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It's the May Stats Show!
June 6, 2022 | Posted by: Michele Cummins
Warning! This is a digitally automated transcript of the show so there will be mistakes throughout - including the spelling of Michele's name!
Curtis Pope:
Time to check in with Michelle Cummins and find out what's going on in the real estate worlds. It's the Cummins Real Estate Group show. My name is Curtis Pope. Good morning, Michelle.
Michele Cummins - PREC:
Good morning Chris. And good morning everyone.
Curtis Pope:
Now I hear it's a bit of a different morning for you because you're up at Sasquatch resort.
Michele Cummins - PREC:
Yes, we got possession and they've been up here just a couple nights and it's amazing up here it is so relaxing and the trees and the just the feel there's still snow on the ground. But yeah, we're so excited. We purchased a property for vacation and air short term rental and it's three levels two stories in a basement full walkout basement and it's it's not a lot, but it's a flat log. It's very east coast style cabin. It's so neat. So we're going to do some renovations. That isn't just going to add such beautiful flair to it. But yeah, I'm so excited.
Curtis Pope:
That is very cool. And I do love the fact that you know your vacation home is like 15 minutes from your home home.
Michele Cummins - PREC:
Practically by the way I drive up the mountains
Curtis Pope:
well maybe not so in the winter but at least right now you're making good time.
Michele Cummins - PREC:
Yeah. Oh, it's so it's so great, but I'll be headed back back after our radio show here this morning.
Curtis Pope:
Very nice. Now you have your your your perfect outfit for hitting the chalet in the middle of winter. Have you got the perfect ski outfit?
Michele Cummins - PREC:
Not yet, but that is definitely on my radar. I thinking about it. I think I want a real hot pink suit with white fur around the collar and around the wrist and white gloves and white boots because I want people see me coming down the mountain.
Curtis Pope:
That's very, very Aspen like,
Michele Cummins - PREC:
yeah, it's very like 80s hot pink, you know,
Unknown:
or you want to go full like neon. Almost almost neon. Yes. Well, if I'm
Curtis Pope:
gonna go full 80s Why not even ride a pair of Andre Agassi tennis shoes, or you can play tennis, but they were neon pink and black. You can see me walk in from a mile away. Glow in the Dark style. Yeah, that was a thing. 1990 Oh,
Michele Cummins - PREC:
oh, yeah, the 90s You're right. That was when I wore all that kind of stuff to
Curtis Pope:
it. Well, it kind of went from the 80s into the early 90s That grunge it and we all wear flannel.
Michele Cummins - PREC:
Yeah, you're right. But when I was 13 at the ice rink, I remember the sweater. I still today what I was wearing the hot pink hot orange striped sweater. Yeah, it was really classy there.
Curtis Pope:
And you know, all that stuff has come back, Michelle,
Michele Cummins - PREC:
I know come back around. But okay, so on our show today. We just got released a couple days ago, the Fraser Valley real estate stats, it is our stats show the first show of the month. Yes, it is the first show of June 2022. And we will do that on our second segment because we are going to first talk about this how the Bank of Canada just raised their interest rates again. We knew it was coming in June and now there is a release it is it has happened. We're going to talk about that. And we're going to talk about also Canada house prices, how far could they fall? What do we all talking about in the industry today? What's the talk of the town kind of thing. And so we're gonna talk about that first. So first, I wanted to actually read out an article from The Canadian Real Estate Wealth magazine. It's one that I subscribed to and it's a great article about Bank of Canada raises interest rates to 1.5% and what it means for your mortgage. So at the start of the year, and it's rising real estate prices and ballooning inflation, a hike of the Bank of Canada's key interest rates think like an investable. Now nearly six months down the line and with multiple hikes behind us high seem like a regular occurrence. It really does. Today, the central bank has made it clear they intend to remain on course and continue to increase its rates even further. This week, the Bank of Canada announced an increase to their policy interest rate of 50 basis points. Now I should say this article just came out yesterday morning. So the this total amounting so far for the year is 1.50 because they did a quarter percent. This is this is 50 basis points now. That means interest rates are now six times higher than they were at the start of the year. So they still remain below pre pandemic Next level, so definitely got to keep that in context. The bank has also announced they plan to continue quantitative tightening the Qt a program under which the bank will allow the many bond holdings accumulate during quantitive easing to mature without replacing them, which will drive bond prices down and put upward pressure on bond yields. The policy interest rate affects the price of borrowing in many different areas of the Canadian economy. The current heights are primarily a tool to help curb inflation, which hit 6.8% In the month of May. Most importantly, for our readers the for their readers, the interest rate plays a big role in how mortgage rates are set. So what happens when the bank raises its rates to you? Well, the Bank of Canada notably does not take on regular Canadians as clients. Instead, they're mostly involved in influencing the major banks and directing monetary policy. This means the first effect of the bank raising its policy rate will be an increase in the cost of borrowing for