Real estate deal hunters, don’t miss your opportunity
Thank you for taking a listen to Propel’s Get to the Point audio.
It appears our real estate prices are in the midst of a phenomenon referred to as a “dead cat bounce.” No, we don’t hate cats over here at Propel. And no, a “dead-cat bounce” is not a viral dance taking social media by storm.
For those new to the phrase, it’s an investing term for the temporary rise in the price of a stock or other asset during a long period of decline. Now, that’s the technical definition, but the morbid term comes from the idea that if it falls far enough, even a dead cat will bounce. I know, gruesome, but I’m just the messenger folks so please, no “hate mail”. Anyway, I’m going to break the “Get to The Point Audio tradition by getting to the point straight out of the gate.
Even though we saw a resurgence of the average price in September and October, it was only momentary and, frankly, expected given the shortage of inventory heading into those months and knowing another rate hike was coming on the 25th of October.
So what is my point? The “bounce” in the phrase was the short-term price increase we saw in those two previous month’s, where the average price for a home in Greater Vancouver climbed back above $1.25M, only to begin the descent back down to $1.2M in November. And these price declines will continue for the next 6 months.
We are not out of the woods just yet when it comes to declining property values. How much further to expect? The honest answer is no one really knows.
So although we are still seeing properties trading (yes, that’s correct, the real estate market hasn’t completely halted), I would prepare for the following if I were a seller in the market:
The Bank of Canada announced another 50 basis point increase to the interest rate just a couple of days ago on the 7th of December, which will certainly take, yet, another tranche of buyers on the cusp of qualifying for a home, completely out of the market. Basically, even less home buyer eyes on your property.
This will further hurt sales figures that are so low that the last time we saw them at these levels, outside of the peak pandemic era that is, was January of 2020. Coupled with the fact that we are going into traditionally slow months of December and January, it’s going to be really difficult for the market to rally with an increase in sales. This will further reinforce the perception of volatility to the lending sector and property buyers. In short, the market is going to appear to be getting A LOT worse before it gets better.
And by the way, I know it hasn’t been widely announced or talked about, but we have been in the early stages of a recession for more than a couple of months now. If you doubt this fact, talk to any small or medium-sized business owner, and they can help set the record straight. Sellers this means that consumer confidence is going to take a huge hit.
So, in short, the dead cat has bounced and the days of putting a for sale sign in the dirt and receiving multiple offers are not coming back anytime soon. If you’re contemplating on selling your property, you better have a darn good reason to want to sell AND provide value to buyers. Yeah I know, value, what a strange concept huh?