides an exemption from the Property Transfer Tax on purchases of new qualifying purpose-built rental buildings. Here is a link to the details in the BC Budget announcement.

General Property Transfer Tax

The above are changes announced to the general Property Transfer Tax which is below;

The general property transfer tax applies for all taxable property transactions. The general property transfer tax rate is:

• 1% of the fair market value up to and including $200,000
• 2% of the fair market value greater than $200,000 and up to and including $2,000,000
• 3% of the fair market value greater than $2,000,000

Here is a link to the details of property transfer tax rates in British Columbia. These numbers can be confusing to calculate on purchase price of a home, message me for a breakdown.

On Thursday, Finance Minister Katrine Conroy introduced the BC provincial government’s Budget for 2024. The budget unveiled several new housing related measures, including the BC Home Flipping Tax. The House Flipping Tax is unlikely to have a meaningful impact on housing attainability according to BCREA.

Over the past several years, house flipping in BC, was a topic of concern for several reasons:

1.) Affordability: in British Columbia, especially areas like Vancouver, we have some of the highest real estate prices in Canada. House flipping in BC can exacerbate affordability issues since it often involves buying properties, making some improvements, and then selling them at a higher price. This can drive up our home prices, making it more difficult for first-time homebuyers or those with lower incomes to enter the market.

2.) Housing Market Volatility: House Flipping in BC can contribute to our housing market volatility. If a majority of home buyers are flipping houses, it can inflate prices rapidly. Conversely, if these house flipping investors suddenly exit the market or if there is a downturn, it can lead to a rapid correction, impacting homeowners and the broader economy.

3.) Tax Evasion and Speculation Tax: There have been concerns about the role of speculation and tax evasion in the BC real estate market. The provincial government has implemented measures, such as the Speculation and Vacancy Tax, to address these issues. House flipping in BC, facilitates speculative buying and selling that does not contribute to housing supply.

4.) Impact on Rental Market: When investors purchase properties to flip in BC, their primary goal is to renovate and sell the property for a profit within a short time frame. This can reduce the rental supply in an already tight market, affecting renters’ ability to find affordable housing.

The BC government has taken steps to cool the real estate market and address some of these issues. Introducing taxes aimed at speculators and foreign buyers, as well as measures to increase transparency and combat money laundering in the real estate sector. The effectiveness of these measures and house flipping in BC can vary over time especially with changing economic conditions.

It’s also worth noting that not all house flipping in BC is problematic. When done responsibly, flipping can improve the housing stock by renovating dilapidated properties and making them livable again. The key is finding a balance that allows for investment and improvement without contributing to affordability issues.

House flipping in BC will be taxed at a rate of 20% for properties sold within a year of purchase. The 20% rate will be in place for a year after purchase and will slide to zero between 366 and 730 days after the acquisition. House flipping in BC being taxed is only one of the 20 pieces of legislation the government plans to introduce. Here is a link to the BC Budget 2024.

When is the best time of year to sell your house? This is the age old question, with no simple answer. Historically, over the years, the best time of year to sell your home is Spring. The spring home selling market is typically when the inventory of listed homes for sale increases, hence creating a busier Real Estate Market and house sale price strengthen.

The 2023 Real Estate Market was a challenging year, affected by several factors including most importantly, rising interest rates and inflation, increasing the cost of daily essentials. In late 2023, mortgage rates for a 30-year fixed mortgage hit a 23-year high of 7.79 percent, and with mortgage rates so high, many sellers and buyers opted to wait.

Now that the first month of 2024 is complete, we are seeing the Real Estate market trending up, sales are up, sale prices are higher and there is a sense of consumer confidence. January sales in the lower mainland are up 38.5% year over year, here is a link to the full breakdown, https://www.gvrealtors.ca/market-watch/monthly-market-report/january-2024.html.html

Here are three reason why now is a good time to sell your house;

1.) Mortgage rates are dropping. In 2023, we saw a 23 year high mortgage rate. Since that high, we have seen a steady decline in mortgage rates. With mortgage rates trending down, we will see an increase of Buyers and Sellers entering the market making it easier to sell your home for a higher sale price.

2.) Inventory is still low. Inventory is still very low, creating a more balanced market. There is less competition for Buyers with lower inventory. With Spring right around the corner, inventory typically increases in the Spring which may affect competition and the potential sale price of your home.

3.) Beat the rush. This is a good time to make a Real Estate move. If your growing family needs more space, or empty nesters looking to downsize, now may be the right time to make that next move.