banks and financial institutions. Canadians can expect the cost of borrowing from banks and financial institutions to rise in a couple of days. If it hasn't happened already, this increased costs will be passed on to consumers in the form of an increased primary. The prime rate serves as the foundation for many consumer interest rates, including some mortgages. So how does it affect your mortgage? Well, the Bank of Canada policy rate plays a major role in how banks determine their variable interest rates. Fixed rates, on the other hand, are more or more closely tied to government bond yields, which will be affected by the ongoing QE program. So the good news is that if you have a fixed rate, your interest rate won't change until your mortgage is up for renewal at the end of the term. Or if you decide refinancing, depending on how when you started your mortgage term. And when you are up for renewal an increased interest rate will affect you differently. Those who began or renewed mortgages amid the record low rates for the last two years will see the biggest increase in interest when it comes time to renew while mortgage terms that started prior to 2020 may not see as large of a change for variable rate mortgages, though your interest rates will be rising shortly, if they haven't already. And we'll continue to follow the policy interest rates as it moves upwards. While variable rates were very popular during our previous low rate environment, these borrowers will quickly feel the burn of rising interest rates, many may choose to convert to a more stable fixed rate to ride out this shift in market. So I talked with a mortgage provider just a couple days ago, and asked, So are you seeing people now going into more terms because of the rate hikes? Or do you still see most people going into variable rates still, and she said that she's still seeing the trends of going into variable rates. And she still sees that the long term and short term that's still better than the current five term and seven term and tenure, just the term rates? So that is the information about that. And then they go on to say how much further will they go though no one, but the Bank of Canada themselves can definitely say just how far right rising interest rates will need to go. Though analysts are predicting more still to come. And again, the mortgage broker I spoke to says that if the inflation doesn't go out of hand continuing on going on hand, then then they shouldn't raise it again this year. But if inflation continues to be an issue and a problem, they will have no choice but to raise interest rates again. So despite the recent hikes, the rate of inflation has continued to go up in recent months and is predicted to continue to rise even further before it falls is what the article says. Clearly, the bank must do more if they hope to rein in inflation. Yet, even with the rapid increases we have seen, they must still try to avoid moving too fast. Our current interest rate is still below pre pandemic levels, though it is higher than it was for much of the 2010 when inflation hovered around 2%. And looking even further back, we're still far from the highest interest rates ever seen in Canada. You know, little comparing with the past has not apples to apples. So looking forward to the rest of the year, many economists are predicting yet another 50 basis point increase in July now. So that's, that's pretty big. And while RBC economics forecasts a policy rate of 2.5% to end of the year, so with just four potential hikes remaining on the vocs 2020 schedule, they will need to continue at a pace of at least 25 basis points per increase to hit that forecast. Based on their recent clip that seems more than doable. So that is what's happening with interest rates currently and the perceivable future and so overnight rate versus current same rate. That is another explanation that we can go on a little bit. But if you want more information of that I do have good connections to great mortgage providers, I'm happy to give you their name. And you can ask them all the questions as I always do. And I do get rate cards every time there's a difference in rate hikes and any discounts that some of my mortgage providers offer. And I do share some of that on my social media, if you want to keep an eye on that. And I'm happy to share with those with everyone as well. But you know, if you wonder who what is the Bank of Canada? Well, the key to understanding how interest rates function in the Canadian financial system all comes down to the Bank of Canada, and the Bank of Canada, not to be confused with the Royal Bank of Canada or the national banks, Canada, which are completely separate entities. It's a government operated bank that serves as the Central Bank of Canada, and the Bank of Canada has been the nation's official central bank since its creation in 1934. And its stated goal is to promote the economic and financial welfare, welfare of Canada. So that is what the BOK is the Bank of Canada.
Curtis Pope:
Very cool. Now we have the full explanation.
Michele Cummins - PREC:
Yes, well, mostly.
Curtis Pope:
All right. Well, I guess we're getting the point where we probably should take a break here. But if people want more information about what you do as a realtor, and all the stuff that comes with X, I know your website's chock full of stuff, where can they go? Alright, we're back with more right after this. You're back with segment number two of the company's Real Estate Group show with Michelle Cummings and myself Curtis Pope. Now, Michelle, I know you're excited. I know you have a lot of stats to get to. So we should probably just dive right in. Because we don't want run at a time when you have so many stats. I know how excited you get for the stat show.
