We could see prices start to RISE in 2023....

We could see prices start to RISE in 2023....

Pandemic fuelled buying of homes. One in three Canadians delaying either buying a home or making a significant purchase. Declining home values almost across the country. The question many home buyers and home sellers and home owners are asked asking is will prices ever reach where they were at the peak of the market in the spring of 2022? Today's post dives into just that question what is going across the country and what is going on locally in the Fraser Valley where we live?

If that sounds like it might be of interest to you, this is definitely the post for you. You're going to want to check it out. What's good everybody? It's Darin Germyn from the Germyn Group where we know you've only got one chance to either buy or sell your next home. So we're here to help you get it right.

The question is will home prices ever recover to where they were at the peak of the market? There is no doubt that buying was completely fuelled by a frenzy and there was lots of, lots of people everywhere in fact, that were buying homes all across the country, including in our little neck of the woods here in Surrey and surrounding areas right across the country.

In Canada, home prices are down about 8.8% and that is largely fuelled by some of the places that had the biggest gains during the Pandemic, which was of course BC and Ontario. All types of product meaning townhomes condominiums, detached homes in the Fraser Valley are down from the peak about 15 8% according to our Home Price Index. A study was done by Diane Durham and the Angus Reid Forum about what is going on in the minds of would be home buyers and homeowners that are out there all across the country. And I think the numbers are going to surprise you a little bit. It won't surprise you that one out of five home sellers or homeowners think it will take significantly longer to pay off their mortgage than what they first suspected.

And one of ten of those homeowners think that they are going to take on more debt as a result of the mortgage rate increases by the bank of Canada which are up about 3% since the spring of this year. The most telling of this study, which I found the most interesting is that one out of five Canadians don't think prices will ever come anywhere near back to what they were during the peak of the market. That's pretty significant. That's 20% of the homeowners out there thinking that the market is never going to come back. And what I thought that might be useful for today's video was if you are someone in this camp that kind of maybe feels the same way, let's take a little bit of a historical perspective to see what has happened in the past when we've seen significant declines in value over the course of time.

If you were around in 2008, it took 22 months from when the market peaked to when the market recovered for prices to finally come back to where they were at that time. We experienced something similar in British Columbia in 2016, where it just took a short eight months for the market to recover to prices higher than where they were at the time of the peak.

The most significant one in our history was in 2018 when the stress test was introduced, where it took 32 months for the market to actually start showing that homes were worth more than they were 32 months prior to that. So the question to me is, well, how far in are we to these home price declines and what might happen moving forward? I think we can all agree, and the bank of Canada has been very forthcoming, that we're not quite done with the rate hikes that are coming and they are going to be around for a little bit. They're not going to go away overnight, but they're probably not going to last forever either. With that being said, knowing that we're probably going to be in a higher interest rate environment than we've been in for quite some time, what is it going to take to get the market to start to come back knowing that we're going to be in a higher interest rate environment for the next short little bit?

How long have we been in this situation? Well, it has been almost eight months altogether since we saw the peak of the market in the Fraser Valley for all product types. If you recall just moments earlier I mentioned that was the same as in 2016 when we saw the market start to come back. But the other two examples I use from recent past did take significantly longer. Now, just because we're eight months in doesn't mean we're on the way out, but there isn't always terrible news based on what's going on out there.

Sure, we've seen the average price of properties across the Fraser Valley go down. However, there are examples of properties that have started to gain in value and this is likely largely due to a supply issue. We're just not seeing the supply come onto the market like we have in previous times. And in fact, over the course of the last eight months, supply has still remained relatively low. If you're a regular watcher of this YouTube channel, you know that we still do have a housing crisis.

I'm not going to get into that right now, but just take away that the supply is still low. And in fact, in all of the sub communities in the Fraser Valley, we have 57 of them altogether. Nine of them in the last month have had relatively significant gains in their values according to the Home Price index, which means if you had bought a home in one of these areas about a month ago, you would have paid less for it than you would today. That represents about 16% of our subareas actually saw a gain in value in the last month. The flip side of that, of course, is 84% of them did not see a gain.

So take it for what it is. But that is what is going on locally in terms of what the prices are doing and how long we've been in this type of market. Now, the numbers I shared with you are, for one story, detached homes. And that's just strictly anecdotal, anecdotal? Anecdotal? I want to know what you think.

Please leave a comment below and let me know what you think is going to happen. How long are we going to be in this type of market? Do you think the prices will come back to where they were in the peak? And what do you think is going to happen with interest rates? Of course, don't forget while you're scrolling around down in that area, please make use of our online calendar where if you have questions about either buying or selling a home, you can book a time to speak directly with me.

We'll give you all the information you need to make sure any decisions you're making are the best. Look, everybody, I want to thank you for reading, and I want to thank you for your comment. We look forward to seeing you on the next post. Cheers. 

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