The stats are in!
August has shown a further continuation of the cooling trend we have been experiencing over the past months. There has been a decrease in both the number of properties listed and sold during the month relative to July 2022.
While August is historically a slower month for real estate due to individuals focusing on summer weather and family vacations, the number of sales this August was 29% below the 10-year August sales average.
Why is this year different?
Likely due to several factors: rising interest rates, inflationary pressures, and uncertainty in the global economy.
The effects of the recent 75 basis point increase in the Bank of Canada’s prime rate (previously at 4.7%, now 5.45%) are beginning to be felt and are likely to continue to affect the changing landscape of Canadian real estate as the cost of borrowing rises.
While inflation remains high, negative pressure on Canadian households’ disposable income continues. Over the past few months, this negative pressure has contributed to the decrease in the number of buyers able to qualify for mortgages in order to purchase a property.
As global tensions remain elevated, Canada and its trading partners will continue to feel the negative effects on real (inflation-adjusted) GDP growth. The decrease in GDP growth will continue to make Canadians more cautious about their spending.
The combination of these 3 factors continues to contribute to decreasing sale prices of Canadian real estate, as we have been experiencing over the past months.
Historically, real estate activity in September tends to pick up as children return to school and people settle into new routines. Whether the same will be true this year is yet to be seen but, so far this month, we have been feeling a slight uptick in buyer and seller activity relative to August.
Have any questions? Give us a call!
Sources: Real Estate Board of Greater Vancouver