Happy New Year everyone! I hope the holiday season has been good to you all. 2018 turned out to be the slowest year in Vancouver real estate sales since 2000. Wow! A 31.6% decrease from 2017 and 25% below the 10-year average.
So, there is no surprise that the month of December was a slow month. 43.3% below the 10-year December sales average. There are less new listing coming in. 25.6% less compared to December 2017 but because of the slow sales the inventory is 47.7% greater than December 2017.
The sales-to-active listings ratio for December is 7.1% for detached homes, 12% for townhomes and 14.2% for apartments. The worst of the last 4 months.
The benchmark prices in the last 6 months for detached homes has gone down 6.6%, for townhouses it has gone down 5.1% and apartment has gone down 6.5%.
So, what should we expect in 2019? In terms of interest rates, they should not go up much. My guess is 0.25% or 0.50% max. Global economic growth has been slowing and many expect a recession in the US within 24 months. Many believe the US will be pausing their interest rate increases. In fact, some predict that there might not be any interest rate increase this year! Amazingly, some have said the same for the Bank of Canada. With the US possibly holding steady for longer, it allows the Bank of Canada to do the same without fear of currency devaluation. This week the Bank of Canada did acknowledge the slow down in the housing market was more than expected. Along with the negative effects of the weak oil prices, this was enough for the Bank of Canada to decide to kept the overnight rate unchanged at 1.75%.
In terms of prices in 2019, the general consensus is flat to slightly lower. Here is a list of predictions.
BC Real Estate Association expects a 5.8% rise in price.
Re/Max predicts a 3% drop.
Royal Lepage predicts a 0.6% rise.
Price Waterhouse Cooper predicts a 2.9% increase.
Central 1 Credit Union predicts little movement in the median home prices.
CMHC predicts a drop in price in the range of 0% to 10%.
Without any external stimulus, I don’t see prices going up. With the foreign buyer taxes, empty home tax, speculation tax and controversial school tax coming into full effect in 2019, there should be some pressure to sell early in the year. Sales of detached houses should continue to be weak. Condos should fair better due to the lower price point.
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