Vancouver Real Estate Market Update for June 2023

The real estate market experienced notable trends and shifts in June 2023. This episode focuses on key metrics for the month of June. We take a look at total sales, new listings, inventory, the current sales-to-active ratio, and pricing trends. By examining these factors, we gain insights into the current state of the market and can make informed projections for the future.

In June, the total sales reached 2,988 units, marking a 21% increase compared to the same month in the previous year. However, sales experienced a significant decline of 14% from the previous month, making it the first decrease in five months. A common theme we see in June is a typical summer slowdown, which was likely exacerbated by a surprise rate hike and the heightened anticipation of another hike the following week. Overall, the total sales were 8.5% below the 10-year average; however this does not reflect the change in pricing we’ve seen so far this year. This downward trend indicates a temporary cooling of the market that we tend to see in the summer months.

June saw 5,348 new listings, reflecting a 1.3% increase compared to June 2022. However, there was a slight decrease of 0.5% from the previous month. Interestingly, this was only the second time this year that month-to-month sales volumes declined. The new listings were 3% below the 10-year seasonal average, and it is expected that listings will further decrease in July and August, following the typical summer trend.

The inventory rose to 9,327 units in June, representing an increase of 300 units or 3%. This milestone marked the first time in six months that the inventory broke the 9,000 mark. Although there has been a six-month period of increases, the total increase during that time was only 1,800 units. Despite a 12-month high in new listings, demand managed to keep the overall inventory relatively flat. The inventory in June 2023 was 8% less than the inventory in June 2022 and 17% below the 10-year average. However, it is important to note that these figures are not adjusted for population growth. Continued low inventory is expected to keep prices stable or flat through the summer, unless there is a rate hike, which could exert downward pressure.

The sales-to-active ratio for June stood at 31.5%, representing a 7.5% decrease and the first decrease in five months. Despite the decline, the market remained in a seller's market territory. Detached homes had a sales-to-active ratio of 21%, down 7.5% and approaching a balanced market. Townhomes and condos also experienced declines, with ratios of 38.5% (down 6.5%) and 39.5% (down 6%), respectively.

The Home Price Index (HPI) continued its upward trajectory for the sixth consecutive month, increasing by $15,000 or 1.3% to reach $1,203,000 in June. This milestone marked the first time in 12 months that the HPI surpassed the $1.2 million mark. Throughout 2023, the HPI has experienced a significant increase of $90,400, representing an 8% rise. However, when compared to June 2022, the HPI was down 2.4%, and it currently sits 4% below the peak reached in April 2022. The lagging nature of the HPI suggests that it is essential to examine other metrics for a comprehensive understanding of the market.

The median price experienced a decrease of $23,000 to $957,000 in June, marking the first decrease in six months. Similarly, the average price declined by $41,000 to $1,270,000, the first decrease in five months. Projections for the future indicate a flat HPI, with a potential 1% drop by the end of August. The median and average prices are expected to remain stable. However, a rate hike could extend the downward trend. It is worth noting that low inventory remains a significant factor in keeping prices buoyant.

The real estate market observed a slowdown in sales, a moderate decline in new listings, and a gradual increase in inventory during June 2023. While the market remains in a seller's market overall, the sales-to-active ratio decreased, indicating a potential shift towards a balanced market, particularly in the detached homes segment over the summer.

The HPI continued to rise, reaching a new milestone, but lagged behind previous year figures and the peak in April 2022, not to mention this is a lagging price indicator. Median and average prices experienced their first decreases in several months. Looking ahead, the market will continue to stabilize, with the HPI remaining flat and a potential 1% drop by the end of August. However, the trajectory may be influenced by external factors such as another rate hike. The foundation of low inventory is likely to support price stability in the coming months despite what we could see from the BoC.