Metro Vancouver market takes ‘wait and see’ approach as December sales fall 52% from year ago

Greater Vancouver ended 2022 with another month of prospective homebuyers taking a “wait and see” approach, which the region’s real estate board said pushed down sales by 52 per cent and prices three per cent from the year before.

“People were just waiting, waiting, waiting,” said Tirajeh Mazaheri, a Coldwell Banker Prestige Realty agent in Vancouver.

“On the buying side and the selling side, we noticed a lot fewer people have been motivated either to list or to purchase a property.”

She attributes much of the sluggish pace to a rapid succession of hikes to the country’s interest rate, which sits at 4.25 per cent — the highest it’s been since January 2008.

The increases, which also sparked mortgage rate hikes, have weighed on buying power, even as home prices have been on a steady descent.

The result is potential buyers sitting on the sidelines awaiting further price declines and reluctant sellers holding off listing properties unless they have to move because they want the sizzling sums their predecessors scored last year.

These sentiments are borne out in figures released by the Real Estate Board of Greater Vancouver (REBGV). Last month’s sales totaled 1,295, about 20 per cent lower than they were in November and 38 per cent below the 10-year December sales average, according to the REBGV.

The figures contribute to the 28,903 sales made over 2022, 34 percent lower than 2021’s total of 43,999.

A real estate agent says most buyers and sellers in the market are taking a ‘wait and see’ approach after a year of consistent interest rate hikes. (Ben Nelms/CBC)

The board attributed the decreases to the market experiencing “a year of caution” fueled by rising borrowing costs and an ongoing battle with inflation.

Andrew Lis, the board’s director of economics and data analytics, says he will be watching prices this year to see if buyers and sellers have adjusted to higher borrowing costs and will wade into the market at last.

“Closing out 2022, the data shows that the Bank of Canada’s decisions to increase the policy rate … in 2022 has translated into downward pressure on home sale activity and, to a lesser extent, home prices in Metro Vancouver,” Lis said in a statement.

The REBGV says the composite benchmark price — which takes the rate of price changes into account — sits at $1,114,300. That is a three per cent decrease from December 2021 and a 1.5 per cent decrease when compared with November 2022.

Some sellers fear further price declines

“Right now, the prices have come down a very fair bit, people are thinking ‘OK, I’ll see a loss on my property of, let’s say, $200,000, but on the flip side, if I upgraded my property, I’ I’ll get a discount of $500,000,” said Mazaheri.

She describes the people still in the market as either desperate to sell or buy or “cash ready.”

Others are pressing their luck with lowball offers.

“If it hits, it hits, and if it doesn’t, then at least they tried, but a lot of them are hitting because a lot of sellers are scared the market is going to go down further,” Mazaheri said.

Starting offers have typically been low because sellers and buyers are both trying to decipher how serious the other is about a deal given the market, added Tim Hill, a regional sales advisor for ReMax.

Some sellers are keen to take what they can get now because they fear further price declines.

“If you’re selling in today’s market, you have to be realistic about what you’re doing,” said Hill.

The REBGV is the real estate board responsible for Metro Vancouver — excluding Surrey and Langley — as well as the communities of Squamish, Whistler and the Sunshine Coast and Gulf Islands.

Their analysis of the December sales figures comes a day after the province announced a mandatory three-day cooling-off period for homebuyers.

The government said the new homebuyer protection period is designed to give purchasers more time to arrange financing or home inspections after a deal has been accepted — details that were neglected in past sizzling housing markets, it said in a statement.

Mazaheri expects the policy won’t have much impact yet “because the power is in the buyers’ hands” already since sales are down so significantly.