Median price of detached homes in Metro Vancouver suburbs slips by double digits

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      Median prices of detached homes in Metro Vancouver are taking a hit from rising interest rates.

      A report took a look at prices in the wake of the first two rounds of rate increases by the Bank of Canada (BoC) in March and April 2022.

      The report by HouseSigma established that a number of suburban markets are experiencing the most impact.

      HouseSigma is a brokerage firm with a digital platform that utilizes artificial intelligence to process real-estate data.

      HouseSigma compared median prices as of June 1, 2022 in the wake of the two interest-rate hikes in March and April with those in February.

      It can be recalled that as of February, the rate was still at the “pandemic-low”of 0.25 percent.

      Median price is the middle point in a list of prices.

      It’s considered to be a good indicator of property prices because it is not affected by extreme high or low values, which affect average prices.

      Five cities outside Vancouver saw median prices of detached homes drop by double digits.

      In Maple Ridge, the median price of $1.55 million in February fell to $1.32 million in May, representing a decline of 14.84 percent.

      New Westminster was down 14.71 percent, from $1.7 million to $1.45 million.

      Surrey saw a 14.21 percent decline, from $1.9 million to $1.63 million.

      Langley dropped 12 percent, from $1.75 million to $1.54 million.

      In Port Moody, the median price of detached homes slipped 11.48 percent in May 2022 to $1.85 million from the February level of $2.09 million.

      Of the 15 cities cited by HouseSigma, Vancouver saw the least decline in the median price of single-family homes.

      The median price in Vancouver dropped 0.4 percent in May 2022 to $2.49 million compared to $2.5 million in February.

      Meanwhile, prices increased in three cities.

      These are Pitt Meadows, Richmond, and West Vancouver, with 1.34 percent, 2.32 percent, and 13.55 percent increases, respectively.


      In the same report, HouseSigma noted that the median sold price of all property types in Metro Vancouver for May 2022 dropped to $922,000, marking a 12.11 percent decline compared to February.

      The real-estate brokerage also reported that terminated listings rose by 120.55 percent, from 2,331 in February to 5,141 in May.

      In addition, house listings are “sitting on the market longer”.

      “In May, the average was 32 days. Back in February, before BoC started raising rates, listings were on the market an average of just 9 days,” HouseSigma noted.

      This means listings are sitting 71.9 percent longer on the market.

      “All those numbers tell us that the market is slowing down,” HouseSigma realtor Hao Li told the Straight in a phone interview.

      Li said that people are taking more time before making an offer on a property.

      The BoC announced increases totalling by 0.75 percent in March and April, which brought its interest-setting rate to one percent.

      On June 1, the central bank raised the rate by 0.5 percent, and it now stands at 1.5 percent.

      It was on the same day that HouseSigma released its report.

      In its June 1 announcement, the BoC stated its observation of what’s going on in the Canadian housing market, but not much else.

      “Housing market activity is moderating from exceptionally high levels,” the central bank said.

      However, the BoC indicated that it is far from done in terms of raising interest rates.

      “With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further,” the central bank stated.

      On the following day, on June 2, BoC deputy governor Paul Beaudry indicated in a speech before the Gatineau Chamber of Commerce that the key interest rate may increase to three percent or beyond to contain the raging inflation in the country.

      Consumer prices rose by an annual rate of 6.8 percent in April 2022, which is way above the central bank’s inflation target of two percent.

      In the phone interview, Li noted to the Straight that the market remains in seller’s territory.

      This means that sellers have the upper hand in terms of setting prices.

      How far prices are going to drop depends partly on what Li said as the “mindset” of sellers.

      “If people are thinking that ‘Oh, it’s okay. I’ll just hold on as long as I want because I’m not in a hurry’, then there’s no rush for that seller,” Li said.

      In the immediate term, Li said that it’s buyers who are feeling the pinch.

      Li cited the formula that an increase in interest rates of one percent translates to a decrease of 10 percent in purchasing power.

      “If someone is purchasing, say a million-dollar home, with a one percent increase that means he or she can only purchase something up to $900,000,” Li explained.

      The HouseSigma agent continued that if the seller is not open to negotiating a lower price, then the market simply won’t move.