The Bank of Canada has been providing relief to homeowners and buyers with multiple consecutive rate cuts, including the most recent drop of 50 basis points in October. For homeowners with variable rate mortgages, they are now saving $75 per month per $100,000 compared to this time last year.    The reduce rate cuts seem to be getting some buyers off the fence, as the real estate market has seen a bump in sales figures in every category in most communities. However, this hasn't led to a jump in prices yet.    DETACHED HOMES The benchmark price for detached homes in the Fraser Valley have declined for the third straight month, dipping below $1.5 million for the first time since February of this year, and representing a -0.6% drop since October 2023. However, after four months of falling sales, October witnessed a sales spike of 48%. Meanwhile, the number of new listings fell by 17%. These statistics mean that the supply and demand ratio is shifting, with 14.5% of homes selling in October compared to the very slow 9.1% in September. This is still technically a buyers market, but the trend is looking much better for sellers. This trend favours downsizers or those selling to leave the local market, but could hurt those looking to upsize or get into the market. The benchmark Surrey detached home price dropped from $1.629 milion in September to $1.617 million in October, which is -1.3% less than this time last year. However, Surrey was responsible for a lot of the increase in sales with a massive 71% increase between September and October. These buyers appear to be taking advantage of the lower prices intersecting with lower interest rates. The number of new listings dropped by 14%, resulting in the sales to listing ratio jumping from a very weak 7% in September to 13.1% in October. This is still a buyers market, but the trend is showing a reversal in the market. Detached homes in the Langleys saw their benchmark price fall -1.2% month over month to $1.614 million.  This is -0.5% lower than this time last year, which is slightly better than the Fraser Valley average for sellers. Sales bumped up 15.5%, so nowhere close to the jump that Surrey had, but still a positive number for sellers. Of course, there are less of those coming on the market, as the number of new listings fell 28.3% in one month. This means that the sales to listing ratio in the Langleys jumped from 14.1% to 18.2%, which is considered a balanced market. This is the first time the sales to listing ratio has been above what we consider a "buyers market" since June.Abbotsford's detached homes also saw its fourth consecutive decrease in the benchmark value alongside other communities. However, its reduction was much more nominal, dropping less than half of 1% month over month. Even with just a slight reduction this month, this is the first time since January that the benchmark value has dipped under $1.2 million. There were 15 more detached home sales in Abbotsford in October than September, representing a 23% increase while the number of new listings fell 22.1%. The sales to listing ratio went from 13.1% in September to 17.4% in October. TOWNHOMES Townhomes in the Fraser Valley continue their slow but steady decline, as the benchmark value fell again for the sixth consecutive month. That said, this last drop was by only $2,200 on a typical $832,000 townhome. Overall, the benchmark value has fallen by almost -2.6% since April, which is around $22,000 of equity. However, just like detached homes, sales have bounced back. There were 338 townhomes sales in the Fraser Valley, which is a 30% boost compared to the month before. The number of new listings in October was about the same as September. This means that the sales to listing ratio has jumped from 17.6% in September to 24.4%, which is considered to be a slight sellers market. If this holds up this month, it is possible that we might start seeing prices climb again. After a big drop between August and September, Surrey's townhomes actually increased in the benchmark value, albeit by only $400, to $861,600. Despite the nominal increase, this is a positive sign of confidence in the housing type heading into the winter months and could be a sign of a reversal in prices. Surrey's townhomes have been among the hardest hit over the last year, with the benchmark price currently -1.5% below where it was in October 2023. It's hard to say that the 42% jump in sales between September and October doesn't have anything to do with recent interest rate cuts. The sales to listing ratio has gone from under 15% in September to over 22%, suggesting a move from a buyers to a solid balanced market, trending in favour of sellers. Townhomes in the Langleys had their second price drop in a row, after having experienced an odd jump back in August. I personally felt that the August increase was a bit off, which might be why we are seeing a statistical correction, more in line with the reality. The current benchmark value of $864,800 is -1.1% below last October's