I really keep hoping that I will be able to change the name of this newsletter and start talking about real estate WITHOUT a Covid spin...but then BOOM another variant pops up! So, we continue with Covid showing protocols and continue to hope you are all staying healthy.
As I explained in my last newsletter, from April through to the end of September this year we had 5 months in a row where the sales volume in Greater Vancouver decreased from the prior month. Then in October 2021 we saw an 11 percent increase in the number of sales when compared with September 2021. Now in November we saw a very tiny slump with a 1.9% decrease in sales as compared to October 2021. Having said that, November sales were still a whopping 33.6% above the 10 year November sales average. And of course, there are still a lot of bidding wars pushing the prices up.
So, the market continues to favour sellers. The question is how long will that last? With so many buyers still wanting to buy, one would think it might continue for a while. However, over the last several months, and in the Throne Speech in November, the federal government has announced a number of initiatives which may be brought in to assist buyers/cool the red hot real estate market, including:
-banning blind bidding to help buyers avoid "overpaying" for homes
-implementing a 7 day rescission period where buyers can back out of buying a home even if they bought it without subjects
-bringing in a rent to own program for first time buyers
-implementing changes to the First Time Buyers Incentive to further assist first time buyers
-raising the insured mortgage amount from up to $1 million to $1.25 million
-developing a Housing Accelerator Fund of $4 Billion to increase housing supply
-banning foreign buyers to remove that competition from the market leaving more options for local buyers
In addition to these changes, we are also expecting interest rates to increase. Rate increases tend to dampen the market but the increases will likely still keep us at very low rates for many years.
There may be a lot of changes coming up in 2022....most of which are directed at helping buyers (which usually hurts sellers). As we know, sometimes these government interventions work; other times they do not. A couple of the proposed initiatives could very easily backfire. It is too early to tell at this point. I suspect the market will soften in the next year or so-even without these measures. Crazy hot markets can only last for so long and what comes up, must come down! When I lived in Japan (also a clean, safe and beautiful country) that country was in the middle of a real estate boom that people did not think could end...but it did..and it still isn't back to where it was over 20 years ago. I doubt that will happen here, but it is an example of how hot markets can implode.
We don't know what will happen over the next 1-2 years but it seems that we will see a cooling off...Timing is EVERYTHING in real estate....and the market currently remains very seller-friendly. I won't be placing any bets on when that will change but if the above measures are brought in in 2022, they will undoubtedly have an impact on our market and could shift us from a sellers' market to a buyers' market, or at least to a more balanced one.
If you have been thinking of selling your home or if you would like to discuss the current market (or anticipated future market) and how it may affect you, please let me know.
Stay Healthy!
