As RE/MAX Canada’s 2022 Hot Pocket Communities Report compares the market activity of the first two quarters of this year, the current state of the housing market is coming into focus.
The recent report took a look at the communities of Greater Vancouver and Fraser Valley — including the Sunshine Coast, the Howe Sound area, Squamish, Whistler and Pemberton — and compared the changes in housing prices between the first and second quarters of the year.
What's influencing the market?
In an Aug. 30 interview with Coast Reporter, real estate advisor Tim Hall, who worked on the Hot Pocket Communities Report, said the report’s goal is to highlight the changes of the market in the last two years, in terms of home prices and inventory levels. The first quarter (Q1) was busy, but quarter two (Q2) saw a “significant change” as inventory began to increase. Interest rates have also increased, and the next announcement is expected on Sept. 7.
On the Sunshine Coast, there were 356 detached homes sold in Q1 2022, and 281 units sold in Q2, representing a decrease of about 21.1 per cent. Hill says a big contributing factor to sales in Q1 was families moving up in the market. The inventory turning point of sorts came around spring break, when families decreased their focus on real estate.
“So very quickly, it was noticeable that buyers had more choice. And when buyers have more choice, it can cause indecisiveness, which is totally OK. It also caused a lot of people to take a step back, and not make a quick decision or a rash decision,” Hill said. “On top of that, when there was more choice and less competition, it brought offers with subjects back into the market as well.”
Hill said the ability to travel again could have been a factor, similar to when travel restrictions were lifted on July 1, 2021, and the housing market saw a “slow and roller coaster market” through July and August that year.
Year-over-year number of sales down
Comparing year-over-year, there were 445 sales of detached homes in January to June 2021. During the same time period in 2022, there were 333 sales of detached homes, marking a 25.2 per cent decrease. That decrease, Hill says, is not as high of a decrease as other areas have seen. In Maple Ridge and Pitt Meadows, sale numbers went down by 43.7 per cent, and the decrease was even higher in Whistler and Pemberton (although the latter locations have a smaller market for detached homes, Hill notes).
“We were hovering in a low inventory market for so long. And with the [worry] of selling your home before buying your home and wondering if you'd have a roof over your head, I do believe that held a lot of people back, which is one of the reasons I think the sales numbers and the inventory numbers were down consistently until inventory started increasing,” Hill said.
“Buyer sentiment changed virtually overnight as growing geopolitical concerns and spiralling inflation destabilized global markets, leaving the Bank of Canada little option but to raise interest rates,” Christopher Alexander, president of RE/MAX Canada, said in a press release. “Those fast and furious incremental increases placed downward pressure on housing sales and prices, improving affordability on one hand, but eroding it on the other.”
Rethinking the urban exodus
The report also notes a “reversal in pandemic trends over the past six months, as work-from-home situations change and buyers rethink the exodus to suburban and rural areas. But the Greater Vancouver housing market experienced an increase in sales in 31 per cent of regions (five of 16 regions), including Island-Gulf, North Vancouver, Squamish, Sunshine Coast and Whistler/Pemberton,” according to the press release.
But with prices moderately increasing in West Vancouver and the Howe Sound area from Q1 to Q2, both the Sunshine Coast and Squamish recorded a zero per cent change in median pricing.
Year-over-year prices up, but holding steady
Median prices in 2022 compared to 2021 show a year-over-year increase on the Sunshine Coast of 22.1 per cent, as the median price in 2021 was $860,000. The median price for the first two quarters of 2022 has held at $1,050,000. (Of the 16 areas included in RE/MAX’s Greater Vancouver region, only the Gulf Islands has a lower median price than the Sunshine Coast at $798,000.)
As for the rental market, Hill says it’s still busy, in part due to affordability. “There's no denying that homes are expensive, right? Whether it's a condo, townhome or a detached house, it takes a lot to be able to finance that. There's a good chunk of people that do make good incomes, but saving for a down payment can be very difficult in an expensive city, and so carrying the mortgage might be less of a concern than being able to save in the higher cost of living market that we are in,” he said.
“While we have seen some easing in prices, the sky is nowhere near falling,” Elton Ash, RE/MAX Canada’s executive vice president, said in the release. “In fact, there is relative stability in terms of market conditions, so buyers shouldn’t expect big bargains. Sales-to-active listings remain squarely in balanced territory overall and even tight in some areas. In Vancouver, for example, supply was lower this June than last in 50 per cent of markets and sales are down accordingly. This trend will likely keep prices fairly stable moving forward.”
“For those buyers that were active in Q2, improved housing affordability due to easing prices and the threat of higher rates down the road clearly provided the impetus for many to leap into detached home ownership,” Alexander said. “Greater selection, particularly in coveted hot pockets, also played a significant role in April and May as the pandemic-fuelled buying spree drew to a close. Buyers locked into five-year fixed terms as the overnight rate hovered between one per cent in early April to 1.5 per cent in early June.”