values, and represents a price point that a lot of Willoughby's developers are targeting with their brand new entry level homes. The sales figures for Langley's townhomes aren't nearly as drastic as Surrey's, but there was still a 10.5% month over month increase while the number of new listings dropped -12.3%. The sales to listing ratio, which was already the strongest in the region, jumped from 29.7% to 38.2%, indicating a relatively strong sellers market. The one thing that I would caution with these numbers is that they don't take into account the large number of off-MLS new development listings. Willoughby has among the most new townhomes available than any other community and most of them are not listed on the MLS and therefore it can definitely skew the market data. Therefore, I believe that buyers have a lot more leverage, both on and off the MLS, than the numbers let on. The benchmark value for Abbotsford's townhomes fell for the fifth month in a row and it was a bit steeper than previous months. The value had dropped from $669,900 in May to $664,500 in August, over a period of three months. Yet, since then, the value have fallen more dramatically to $649,000 over the two months since, the lowest it's been since February. However, sales did jump by 43.3% between September and October. Keep in mind though that this is a relatively small market, with only 43 sales and 74 new listings in October. The sales to listing ratio in Abbotsford has increased from 16.3% in September, a buyers market, to 24.9% in October, a sellers market.  APARTMENTS Fraser Valley's apartment market fell for its sixth month in a row, although the benchmark price dropped only incrementally from $545,000 in September to $543,300 in October. In fact, the benchmark value has only fallen -2.2% in those six months since April and the current value is +0.1% more than this time lasy year, showing some resilience in the market. Bouyed by Surrey's strong sales figures, the Fraser Valley saw an increase of 34% in month over month sales in October. There was also a slight increase in new listings of 1.6% between September and October. The sales to listing ratio has gone from 12.9% in September, which was a strong buyers market, to 17.9%, which is considered to be in the balanced market range. The benchmark value for apartments in Surrey tumbled significantly in one month, from $539,300 to $526,700: a -2.3% month over month drop. This is -1.4% compared to the typical apartment value in October 2023. However, there may be hope for sellers as sales skyrocketed by 58% in October. Apartment owners might be catching on since there were 11.2% more new listings in October compared to September. Even with the increase in new listings, the sales to listing ratio improved from 10.1% to 16.2% in one month. While this is still considered a buyers market, if this trend continues, buyers are going to start losing leverage. Apartments in the Langleys dropped in value alongside other communities in the region, from $606,500 in September to $604,800 in October (which is less than half a percent). This number is -0.5% below October 2023 and -2.5% below the 2024 peak which was back in March. Sales were up 15.1% month over month, while the number of new listings declined by 9%. This resulted in a bump in the sales to listing ratio from 17.8% to 22.2%, which is a shift from a balanced market slightly in favour of buyers to a balanced market slightly in favour of sellers. Abbotsford's apartments bucked the regional trend, making a jump from $433,600 in September to $446,700. That is a +3.0% increase in one month. When I see an increase like this in one month, I hold to some skepticism. It often means that the "algorithm" had reduced values too aggressively over the last few months and are now making a correction rather than being truly representative of a sharp increase to prices. Regardless, this is positive news for Abbotsford apartment owners. The current benchmark price is +3.7% more than this time last year, which exponentially outpaces the regional average. The number of sales increased by 16%, which may sound like a lot, but really its only 8 more units. The number of new listings dropped 15.4% as well between September and October. The sales to listing ratio bumped up from 17.2% to 20.9%, which is a solid balanced market. CLOSING COMMENTS Based on the sales figures across the region, it's pretty obvious that the consecutive rate cuts, the news of a bigger rate cut, AND the eventual October 23 rate cut of .50 points has finally started to shift the marketplace. People generally don't just suddenly decide to buy a home, so with the sales spikes across the region, it suggests that a lot of buyers who have been considering buying a home over the summer finally got off the fence as interest rates and prices have come down. This perfect storm rarely lasts. The question is, therefore, when exactly will we start seeing the prices follow the logic of lower interest rates, higher sales and lower listings?   