Michele Cummins - PREC:
And hopefully I don't talk too fast so everyone can keep up with me.
Curtis Pope:
Well, how many coffees have you had today?
Unknown:
Only two?
Curtis Pope:
Only two. Yeah, but how? When did you have those two like an hour ago? Or like, just before we got on air? Pretty much just before we got on here. Okay, so we're gonna do you know, 12 minutes of stats in about three minutes is what you're saying. All right. Well, let's get right to it. No need to drag it out any longer. Let's hear the stats.
Michele Cummins - PREC:
Okay, so Canada house prices, how far could they fall? Let's talk about that first, and then we'll get into the stats, because then you'll see as though sales and price growth had slowed in the housing market in recent weeks. And we're going to talk about all of Canada and not just the Fraser Valley. So it's not a secret that Canada is currently in the throes of a housing market cool down. There's no surprise there. But with the pace of the home sales falling in April and that national house price is also on the way down. So new figures released by the Canadian Real Estate Association we call it Korea revealed that the country's home price index fell point 6% Between March and April. Its first declined for over two years at home. resales also dropped by 12.6%. Unsurprisingly, Korea said that slowdown had been caused largely by recent interest rate hikes, with mortgage rates rising as the Bank of Canada and lenders across the country move away from the rock bottom rate environment that's prevailed throughout the COVID 19 pandemic. That's not to say A crash is imminent. The actual national average home price has now declined for two months in a row After peaking in February. And that's the first half of February according to create the prices are still about 7% higher than last April. Meanwhile, the home price index is 23.8% up compared with the same time last year, although that represents a smaller yearly increase than the 29% it recorded in February. While the market is seeing the same number of transactions as last year. That's mainly because 2021 was an anomaly. According to Kitchener, Ontario based principal broker Tracy Valco. So she's the founder of algo financial Okay, so she told Canadian mortgage professional that activity remained robust with agents and brokers now having next lavatory discussions with their clients and focusing on the educational aspect of what's happening in the current market. You She says, I feel we're busy. But we're busier educating people and having more economic conversations. I think people understand inflation probably more than they ever have historically. So maybe that's a good thing. She said, I do think there's a bit of a shift for sure. In terms of transactions, were doing more second mortgages, more lines of credit. The current cooldown is also presenting an opportunity for many homebuyers Valco said, with lower demand and fewer bidding wars, meaning a less stressful overall experience for those looking to buy. She says, I have to say I find a lot of our clients are finding houses where before they weren't, of course, they were sitting because they weren't able to find the house. She goes, I wouldn't say there's more inventory on the market, I would say because there's not a huge demand. They've slowed down. Now for us in the Fraser Valley. We know that in February, we had more listings at the market than we've seen in the 80s. So of course, this is Canada wide, not just the Fraser Valley. So that's kind of what's happening with with that. So real estate. You know, Royal a page is the brokerage the first brokerage ever in Canada and the first brokerage I was with before I moved to REMAX. They also said aggregate home prices across the country was continued to rise revealing in its full year forecast that it expected that benchmark to increase by 15% this year and land at around 900,000 By the end of 2022. That would include a 16.5% price hike in the Greater Vancouver area to about 1.3 million. With the Greater Vancouver area, the other of the country's two hottest markets projected to see its accurate sale price rise to 1.4 4 million. That's an increase of 15%. So with that, I'm going to go into our local stats. And that just came out a couple of days ago and it says home prices soften this Fraser Valley housing market cools amid lower sales and higher inventory. As property sales continue to fall in the Fraser Valley and active listings continue to grow. The region is edging towards more balanced levels not seen since the pre pandemic period. If you see this graph, that's part of the statistics. And again on my website, Michele cummins.ca. Scroll all the way down and you will see every month stats I have their season compare all the months and months and how it's gone down February to March, March to April, and now April to May. So have a look there. But this graph shows you that from a very high seller's market, it is now what we call in the blue zone, which is a balanced market, I should say it's just above a balance market literally just above it. So it's almost a balanced market again, sales of all property types in May were 1300 60, down 16.9% from April's 637 and down 53.9% compared to May of 2021. At the same time active listings have more than tripled since December 2021. At the end of may act is sat at 5.4% higher year over year and an increase of 14.8% compared to April 2022. The sales to active listings ratio measures whether the market is balanced and 12 to 20% are favors either buyers, which is less than 12% or sellers that are greater than 20%. So in May, the ratio for Fraser Valley all property