What is happening with the Real Estate Market? This is a question that has been constantly asked by buyers, sellers, investors and real estate agents like myself.
At Dexter Realty, we take pride in our indepth analysis of the market each month in order to completely understand the market and the complex factors that affect it. What we can say is – Like the weather itself in May, the Greater Vancouver housing market was unseasonably hot but with subtle signals of cooling.
May marked the second consecutive month with sales declining in absolute numbers from the previous month, but with a 187 per cent increase in transactions compared to May of last year. This decline of sales in combination with such a high increase in transactions makes it is hard to say this market is slowing.
What I can tell you for certain as an experienced Realtor of 20 years is that May received a boost from a sudden change in the ‘mortgage stress test’ in mid-month that extended the stress to all homebuyers, not only to those with a 20 per cent down payment. That last-minute change caused some buyers to push to close on sales before the June 1 deadline for the new stress test to begin.
Under the revised stress-test regulations, buyers must qualify at a five-year mortgage rate of 5.25 per cent, which is much higher than the actual mortgage rates available. (Scotiabank and National Bank , as examples, are currently offering five-year fixed rates of 2.14%). Buyers don’t have to pay the higher rate, just prove they can afford it.
Apparently, many can. During May, 4,346 homes were sold in Greater Vancouver and another 2,951 in the Fraser Valley, where sales were up 267%, year-over-year. Ponder these facts for a moment.
May, therefore, set an astounding pace of 235 sales per day, every day, all month long, or $11.1 million worth of transactions every hour, based on the composite Lower Mainland home price of $1.14 million.
Will the stress test affect early June sales? Not likely. June 15 marks the Phase 2 relaxing of B.C.’s COVID-19 restrictions, which could provide further confidence and impetus to the housing market.
Say what you will about the effects of the pandemic on the real estate market, optimism is always a good thing when it comes to real estate.