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Despite two back to back interest rate reductions (prior to this month), benchmark home values fell throughout the Fraser Valley in every housing type. Yet, one community bucked this trend. Prices for Langley's detached homes and townhomes actually increased in August.  DETACHED HOMES Detached homes in the Fraser Valley are back to where they were in March, with a benchmark value of $1,523,500. This is a slight reduction from the 2024 peak of just over $1.53 million in May, yet this is when interest rates were a half percentage higher. The current benchmark price is -0.4% less than this time last year. The active to listing ratio has held steady just above 11%, which is considered a pretty strong buyers market. If you're selling a detached home right now, you've got to be priced pretty competitively. Surrey detached home prices had risen to over $1.663 million in July, but abruptly fell to $1.647 million in August, which is -1.2% lower than August 2023. The sales to listing ratio has fallen from just shy of 15% earlier this spring to 9.5%, even weaker than the rest of the Valley.  Moving east, Detached homes in Langley bounced back up from $1.635 million to $1.647 million, just shy of this year's peak of $1.65 million in May. Although the sales to listing ratio has fallen sharply from 28% back in May, the current 15.7% is much strong than the rest of the region. However, the market does still favour buyers.Abbotsford's detached homes were also driven down from $1.234 million in July to $1.222 million in August. This is the lowest value we've seen since February. The sales to listing ratio has slowly fallen from 15.5% in May to 11.8% in August, in line with the overall soft Fraser Valley market. TOWNHOMES Townhomes in the Fraser Valley fell for the fourth month in a row in August, from $854,000 in April to $846,300. This obviously represents an extremely slow decline, but one that is unexpected considering the usual strength of townhomes in the region, especially with softening interest rates. The sales to listing ratio is in a balanced market territory, with 18.7%, which might explain the rather stagnant values. Keep in mind that back in March, 41% of townhomes were selling in a month. Surrey's townhomes have witnessed a much sharper decline, pulling down the regional average. After an annual peak at $890,900 in April (the highest prices we've seen since July 2023), the benchmark value has fallen to $872,600. This isn't great news for townhome owners, but it is promising for buyers. The sales to listing ratio of 17.3% represents the weakest supply and demand for sellers since December 2022.  As prevously mentioned, Townhomes in Langley jumped for the second month in a row. Langley's townhomes have actually been steadily increasing almost every month since February, when the benchmark value was $858,100. The current value is now up to $884,700 - a 3.1% increase in less than half a year. Although the sales to listing ratio certainly isn't the 52-54% that we saw in Spring, the current ratio of 25.5% is still well above the regional average and a strong market for sellers. Meanwhile, Abbotsford's townhomes fell slightly for the third consecutive month, down from $669,900 in May to $664,500 in August. The sales to listing ratio dropped from 25% in July to 17.5% in August, holding onto a softening balanced market. APARTMENTS Fraser Valley's apartments continue to fall for their fourth straigth month. Most of the month over month decreases have been relatively nominal, but the benchmark value saw a more noticable drop in August. In April, the typical Fraser Valley apartment was selling for $555,500, the highest value its been since December 2022 when the market was in freefall. It went down to $551,000 by July over three months, and then dropped a bit more sharply to $546,200. This value is -0.8% this time last year. The sales to listing ratio has fallen to 15.4% - the lowest its been since May 2020! The benchmark value for apartments in Surrey also declined for the fourth month in a row. The 2024 peak of $551,700 in April was the highest value since July 2023. The value has since fallen to $541,700, which represents a -1.0% drop since August 2023. The sales to listing ratio of 12.2% is among the weakest in region and is also the lowest it has been since May 2020. Apartments are the one housing type in the Langleys that didn't see an increase in prices. The benchmark value dropped from $618,300 in July to $611,600 in August. The sales to listing ratio, however, is in the balanced market range of 21.2%.  Abbotsford's apartments also fell from $448,200 in July to $443,100 in August. The sales to listing ratio is also still in a balanced market range at 22.6%.  CLOSING COMMENTS Apart from the Langley exception, the market continued to soften throughout the region. The Bank of Canada has been cautious in its interest rate announcements, not wanting to set off another cycle of inflation. However, it appears that the market has weathered these interest rate drops with little fanfare. A third consecutive incremental rate drop of .25% by the Bank of Canada took affect on September 4 and most forecasters are expecting another rate drop for the October 23 scheduled announcement. Some commentators suggest we may see a sharper drop if inflation continues to drop. A steeper reduction in the interest rate would be positive news for current homeowners and sellers.   

