Last month we discussed the beginnings of a slowdown, and that theme continues this month. For the first time since 2010, the lowest nationally-available uninsured 5-year fixed rate mortgage is now north of 4%. This means that any buyer opting to make a purchase using a 5 year fixed rate will be stress tested at a minimum of 6.25%. Now add record home prices and wage growth that has failed to keep pace with the rising cost of living and you can see that something has to give. The highly levered Vancouver housing market is going to struggle with mortgage rates north of 4%. Need I remind you that in 2018, when mortgage rates were hovering around 3.5%, Greater Vancouver home sales slumped to an eighteen year low. Thus there should be no surprise that sales activity has fallen precipitously since the end of February, and April home sales fell 34% year-over-year. Prices need to adjust for the higher cost of borrowing. There are now signs that process is underway, which we’ll discuss later in the report.
Steve is a regular speaker at industry events, hosts an online video series ‘The Saretsky Show’, and authors the popular “Saretsky Report” which is read by over 7000 subscribers.
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