Metro Vancouver homebuyers still hesitant despite Bank of Canada cuts

Metro Vancouver and Fraser Valley homebuyers still hesitant despite Bank of Canada rate cuts

Volodymyr Kyrylyuk/Shutterstock

“With the recent half-percentage-point decline in the policy rate over the past few months and with so much inventory to choose from, it’s a bit surprising transaction levels remain below historical norms as we enter the mid-point of summer,” said Andrew Lis, the director of economics and data analytics for Greater Vancouver Realtors (GVR) today.

That was Lis’ prognosis based on July 2024’s home sales activity within Metro Vancouver — that home sales have not budged much, despite the Bank of Canada’s first two cuts to the policy interest rate in June 2024 and July 2024, which brought down the rate from 5% to 4.5%, and the surging volume of available listings in the market.

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The number of home sales within GVR’s jurisdiction reached 2,333 units in July 2024, representing a 5% decrease from the 2,455 sales over the same month in 2023 and a 17.6% drop from the 10-year seasonal average.

There were 5,597 newly listed homes for sale in July 2024, a 20.4% increase compared to the 4,649 homes listed in July 2023 and 21.5% above the 10-year seasonal average.

Similar trends were observed by the Fraser Valley Real Estate Board (FVREB), where home sales reached 1,230 units in July 2024, representing a 7% decline from June 2024 and a 26% drop from the 10-year seasonal average. The number of listings reached a 10-year seasonally adjusted high in July 2024, with active listings at 8,731 units, which is an increase of 5% over June 2024 and a 41% increase from July 2023.

“Despite back-to-back policy rate cuts by the Bank of Canada, many first-time homebuyers are still facing challenging market conditions — high interest rates, the mortgage stress test and the need for a substantial down payment,” said Baldev Gill, the CEO of FVREB.

The jurisdiction of GVR, previously known as the Real Estate Board of Greater Vancouver (REBGV), covers Vancouver, Burnaby, New Westminster, Richmond, South Delta, Coquitlam, Port Coquitlam, Port Moody, North Vancouver, West Vancouver, Pitt Meadows, Sunshine Coast, Squamish, and Whistler. Other areas such as Surrey, Langley, North Delta, White Rock, Mission, and Abbotsford are part of the separate FVREB.

Benchmark home prices for all properties within GVR are now $1.198 million, representing a 0.8% decrease over July 2023 and a 0.8% decrease from June 2024. The benchmark prices are now $2.049 million for a detached home, $1.125 million for a townhouse, and $768,000 for an apartment. Within the FVREB, the overall benchmark price is now $999,100, which is the first time the benchmark price trended below $1 million since January 2024.

“With the overall market experiencing balanced conditions, and with a healthy level of inventory not seen in quite a few years, price trends across all segments have levelled out with very modest declines occurring month over month,” said Lis.

“While it remains to be seen whether softening prices and improved borrowing costs will entice buyers to purchase as we head into the fall market, it’s worth noting that it can take a few months for improvements to borrowing costs to materialize into higher transaction levels.”

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