The following is an update from Glynis MacLeod PREC* of the MacLeod Group.
As we step into 2024, we want to extend our best wishes for a happy and successful New Year! We hope that you enjoyed the holiday season with your loved ones and we wish you good health and positivity for the year ahead.
In his new year message, Don Kottick, President of Sotheby’s International Realty Canada said, “As we look at the year ahead, there is reason for optimism: the real estate market has always been cyclical, and there are signs that interest rates are stabilizing, and that market activity will see an upswing later this year.”
Tu Nguyen, an economist with accounting and consultancy firm RSM Canada, said the economy has turned a corner. “Overall, the Canadian economy has entered a phase of stalling. A few months of challenging times are ahead before price stability is restored,” she said. However, Nguyen said wage growth remains far above inflation.
Statistics Canada said average hourly wages in the month were up 5.4% on a year-over-year basis compared with an increase of 4.8% in November. “This creates an interesting scenario for the Bank of Canada (BOC). The weaker-than-expected job report might accelerate the Banks decision to slash rates, but the hot wage growth does not ease concerns about sticky inflation,” Nguyen said.
In its summary of deliberations, the central bank noted its governing council agreed that the likelihood that monetary policy was sufficiently restrictive to achieve its inflation target had increased, but still cautioned it was ready to raise rates if needed.
Doug Porter, Bank of Montreal chief economist, is expecting the BOC to begin cutting interest rates in June however expects that they would like to see wages start to ease. The BOC’s next interest rate decision is set for January 24th when it will also release its latest monetary policy report.
RBC assistant chief economist Nathan Janzen recently said, "We have housing activity remaining fairly sluggish to start 2024, but inflation has also been slowing. What that means is the BOC is getting closer to the point where they can start taking their feet off the monetary policy brakes of the economy and inch closer to a pivot to interest rate cuts." That could bring more activity and "small increases in prices" over the second half of the year, as he forecasts home prices moving "gradually higher" across all markets.
BC Assessment has released the 2024 Island assessments. Many properties have seen a slight decline in values largely due to the increase in interest rates last year. The highest assessed property in Greater Victoria is 1850 Lands End Road, assessed at $17,501,000 which sold for $18M in 2022. The second highest assessment goes to 3160 Humber Road in Oak Bay assessed at $16,244,000.
The past year saw 6,207 properties sold – an 8.7% decline from the 6,804 properties sold in 2022. The benchmark price for a single-family home in the region’s core (Saanich, Victoria, Oak Bay, Esquimalt and View Royal) was $1.268 million. A year earlier, it was slightly lower at $1.236 million.
We certainly have been experiencing a shift in the market towards more of a balanced market and it is not uncommon to see offers subject to the sale of a property. We always reflect on the fact that it just takes one sale to bring about a domino affect.