types combined with 22%, comparable to pre pandemic conditions in early 2020. So by comparison, during the pandemic, the ratio peaked at 92%, indicating a very strong seller's market. So that's the difference. So since March, this is this is actually quoted from the current president of our real estate board. Since March, we've seen sales come down within a accompanying increase in inventory subsequently restoring much needed balance and cooling our heated market. So that stands or bends that President. And she further says while still early, it suggests that as we gradually settle into a post pandemic state of work and life, the big pandemic era drivers working from home and record low interest rates may have run their course. So single family detached benchmark prices for the overall Fraser Valley is currently at 1,712,500. And that's a decrease of 2.4% compared to April and an increase of 26.2%. From May of 2021. So year over year, it's a lot. Townhouses are at 918,900. That's a benchmark price and that's a decrease month over month from of 1.4%. But it's still an increase 31.3% from last year, and apartments are at 581,400 and that's decreased month over month by 1.1%. But an increase still up 30% Compared to last year. So The sky isn't quite falling, got a look at everything. And so now we're gonna go into municipality by municipality. So abbatoirs first intach benchmark prices are at $1,420,200, an increase from last year, so it's 23.7%. But a decrease of 3.3% townhouses are at 751,000. That's an increase of last year still of 36.6%. And it actually townhouses went up month over month in Abbotsford for 1.8% apartments are 490,300 And that's an increase of 39.3% from last year, but it did go down 1.6% from the month before missions, the patch benchmark prices are 1,000,900 Sorry, $1,193,600, an increase of 24.3% from last year but a decrease month over month by 5.9%, which is pretty big townhouses missioner at 762,000 that actually went up month over month just like it did in Abbotsford, it went up 1.6% month over month. And so that's a total from last year of 36.1% apartments actually went up to in in missions month over month by 3.1%, which is a total of 36.4% from last year. And that takes them to $480,700. Then why rock in the south Surrey area benchmark prices for detached homes is that 2,133,400 that just went down slightly, which is point 7% from last month, still an increase of 24.3% from the year before and townhouses they're at 1,030,700 that went down month over month 2.1% But still at 27.2% from the year before, and apartments at 642,900. That went down only point 9% from last month. But still 23.6% from the year before Langley benchmark prices for detached is $1,838,900 that went down 1.8% from last month, and it's still 25.7% higher than last year. Townhouses are at $946,500 that actually went up to last about 1.2% for over a year is now 35.7% and apartments in Langley are 640,500 that only went down month over month point two 8%. So a total of 29.5% from last year. So delta north that area benchmark the top prices are $1,589,200. That was down 3.1% from last month, a total increase now of 26.1% from last year, and townhouses are million $24,200. That went down month over month 2.1%. That's still up 30.2% from last year and apartments at $640,500. In decrease 1% from last month, but increase year over year 35.8%. Then we've got city of Surrey, Surrey all combined. Detached benchmark prices $1,849,400 went down 2.1% from last month, but overall up 27.3% from last year and townhouses design has been $42,500 Down 2.9% from last year, but still overall up 28.7% from last year, and apartments at $581,800. That went down 1.2% from last year, but overall still 20.1% from last year. So with that, that is the Fraser Valley real estate statistics for you today. And I know we're kind of short on time. But so I want to share a quote and are my new listings, please check out my website and check out my Facebook business page. Because I have them all up there. We do have a couple open houses this weekend, if you want to go galavanting around to open houses. And you could also check your realtor.ca app and check hit the button to open houses and in your map area. And it will show you all the open houses that you can you can have a look at. So our quote of the show this week is progress is impossible without change. And that's from George Bernard Shaw.
Curtis Pope:
That's what I actually knew.
Michele Cummins - PREC:
I knew you were so good at quote.
Curtis Pope:
Well, there's you got you pull out some really good ones that I don't know. But that was one of the few ones I've known. That is a great one. Awesome, unless you're, you know, John Dutton and you are the wall that stops progress. Right?
Michele Cummins - PREC:
Right. Right, what you know, and you know, by selling and buying real estate, it's it's a huge change. And it's so hard for for a lot of people to make that decision and make that change. And I always try to remind people when you know, there is always a positive reason why do you make a change? It's a positive reason and just keep on thinking of that reason why why you're wanting to make the change because it is it is good.
Curtis Pope:
Absolutely. All right. Well if people want more information about what you do as a realtor. Where can they go? They could always come in and join us again next week when we will talk real estate in order to unlock your real estate potential on the show real estate is maximized. Thanks for listening
If you missed last week's episode where we replay our Episode About Recreational Properties and Reno tips please go take a listen! It's well worth it.