Broker based in the city looking ahead to a strong year in the mortgage space
The past 18 months may have seen some trying times for Canada’s mortgage market – but for Vancouver-based broker Sharon Davis (pictured), there’s plenty of room for optimism as the 2024 market kicks into gear.
DLC BlueTree Mortgages WEST’s Davis, who recently marked the beginning of her 20th year in the industry, told Canadian Mortgage Professional that while the recent cycle of rate hikes and rising borrowing costs may have been more drastic than those that preceded it, Canadians had shown their ability to adjust budgets and adapt to the new reality.
What’s more, with the prospect of rate cuts in the cards for 2024, the year ahead is likely to see some relief for both homeowners and buyers on the mortgage front, Davis said.
“People are having to reset their pocketbooks and figure out where they’re going. It’s not all just about mortgages,” she said. “So I think it’s really reset people’s minds about where they’re spending. And I am optimistic: I feel like maybe we’re actually going to have a spring market this year.
“The last few years since COVID, there hasn’t been a traditional spring market, but rates are dropping, which gives people a little bit more qualifying [power].”
While Vancouver remains one of Canada’s most notoriously pricey real estate markets, Davis said more properties were likely to come to market in the coming year – particularly small units such as micro condos following the government’s recent crackdown on short-term rentals.
Those property types may not be the first thing that comes to mind in terms of a dream home, but they can offer a good way of getting one foot on the property ladder in an expensive market, according to Davis.
“If your choice is to own a 450-square-foot something or not, and you’re a single person, I think people will just learn to deal with it,” she said. “At least they can get into the market. A lot of the kids that are moving out today or that are buying a place, they grew up in condos or townhomes.
“And I think that’s the price that they’re willing to pay to downsize dramatically in order to own a piece of something to get started.”
Canada's mortgage and housing markets may see an upturn in 2024, but the recovery is expected to be gradual, according to Drew Donaldson, founder and CEO of Donaldson Capital.
— Canadian Mortgage Professional Magazine (@CMPmagazine) January 10, 2024
Read more: https://t.co/yct4Txl9Z0#mortgageindustry #mortgagemarket #industrytrends #housingmarket
Softer market, lower rates could boost interest in homebuying
While Vancouver home prices were up in December on a year-over-year basis, they skidded slightly from November, falling by 1.4%, with softer activity projected to continue in the opening months of 2024.
That trend – coupled with the prospect of the Bank of Canada either lowering its benchmark rate or signalling its intention to cut at its next rate announcement – could help bring buyers back off the sidelines, Davis said, and contribute to a market uptick in time for spring.
“I think prices are quite soft now, and when the Bank of Canada makes its next announcement – whether or not there is a movement in prime – I think the verbiage that comes out, or the underlying theme of what the Bank of Canada is feeling and thinking, will start to change people’s minds,” she said.
There appears to have been little change in the client types purchasing in the city centre itself – and younger buyers there are usually relying on help from parents or purchasing with a friend or common-law spouse, Davis said.
“You definitely need a double income, a sizeable double income, and sizeable downpayment to stay close to the city,” she said. “There’s still lots of younger people that are looking to upscale from a condo or townhome [downtown] who are looking further out east and ideally hoping that they can get a suite. So it depends.”
REBGV weighs in on 2024 prospects
The Real Estate Board of Greater Vancouver (REBGV) director of economics and data analytics Andrew Lis said in remarks accompanying the board’s latest data that the “story of 2023” had been too few homes available compared with the number of buyers who were ready to purchase.
Still, the possibility of lower interest rates in the year ahead is one that could have big repercussions for the Vancouver market, he added.
“Looking back on the year, it’s hard not to wonder how we’d be closing out 2023 if mortgage rates had been a few per cent lower than they were,” Lis said. “And it looks like we might get some insight into that question in 2024, as bond markets and professional forecasters are projecting lower borrowing costs are likely to come with modest rate cuts expected in the first half of the New Year.”
