It’s that time of the month again, and here are the December 2018 market updates for areas covered by the Fraser Valley Real Estate Board (FVREB)!
In their most recent press release, the FVREB has noted that the Fraser Valley housing market in general has seen a slowdown in 2018. According to the report, after three consecutive years of total annual sales surpassing 20,000 units, 2018 saw the Fraser Valley real estate market return to more typical levels for both sales and inventory.
2018 also saw the fourth highest total for new inventory in the board’s history, with 32,058 new listings received by the Board’s MLS system. For the month of December, inventory was at 5,454, with 978 new listings entering the market throughout the month.
As for monthly sales, the board processed a total of 800 sales in December 2018, the lowest for the month since 2012.
John Barbisan, FVREB President, notes,
“In terms of demand, this is around what we’re used to seeing for our region. There is still a great deal of interest for Fraser Valley real estate, but with prices moving slowly and more inventory becoming available, many consumers are taking a deliberate approach now that they can afford to.
With buyers shifting into the driver’s seat and able to navigate the market more comfortably, it has become key for sellers to price effectively and leverage their home’s appeal to stand out and find success.”
The following data is a comparison between December 2017 and December 2018 numbers, and is current as of January 2019. For last month’s report, check out our previous infographic!
These infographics cover current trends in Fraser Valley neighbourhoods that are within the FVREB.
Click on the images for a larger view!
(Protip: Make sure to grab the printable PDF version, too! It fits best when printed on A4-sized sheets, AND we’ve added an area on the sheet where you can attach your business card! )
Given the fear-inducing movements in the financial markets over the past few months — declines coupled with increases in volatility, tumbles in oil prices, as well as Brexit and Trump-related developments — one can understand why consumers and businesses are anticipating a major growth slowdown.
But the authors of Scotiabank’s latest global economic outlook beg to disagree. Citing the positive reversal in equity markets over the past couple of weeks as well as their own recession probability modeling, they argued that investors are over-reacting to minor changes in the outlook.
“From a Canadian perspective, much is being made of the rapid drop in oil prices and the widening of the differential of the price received for Canadian oil late last year,” the Scotiabank economists wrote. They noted that a drop in international oil prices and a shutdown of US refineries, which helped send Canadian oil prices to nearly $15 in November, have since been reversed. An Alberta government order for oil firms to cut production has also contributed to a Canadian price recovery. “This suggests that the impact of the decline in oil prices may not be as sharp for Canada as the Bank of Canada believes,” the analysts said.
As for the fear that the estimated 10% decline in equity markets would weigh on Canadian wealth and consequently spending, the analysts maintained their expectations that financial wealth will gradually rise to levels more consistent with economic fundamentals. “The pickup in equity indices over the last two weeks is a sign that this is already underway,” they said, adding that their research suggests the impact of financial wealth on spending is much smaller in Canada than it is in the US.
The report granted that the negative factors have caused Scotia analysts to shave their growth forecast down to 1.8% in 2019, they saw it only as a soft patch that would yield to 2% in growth in 2020. They pointed to generally positive fundamentals including:
They also acknowledged areas of weakness, such as oil-industry developments that have dragged on growth, declining sales and starts in the housing sector relative to 2017, and moderating business investment compared to the rapid pace set in early 2018.
“There are plenty of risks to the outlook,” the report said. It cited a possible escalation of the US-China trade war as the dominant negative risk, with additional volatility also possibly coming out of political developments shaking the Trump administration in the US.
They also noted positive risks, including a smaller-than-expected impact of oil prices on the Canadian economy, an extended bull run in oil prices, and a sharper-than-anticipated pickup in business investment as reasons for uncertainty wane in the first months of this year.
Canada’s home sales skidded to the lowest level since 2012 last year after dropping for four straight months through December, as higher interest rates and tighter lending rules cast a pall over the real estate market.
Nationwide, sales totalled 458,442 for the year, a drop of 11 percent which was the biggest since 2008, the Canadian Real Estate Association said Tuesday from Ottawa. The 2.5 percent December drop from the prior month was the most in eight months. Vancouver and Toronto led the slowdown in transactions.
Weaker-than-expected housing data prompted central bank officials to mark down growth forecasts earlier this month and to adjust the pace at which they may pursue monetary tightening, as evidence emerges the five hikes since mid-2017 are already having a significant impact. The higher rates and tougher mortgage regulations will probably weigh on housing demand again this year as more Canadians carrying five-year fixed term mortgages face a reset.
“It’s clear that higher interest rates are having an impact,’’ Benjamin Reitzes, a Canadian rates and macro strategist at BMO Capital Markets, said by phone from Toronto. “It was a difficult year and you are coming off a very strong run for housing,’’ he said, adding there is little chance of a “major comeback’’ in 2019.
Vancouver sales fell 32 percent last year, the most since 2008, and Toronto sales declined 16 percent. Toronto showed some stability in December with sales flat on the month and benchmark prices up 3 percent from a year earlier.
“The stress-test has weighed on sales to varying degrees in all Canadian housing markets and it will continue to do so this year,” CREA President Barb Sukkau said in the report, referring to new rules from the federal banking regulator. With mortgage lending fading to the slowest in decades, CREA cut its 2019 sales forecast last month to a 0.5 percent decline this year compared with a September prediction for growth of 2.1 percent.
Vancouver’s average sales price was C$1.03 million ($780,000) in December, down 2.1 percent from a year earlier, and the Toronto average was C$750,180. Those markets are well ahead of the national average price of C$472,280.