A year ago today, a couple with an annual household income of $138,153 and a 20% down payment could purchase a $1,000,000 home. Today, that same couple with the same income could only afford to purchase a $750,000 home. What has changed? The Bank of Canada has had three key rate increases totaling .75%, and the Federal government is now requiring lenders to “stress test” all mortgages at two percentage points higher than they are right now to ensure borrowers would be able to pay off the loan. The net effect is that Buyers will have to save more and lower their expectations. What does this mean to Sellers? In the long term, it means fewer Buyers with less purchasing power.
How does this impact the current market? In the short term, supply and demand factors are still driving the market. However, we did start to see the impact of affordability on the North Vancouver detached market last year as higher prices sidelined many Buyers, and inventory levels for detached housing started to increase. Lower demand levels for detached housing saw the market move from a Seller’s market (sales to active ratio 20% +) back towards a Balanced market (sales to active ratio 12 – 19%).
We are now starting to see high prices impact affordability for townhouses/duplexes and apartments, and with Buyers being impacted by rate increases and “stress tests”, I believe inventory levels will build again for both market segments and we will see a trend back to a more balanced market.
North Vancouver Detached Market
Sellers’ market running between 20 – 25% sales to active ratio. The year over year bench mark price up 5.5%. Builders are currently carrying high levels of inventory at the $3 million plus price range and are not as active purchasing at the lower end of the market resulting in less competition. Most active price range $1.500m - $1.999 million.
North Vancouver Condos Market
Inventory levels continue to decline resulting in a hot Seller’s market; 40 – 80% sales to active ratio. Market is showing signs of slowing down because of high prices. The year over year benchmark price is up 23.0%. Most active price range $400k to $900k.
North Vancouver Townhouse/Duplex Market
Inventory levels remain low resulting in a strong Seller’s market; 35-60% sales to active ratio. The year over year benchmark price is up 17.6%. Most active price range $900k to $1.5 million.
If you need a REALTOR to assist you with Buying, Selling or Investing, I am definitely someone you can rely on and trust. Friendly introductions always welcome and very much appreciatedJ