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The last time that Canadian homeowners had experienced a 5.0% prime interest rate was back in March 2001 - when the benchmark price for a detached Greater Vancouver home was $355,550 ($581,416.11 adjusted for inflation). As of June 2024, the price for that same home would be $2,060,000.    The prime rate rose from 0.25% in February 2022 to 4.5% by January 2023 and then had hit its decades long high of 5% in July 2023. Many homeowners experienced wildly inflated mortgage payment hikes - some even in the thousands - and some even found renewing their mortgage to be a significant challenge - or impossibility. The homeowners who were hurt the most were those who purchased property with variable or short term mortgages in the 2021-22 peak of the market when interest rates were at their lowest.    Many landlords sitting on variable mortgages also suddenly found their investments costing them a lot more than what their renters were paying - or even what the rental market could bear. Many provincial governments scrambled to beef of renter protection legislation, including in BC. While this gave solace to some renters, it certainly hasn't helped the overall situation. Many of the apartments that are currently on the market are the landlords who are trying to unload properties that are cash flow negative with appreciation that falls well under inflation.   However, since the majority of homeowners own significant equity in their property, the market has avoided a spike in inventory or foreclosures - so far. Most savvy real estate investors also know that being an investor means riding out the hard times to make the good times worth it. After holding steady at 5.0% for almost a full year, we received two back to back incremental interest rate reductions in June and July. This certainly helped homeowners and landlords a bit. The two rate hikes would reduce approximately $30 on every $100,000. It's not a lot, but its a start.   What we haven't really seen since the interest rate reductions is an effect on sales in the real estate market. With reduced interest rates after a prolonged period of higher rates, we would generally expect to see both an increase in housing prices and an increase in sales. So far, neither have happened in the Lower Mainland. Of course, it's only been two months and they were only incremental 0.25% reductions. But it was late spring-early summer, and this is generally the time of the year that we see prices and sales spike.  Benchmark Housing Price Benchmark home values fell in every property type in both the Greater Vancouver and Fraser Valley regions between May and June. Between June and July, it was exactly the same story, with the exception of detached homes in the Fraser Valley: the benchmark price for that segment went up by $700 - from $1,528,900 to $1,529,600. In case you're wondering, the benchmark detached home values were up in Abbotsford, nominally in Surrey, but down in Langley. Townhomes and Apartments in both regions fell. Sales When it came to sales, we've seen a continuation of the declining trend since April/May, which again, is historically not the case. The only housing type in either region that didn't decline in sales were Fraser Valley townhomes. As we head deeper into summer, this is usually the time that we might have seen sales peak for the year, maybe plateau before falling in September and October. But if we've peaked in April at historically low sales figures, this may be worrying for many home sellers (and certainly the real estate and construction industries). Let's also not forget that when the average sales price in Greater Vancouver is $1.25 million and sales fall from 44,000 units in 2021 to 26,000 in 2023, that's a loss of around $400 million in property transfer taxes for the BC government. That might be a drop in the bucket in an annual budget, but it could hire a few nurses, I'm sure (or 0.8km of the Broadway Subway). Are Buyers Waiting for Further Rate Reductions? Despite the slight softening of home values, they are still high enough at today's interest rates to keep many buyers away. Yes, variable mortgages are down $30 per $100,000 since earlier this year, which is a relief for current homeowners, but for those trying to get into the market, or for those looking to upsize, it just isn't an economic reality.  Anecdotal evidence suggests that many people have a lot of doubt about the accuracy of inflation reports. The grocery bills for the average household have skyrocketed well beyond what inflation suggests. These are the types of things that play into the psychology of the average first time homebuyer that drives the market. However, inflation has obviously come under control and home prices aren't rapidly climbing, both of which should lead to a summer of stronger sales, so what else is going on? I created a series of graphics, which I shared on social media, comparing interest rate projections from the big five Canadian banks. The graphic here is pulled from that data, which shows the range of the banks, with BMO being more conservative and TD a bit more bullish.  