As we bid farewell to the year 2023 and gaze into the horizon of the future, I invite you to join me in exploring the housing landscape for 2024. Your valuable time is appreciated, and should you wish to delve deeper into the discussion, feel free to reach out.
Every month, I eagerly anticipate the comprehensive summaries offered by the Greater Vancouver Real Estate Board. The most recent data suggests that we are still navigating a balanced market, with a persistent downward pressure on prices. Over the last month, residential composite prices have seen a modest 1.4% decrease, while a 3.2% drop occurred over the past three months. The era of record-breaking sales volume is now behind us, with sales figures 10.3% lower than 2022 and a substantial 41.5% decline from 2021. With no foreseeable external influences on our real estate environment, I am convinced that we are currently at the pinnacle of prices, and a gradual descent is on the horizon.
In the intricate realm of real estate, simplicity often prevails through the dynamic of supply and demand. When demand surpasses supply, prices rise; when supply outweighs demand, a reversal ensues. Despite local news consistently reporting a housing shortage, I feel that high-interest rate are limiting the overall demand for home purchases.
I recently attended a conference for managing brokers hosted by the BCFSA that provided valuable insights into the real estate industry's future. Concerns echoed throughout the conference regarding housing affordability in our current interest rate climate. While a 5% mortgage is still relatively low, the timing of past rate increases is crucial. Over the past decade, as land values in the GVRD soared unprecedentedly, we concurrently experienced historically low interest rates. This period witnessed many individuals stretching their financial limits to enter the market. Although the Bank of Canada set a qualifying rate higher than contracted mortgage rates, current fixed rates often surpass the qualifying rate at the time of the mortgage applications.
What does all this mean???
Drawing from my 35 years of experience, research and insights, I anticipate 2024 as a transitional year. Forecasts suggest a slight decline in interest rates. There are signs that show that the 12 rate increases of recent years are taking hold on curbing inflation. The challenge lies in the gradual nature of this descent. At the current time, there are many people that have been struggling with the higher interest rates on their varaiable rate mortgages. These people have held on in hopes that rates would decline quickly. A tipping point awaits those with variable rate mortgages, as they may no longer refinance to manage their debt. They may be forced to sell and either buy a more affordable home or enter the rental market.
Meanwhile, individuals who opted for fixed-rate mortgages during the recent boom face renewals in the coming months and years. With limited options for some, selling their homes may become a necessity, either to downsize or enter the rental market. Foreclosure also looms as a potential outcome for those who find themselves unable to meet their mortgage obligations due to internal or external life changes.
(for more information on the foreclosure process, please watch my video by clicking here)
Yet, amidst these challenges, there is a silver lining. The real estate market will persist, with buyers and sellers navigating their roles. The key lies in understanding where you and your family fit into this evolving narrative. I trust you find these insights valuable as you contemplate your moves in the real estate arena in 2024.