Increased seller activity is giving buyers more choice this spring
Increased seller activity is giving buyers more choice this spring The number of Metro Vancouver1 homes listed for sale on the MLS® rose nearly 23 per cent year-over-year, providing more opportunity for buyers looking for a home this spring. The Greater Vancouver REALTORS® (GVR)2 reports that residential sales3 in the region totalled 2,415 in March 2024, a 4.7 per cent decrease from the 2,535 sales recorded in March 2023. This was 31.2 per cent below the 10-year seasonal average (3,512). “If you’re finding the weather a little chillier than last spring, you may find some comfort in knowing that the market isn’t quite as hot as it was last spring either, particularly if you’re a buyer,” Andrew Lis, GVR’s director of economics and data analytics said. “Despite the welcome increase in inventory, the overall market balance continues inching deeper into sellers’ market territory, which suggests demand remains strong for well-priced and well-located properties.” There were 5,002 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in March 2024. This represents a 15.9 per cent increase compared to the 4,317 properties listed in March 2023. This was 9.5 per cent below the 10-year seasonal average (5,524). The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 10,552, a 22.5 per cent increase compared to March 2023 (8,617). This is 6.3 per cent above the 10-year seasonal average (9,923). Across all detached, attached and apartment property types, the sales-to-active listings ratio for March 2024 is 23.8 per cent. By property type, the ratio is 18.2 per cent for detached homes, 31.3 per cent for attached, and 25.8 per cent for apartments. Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months. “Even though the market isn’t quite as hot as it was last year, we’re still seeing modest month-over-month price gains of one to two per cent happening at the aggregate level, which is an interesting dynamic given that borrowing costs remain elevated,” Lis said. “With the latest inflation numbers trending in the right direction, it remains likely that we’ll see at least one or two modest cuts to the Bank of Canada’s policy rate in 2024, but even if these cuts come, they may not provide the boost to affordability many had been hoping for. As a result, we expect constrained borrowing power to remain a challenging headwind as we move into the summer months.” The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,196,800. This represents a 4.5 per cent increase over March 2023 and a 1.1 per cent increase compared to February 2024. Sales of detached homes in March 2024 reached 694, a 5.4 per cent decrease from the 734 detached sales recorded in March 2023. The benchmark price for a detached home is $2,007,900. This represents a 7.4 per cent increase from March 2023 and a 1.8 per cent increase compared to February 2024. Sales of apartment homes reached 1,207 in March 2024, a 7.9 per cent decrease compared to the 1,311 sales in March 2023. The benchmark price of an apartment home is $777,500. This represents a 5.7 per cent increase from March 2023 and a 0.9 per cent increase compared to February 2024. Attached home sales in March 2024 totalled 495, a 6.2 per cent increase compared to the 466 sales in March 2023. The benchmark price of a townhouse is $1,112,800. This represents a 5 per cent increase from March 2023 and a 1.7 per cent increase compared to February 2024. Greater Vancouver Market Update
First Time Home Buyers Things to Consider
every 12-month span since 1980, home prices (https://financialpost.com/tag/home-prices/) have risen an average of 5.78 per cent. That means, if you’re adequately qualified and financially fit, getting on the property ladder earlier in life can put you on the fast track to a secure retirement. Of course, there are would-be market psychics who argue there’s too much price risk to buy right now. But I’ve never met an expert that can consistently time when home values will bottom. So, as a young potential homeowner, how do you know when the time is right — when you’re ready to get your first mortgage What follows is a checklist to audit one’s home buying potential. Tick all of the following boxes to confirm you’re ready. • You’re past the age of majority in your province (lenders can’t discriminate based on age, as long as you’re a legal adult). • You’re a permanent resident of Canada. • You’ve got job security and are past any probation period at work. • You’ve got at least a five per cent down payment, the minimum on a home valued up to a $500,000 (or someone is willing to gift or loan you the down payment). • You’ve got at least 1.5 per cent of the property value for closing costs. • You’ve built up strong credit with a 680-plus credit score, but preferably 720 or better — it’s like high school grades, but for money. • You