Cooling trend continues in B.C.'s residential real estate market

A real estate sign is pictured in Vancouver, B.C., Tuesday, June, 12, 2018. THE CANADIAN PRESS/Jonathan Hayward

High interest rates are continuing to have a cooling effect on B.C.'s residential real estate market, as sales slump, active listings plateau and average prices dip.

The BC Real Estate Association's October report shows a 45.5 per cent decline in the number of sales, a 47.2 per cent drop in sales volume and a 3.1 per cent decline in average price compared to the same time last year.

"It's pretty much a continuation of the trends that we've been seeing since rates started rising, and rising rapidly," Brendon Ogmundson, the association's chief economist says.

"We have rates at their highest levels since 2007 and going up at the fastest pace since the early 1990s. That's having a major impact on sales activity.”

The current state of the market means buyers will have more time and more choice than they did amid the frenzied activity of 2021 when low inventory triggered bidding wars and quick sales on many listings.

"Buyers probably have a bit of an upper hand but generally what we're seeing is a market that's kind of finding some balance," Ogmundson says.

"As long as we have rates at these levels, we're going to see pretty slow activity. On the supply side it looks like things are kind of plateauing. We're just getting back to pre-pandemic levels of active listings in the last month or so."

Sellers will have to adjust, he adds, to the reality that their listings will sit on the market for longer and that process may have to be reduced.

"Whenever you have a market that transitions this quickly, buyers and sellers, their expectations – especially on price – are pretty far apart," Ogmundson explains, saying sellers are slower to adjust to the changes.

A regional breakdown shows that drops in both price and activity are most pronounced in the Fraser Valley, which includes Surrey and Langley, and farther east in Chilliwack. In the former, the average price is down 8.3 per cent while sales are down 53.9 per cent. In the latter, the price has dropped by 11.9 per cent while sales have dropped by 60.9 per cent.

Ogmundson says this is largely due to a pull back on demand in those markets, where a desire for extra space and a transition to working form home drove demand and prices up in the earlier days of the pandemic. With people returning to in-person offices and high gas prices, commuters are generally shifting their focus on properties closer to the city centre.

In Greater Vancouver, year-over-year prices were up 0.7 per cent compared to 2021, with the average sitting at $1,231,805. Ogmundson says the relatively modest fluctuation reflects the fact that demand in this area did not see the same kind of rapid rise as in other markets.