Here are some key takeaways from the big 5 banks: 1) CIBC, RBC, & Scotiabank all predict the prime rate will drop to 4.0% by the end of this year. However, RBC & Scotiabank are thinking that we'll see a quicker drop to 4.25%.2) TD, CIBC, & RBC project a reduction to 3.0% by the third quarter of 2025.3) TD & CIBC believe that interest rates will drop as low as 2.75% by the end of 2025. However, BMO is much more conservative, predicting a 3.5% rate. Regardless of the differences, when every major bank making predictions like this, it's likely that more than a few potential buyers will stay on the sidelines waiting for better rates. The common thought is that lower interest rates not only help keep payments down, but they also help buyers qualify for a larger mortgage. Both of these things can be true, but a significant amount of economic nuance is missed. When interest rates come down to the point that pushes the typical home buyers to purchase en masse, they often do so after the more savvy real estate investors, speculators and developers. This means that by the time buyers come back to the market to make a difference in these graphs, property values are likely going to be much higher. So although a home buyer can "afford more" (in dollar value) with lower interest rate, they are actually buying less house than they could have at a higher interest rate.  On top of that, when you "give" everyone more money, which is what elevating the increased purchasing power through lower interest rates, what do you believe people do with it? They spend it. In the real estate market, this pushes the prices up further. We have seen this cycle every time that interest rates go down. The same phenomenon occurs when tax rebates are provided in the real estate market. It doesn't make homes more affordable, it just shifts the money around. So do I believe home buyers are waiting on better interest rates to purchase property? Yes, yes I do. Should they? Maybe, maybe not. This completely depends on your individual situation. What's key is to weigh out as much of the big picture as possible and make a decision that is right for you. What I do know is that "patience" is generally not a virtue in the world of real estate. Indecision or lack of planning can often lead to being swept up in hype, fooled by influencers, or significant loss of opportunity. I may also be biased, but I generally think its smarter to purchase a long term asset at a lower price with higher interest rates and have those interest rates fall, than it is to wait for interest rates to fall and then purchase at a higher price... There is No Crystal Ball The big 5 banks are basing their projections on what the Bank of Canada wants to do with a whole lot of assumptions in stability of the world markets - an assumption that is impossible  to take seriously. In my adult lifetime, I've seen 9/11 completely disrupt markets in 2001. I've seen the financial and housing collapse in 2008. I've seen an unheard of housing escalation in 2016. And then finally we have the pandemic of 2020-22 and the Russian invasion of Ukraine, both of which have had immense economic repercussions. None of this was predicted or assumed by big bank projections or central banks. They've all had influence on rise and falls in the real estate markets. We don't know what the next event to change history will be. Politically, we have a provincial election in October and our neighbours to the south have their Presidential election in November. Both will have an affect on our economy and our markets to varying degrees. There is escalation of war in the Middle East, again. World history continues to play out and our markets react with the same votility they've had for generations. This may seem like a pretty high level monologue, because its meant to be. It's easy to get caught up in the 40-second reels and 20 second news soundbites. My advise: avoid making decisions based on social media. It's human nature to want to make wise, sound choices, while also mitigating risk. It's also human nature to be fearful and make irrational decisions. We want security and predictability when it comes to our finances. Regardless of what any real estate agent, mortgage broker, or financial advisor tells you, there is no silver bullet. There is no way to make a guaranteed investment that doesn't come with some risk, or way to perfectly time the market. If we could, we would all be Warren Buffet - and even he has made mistakes. However, we should take some advice from one of the most successful investors in the world: “Risk comes from not knowing what you’re doing.”-Warren Buffett

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