Deciding to sell your home is a complicated decision in usual circumstances, given this is ultimately a personal decision and can only be answered from your perspective, here is a list of questions you might consider when making the decision only you can make:

Are you also Buying a home? When you are listing it is important to understand if you are buying in the same market or not.

What is the house market doing? In British Columbia experts say if you are buying and selling in the same market, it does not matter when you transact! View Market Data

How much equity do you have? To understand a full financial picture, it is important to evaluate how much equity you have in your home.

What is the current value of your home? It is important to determine the current value of your home. This analysis is possible with online tools, or with the consultation of a Realtor. Understanding your neighborhood trends and comparing recent sale prices are some of the tools a professional Realtor uses to help determine the potential sale price of your home.

The Greater Vancouver Real Estate market has demonstrated impressive resilience as it kicked off the year with notable growth. Home values surged by $10,320 monthly and an impressive $84,637 year over-year, resulting in an average home sale price of $1,252,392. The surge in yearly sale prices coincided with a remarkable 37.5% increase in overall market activity, while inventory saw a 2.4% uptick.

The real estate landscape in 2024 has started on a positive note, industry experts predict a further acceleration in market conditions in the latter half of the year. This creates a timely opportunity for prospective homebuyers to make their move before the market potentially witnesses a resurgence of multiple offers and frenzied activity.

As highlighted in a recent Globe and Mail article, attempting to time the mortgage rate cuts may not be the best path forward. “The truth is no one knows the future of interest rates – even Mr. Macklem is uncertain about the possibility and timing of rate cuts. For first-time home buyers navigating the uncertainty, it’s crucial to acknowledge that a crystal ball for mortgage rates doesn’t exist. And getting caught up in the hype and uncertainty surrounding the future of rates is dangerous. When you buy your first home, aim for a reasonable degree of certainty regarding the people in your life and your housing needs; otherwise, you will end up having to sell sooner than you had planned and perhaps in unfavourable market conditions, costing yourself tens or even hundreds of thousands of dollars.”

In January, each asset class experienced both monthly and yearly gains, instilling confidence in homebuyers and sellers as market conditions stabilized. Leading the charge was the detached market, boasting an average sales price of $2,104,523 – a monthly increase of $40,801 and a significant yearly increase of $194,628 or 10.2%. The inventory for detached properties increased by 9.4%, with 3,310 active listings, resulting in a substantial 28.4% yearly gain in sales.

Condo prices also saw an upswing, reaching an average sales price of $816,427 – a robust yearly increase of 7.5%. The strength of condo sales played a crucial role in this upward trajectory, with January recording 749 sales, marking the 9th consecutive month of yearly gains. Sellers are becoming more confident in achieving sales, reflected in the market with 11.3% more inventory in January 2024 compared to the previous year.

Townhomes emerged as the highlight of the first month, experiencing a remarkable 83.3% yearly increase in sales, totalling 220 finalized transactions. The average townhouse in Greater Vancouver is now priced at $1,141,674, and despite a 6.8% yearly decline in inventory, the demand remains strong.

The REBGV highlighted the unexpectedly robust performance of the housing market. “It’s hard to believe that January sales figures came in so strong after such a quiet December, which saw many buyers and sellers delaying major decisions,” commented Andrew Lis, REBGV’s director of economics and data analytics. “If sellers don’t step off the sidelines soon, the competition among buyers could tilt the market back into sellers’ territory as the available inventory struggles to keep pace with demand. This follows a recent interview where Andrew expressed, “As we navigate through 2024, we expect a delicate balance between rising sales and normalizing inventories, which should lead to a relatively quiet year for prices.”

A promising indicator of the market’s potential for substantial gains is the re-entry of the Greater Vancouver housing market into a golden cross scenario. This pattern, characterized by a short-term moving average crossing above a long-term moving average, is considered a bullish breakout pattern, suggesting positive momentum and potential future growth.

The anticipated strength and resilience projected for the latter half of the year seem to be gaining traction earlier than expected. In light of this, both buyers and sellers should remain vigilant and prepared to make informed decisions as the market continues to unfold.

Here are the monthly statistics for Vancouver Real Estate Detached Home Sale Prices in January 2024;

Here are the monthly statistics for Vancouver Real Estate Condo Sale Prices in January 2024;

Here are the monthly statistics for Vancouver Real Estate Townhouse Sale Prices in January 2024;