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Cowichan Valley Realtor

Market Information

January 1, 2023  

Happy New Year!  

The Cowichan Valley had 29 single-family home sales last month, which was 12.12% lower than the 33 that sold in December of 2021, and well below the 46 sales in November 2022. The 10-year average is 41.2 sales for the month of December.  

There were 713 sales in our valley over the past year representing a 19.34% decrease in comparison to the 884 sales in 2021.  

The average single-family home price finished the year at $738,207; that’s 14.57% lower than the end of last year at $864,142.  

The benchmark sale price for single-family homes in the Cowichan Valley finished the month of December at $752,700 which is down 1.24% from $762,200 at the end of December 2021 and down from $793,500 at the end of November. At the end of May 2022, the benchmark price was $863,300 which is now 12.8% lower than the peak this year. 

The active inventory of single-family homes on the market in the Cowichan Valley has risen substantially and is now at 154 homes for sale at the end of the year compared to 32 at the end of last year. Currently, we have a 5.31-month supply of homes on the market which is a very sharp increase as at the beginning of the year, we had a .77-month supply. We are now just above the 10-year average of 146.5 homes on the market at the end of December but far below the 352 homes on the market on December 2013.

In December, the time to sell a single-family home took 57 days compared to 24 days last December. The 10-year average is 60.1 days to sell.

Condominium apartment sales were down to 3 sales compared to 8 last December, and down from the 7 sales in November 2022.  

Condominium apartment average prices in the valley were up to $431,000 at year-end compared to $316,063 last December; that's a 36.37% gain. Note with only 3 reported sales it's difficult for the average to be accurate as 3 higher priced condos sold. The Home Price Index benchmark shows a gain of 4.23% over last December to $321,400. On May 31, 2022, the benchmark price was $373,000 which is 13.83% lower than the peak this year. 

There are many factors affecting the market going into 2023. Interest rates have had a dramatic effect on Real Estate sales, though there is some hope there might be some relief with lower rates later in 2023 and there is much more change in the air. On January 3 the new home buyer's recission period comes into force effectively giving buyers the option to get out of an unconditional contract for up to 3 business days after acceptance for a small fee. On January 1 the ban on foreign buyers comes into effect that is slated to last 2 years, and Bill 44 will remove age restrictions under 55 as well as remove rental restrictions on strata properties. Time will tell the positive and negative effects of these changes but there is no question that inflation is going to be the big story in 2023 and the way the ball bounces will be heavily influenced by inflation and interest rates.  

So where is the market going? Here is a link to an article I found very interesting.

https://www.canadianmortgagetrends.com/2022/12/long-term-prospects-for-canadian-home-prices-are-positive/ 

Lastly, the really big news for 2022. We have a beautiful new grandson and brother for Blake born on November 26th, Grayson Kenneth Frueh. Thank you to Michelle, Andrew, and Blake, for making us the happiest grandparents in the world; Grayson is just perfect. And yes, when I heard his name, I sure had a tear in my eye. 

All the best in 2023 from our family to yours!

Provincial Update!

Home Sales Decline in 2022 After a Record 2021

Vancouver, BC – January 12, 2023. The British Columbia Real Estate Association (BCREA) reports that 80,874 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2022, a 35.2 per cent decline from a record 124,788 units sold in 2021.

The annual average MLS® residential price in BC was $996,878, a 7.5 per cent increase from $927,513 recorded the previous year. Total sales dollar volume was $80.6 billion, a 30.3 per cent decline from 2021.

"2022 could not match last year's record pace," said Brendon Ogmundson, Chief Economist. "While strong momentum from the end of 2021 carried through to the first quarter of the year, the pace and degree of Bank of Canada interest rate tightening ultimately precipitated a dramatic shift in the provincial housing market."

A total of 3,490 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in December 2022, a decrease of 49.4 per cent from December 2021. The average MLS® residential price in BC was $911,753 an 11.5 per cent decrease from $1.03 million recorded in December 2021. Total sales dollar volume was $3.2 billion, a 55.2 per cent decline from the same time last year.

