Real (Estate) Talk with Ryan Berlin - October 2022

For many, September is a month of transition: summer holidays have come to end, school is back in session, and as a Canadian media executive recently recounted to me, his first wife observed that “the only time of the year people really work hard are the months of September, October, and November.” For our local housing market, September represents a transition from the slower summer market into a more active fall one, with (typically) rising listing counts paving the way for a bump in sales counts in October. As with so many things, though, this year has been different; indeed, market activity in the Vancouver Region was rather muted last month.

As we noted previously, this year’s large and frequent rate hikes by the Bank of Canada have dampened housing demand, with buyer confidence not at its, shall we say, highest level in recent memory. And while prices have been declining of late—the overall benchmark price in the Greater Vancouver board area is down 9% from its peak in the spring, and down 16% in the Fraser Valley board area—borrowing costs have risen such that purchasing power has been eroded for almost all would-be home buyers. Reflecting these dynamics, the 2,549 MLS sales in the Vancouver Region last month were 36% lower than the past 10-year average; they were also 10% below August 2022’s level, when the typical seasonal pattern is a 3% contraction.

As we also noted previously, rising interest rates have not yielded an expansion in housing supply and, for this, we can “thank” a robust labour market. This continued to hold true in September, with Metro Vancouver’s unemployment rate falling to 3.9% (its lowest level in 4 years) while the region’s total number of home listings rose by just 0.8% between August and September, to 15,038. Notably, this level of supply is 21% below the long-run average. Part of the reason inventory did not rise appreciably is that only 6,440 new listings came to market last month—13% below September 2021’s count and 17% below the past 10-year average for the month.

This new listings low-flow, combined with already below-average levels of supply, points to fewer-than-is-typical sales being reported in October. And with the Bank of Canada’s next interest rate announcement on October 26th—expect another rate hike, perhaps as high as 75 basis points—the continued uncertainty around inflation and how high interest rates might rise will compel buyers (and perhaps some sellers) to wait on the sidelines for the macroeconomic environment to settle down.Our rennie intelligence team comprises our in-house demographer, senior economist, and market analysts. Together, they empower individuals, organizations, and institutions with data-driven market insight and analysis. Experts in urban land economics, community planning, shifting demographics, and real estate trends, their strategic research supports a comprehensive advisory service offering and forms the basis of frequent reports and public presentations. Their thoughtful and objective approach truly embodies the core values of rennie.