have at least two credit accounts with meaningful credit limits (a credit card with a $5,000+ limit is far more meaningful than one with $500). • Your estimated housing outlay is less than 39 per cent of your gross income. Some personal finance gurus (https://financialpost.com/category/personal-finance/) recommend 32 per cent or less, but that’s not realistic anymore. In lender terms, housing outlay means your mortgage payment (calculated with your expected rate plus two percentage points — the government’s stress test requirement (https://financialpost.com/tag/mortgage-stress-test/)), monthly property taxes, heating costs and half of any condo fees. • Your total housing outlay plus debt payments are less than the typical bank limit of 44 per cent of gross income. (You can find lenders that’ll allow higher on a 20 to 35 per cent down payment, but payment stress is correlated with hair loss. Avoid it if you can.) • You can prove enough income, or you have a co-signor (note: in most cases, self-employed, part-time and commission income require a two-year track record, but there are exceptions). • You’re prepared for rising property taxes (https://financialpost.com/tag/property-taxes/), rising condo fees (if applicable), rising utility costs and continuous home maintenance costs. • You’re a disciplined spender (new homes are money pits, and there’s nothing worse than digging yourself into a housing-induced debt hole with high-cost revolving credit). • You’ve got a five-plus year time horizon — so you can ride out market hiccups and not get trapped in a home that’s worth less than the mortgage. • You’ve done the math, and buying makes more sense than renting or parental basement squatting, after factoring in the monthly payment savings, home ownership costs, appreciation potential, government rebates and incentives, opportunity cost of investing in something else, and so on. • You’ve been pre-approved, meaning a lender has reviewed your application — and preferably your income and down payment documentation. • You’ve developed an honest monthly budget (a purchase is just the beginning of ongoing home expenses). • You’ve studied which mortgage term you’re best suited to (variable and short terms have won over the long term but much depends on which stage of the business cycle we’re in) • You’ve got access to three-plus months of living expenses, “just in case.” • You’re able to buy in an area with good appreciation potential (e.g., one where household growth exceeds new housing units and one where there’s a sustainable catalyst like strong job growth, terrific nearby amenities, scenic beauty, a top-notch school nearby, and so on). This is not an exhaustive checklist, but if you check all these boxes, odds are you should be buying. If you don’t, embrace the freedom of renting and invest the monthly cash flow savings. It doesn’t have to be much more complicated than that. Robert McListerFinancial Post
Slower economic growth predicted this year
In its Global Economic Prospects report, the World Bank estimated that global economic growth would slow for a third consecutive year in 2024. Several global economic organizations have projected the global economy to grow relatively slowly this year as it faces several challenges. Despite a strong likelihood of slower growth ahead, the World Bank believes global recessionary risks have subsided compared to last year. The World Bank estimates the global economy will expand by 2.4% this year. This would be down from the 2.6% expected pace of growth in 2023 (all data has yet to be confirmed and reported). After a strong 2021, where the global economy recovered after the COVID-19 pandemic, economic growth is expected to slow for a third straight year in 2024. Growth might be relatively soft in advanced economies, where the World Bank is projecting growth of just 1.2% in 2024, compared to 1.5% last year. The economic organization expects developing economies to see growth of 3.9% this year, down from 5.5% in 2023. Geopolitical tensions, tight financial conditions, reduced trade activity and high debt, particularly in developing economies, are all likely to weigh on global economic growth this year, according to the World Bank. On the plus side, the World Bank expects global inflation to moderate in 2024, which might provide some much-needed relief to households and businesses. Canada’s economy might not be immune from the global economy’s struggles this year. Canada’s gross domestic product shrank by 1.1%, annualized, in the third quarter of 2023. Given slower economic growth and falling inflation, the Bank of Canada is widely expected to start reducing interest rates this year. The headwinds faced by global economies might slow growth this year, which could result in some volatility in financial markets. CICB Daily Market Brief
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