Bank of Canada Interest Rate Announcement - January 25, 2023

The Bank of Canada raised its overnight policy rate by 25 basis points to 4.5 per cent this morning. In the statement accompanying the decision, the Bank noted that recent economic growth in Canada as been stronger than expected and labour markets remain tight but it sees growing evidence that monetary policy is working to slow the economy. The Bank expects the economy to stall through the middle of 2023 before picking up later in the year.  The Bank sees improvement in the inflation outlook with signs that core inflation has peaked and it projects a significant decline in inflation this year. It expects inflation to return to its 2 per cent target by 2024. 

Most importantly, the Bank stated that it expects to hold its policy rate at 4.5 per cent as it monitors the impact of the last year of rate increases. While the door remains open to further rate increases should the outlook for inflation change, the Bank for now is on hold.  From here, the trajectory of mortgage rates will depend on the outlook for the economy. With growth expected to slow in 2023, markets are pricing in Bank of Canada rate cuts by the end of this year and average five-year fixed mortgage rates have declined in January from their peak of 5.5 per cent to 5.19 per cent and will likely fall further in coming months. However, the average variable rate mortgage, now at 6.35 per cent will stay elevated until the Bank of Canada begins lowering its policy rate.

Canadian Inflation (December 2022) - January 17, 2023

Canadian prices, as measured by the Consumer Price Index (CPI), rose 6.3 per cent on a year-over-year basis in December, a decrease from the 6.8 per cent rate in November. Falling gasoline (-13.1 per cent month on month) and fuel oil prices drove the decline, while softening costs for durable goods such as furniture and used vehicles also slowed price appreciation. Rising interest rates contributed to an increase in mortgage interest costs, which were up 18 per cent year-over-year as Canadians renewed or initiated higher-rate mortgages. In contrast, the Homeowner's Replacement Cost, which tracks home prices, continued to slow, pushing the CPI downwards. Month-over-month, on a seasonally-adjusted basis, prices were down 0.1 per cent in December. In BC, consumer prices rose 6.6 per cent year-over-year, down from 7.2 per cent last month.

While sharply declining gasoline prices were mostly responsible for the drop in CPI in December, there are encouraging signs that price appreciation is slowing in other sectors of the economy as well. Prices for household furnishings and equipment fell from last month amid ameliorating supply chain issues. The Bank of Canada's measures of core inflation, which strip out volatile components, ticked down in December for the first time since the summer. Weighing CPI numbers against a strong December jobs report, most analysts are expecting a final modest increase in rates on January 25th before the Bank concludes the tightening cycle.  

Housing Market Faces High Rates and Slowing Economy in 2023

BCREA 2022 Fourth Quarter Housing Forecast

Vancouver, BC – November 8, 2022. The British Columbia Real Estate Association (BCREA) released its 2022 Fourth Quarter Housing Forecast today. 

Multiple Listing Service® (MLS®) residential sales in BC are forecast to decline 34.4 per cent from a record high 2021 to 82,345 units this year. In 2023, MLS® residential sales are forecast to fall an additional 11.4 per cent to 72,960 units. 

“The factors that drove unprecedented housing market activity over the past two years, including record low mortgage rates, buyer preference for extra space and the ability to work remotely, are now unwinding,” said BCREA Chief Economist Brendon Ogmundson. “As a result, there has been a significant shift in the housing market, which we anticipate will continue through 2023.” 

With continued high-interest rates and what looks like a difficult 2023 ahead for the Canadian economy, we anticipate that market activity is going to fall below normal levels next year. On the supply side, slow sales activity has led to an increase in inventory, but from record lows. The rapid shift in market conditions has weighed on prices in the second half of this year, though active listings growth has slowed and is short of levels where we tend to see more substantial downward pressure on prices. However, price levels have fallen from their peak earlier this year, so even flat prices from current levels will translate to the provincial average price being down about 5 per cent in 2023.

Here is a link to this month’s Graph Stats for the Cowichan Valley, courtesy of the Vancouver Island Real Estate Board: Cowichan Valley Graph Stats.

I hope you find this current market information informative. If you have any questions about the market please feel free to contact me anytime.

Thinking of selling? Please feel free to contact me for advice on preparing your home for the market. What money should you spend if any? When is the best time to list? I am happy to consult with you anytime even if you are not planning on selling for some time.

I would love to hear from you. Email me at ken@kenneal.com or Like me on Facebook at http://www.facebook.com/kennealduncan.