There have been many people asking about our market and what’s happening. Vancouver’s North Shore has been a volatile market in 2010. Over the past three months there has been a marginal increase in sales and a decrease in inventory.
The first 3 months of the year were a Seller’s market. When the listing inventory peaked out in North Vancouver at 472 detached homes for sale in June, the market started transitioning towards a Buyer’s market. As of November 16, 2010, there were 305 detached homes currently for sale. If sales continue to increase we will trend back to a balanced stable market in 2011. Currently the good value buying opportunities are starting to decrease. If the inventory trends lower, we will see a 5-10% increase in prices, keeping in mind that variables exist in each segment (property type and location) and price point.
Detached (Single Family) Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 3-5%. Note West Van was down .6%
Attached (Town homes) Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 3-5%. Note North Van was down 2.8%
Apartment Bench Mark price for Greater Vancouver from October 2009 to October 2010 has increased 2-3%. Note North Van was down 1.1%
“As we enter the final two months of the year, buyer demand is in closer alignment with supply than we’ve seen for
most of 2010,” “Those buying today recognize that they still have a chance to enter the market with
near-record low interest rates, while gradual reductions in inventory have eased downward pressure on prices.”
Bank of Canada met on October 19th and held the prime rate steady. So if you are in a variable rate mortgage or line of credit, prime remains at 3.0%. To recap current rates, the best five year fixed rates can be obtained for as low as 3.49%, and variable rates can be obtained for as low as 2.35% which is .065 below the prime. These rates are at now at record lows.
Variable-Rate Mortgage Forecast
Most analysts now expect the Bank of Canada to remain on the sidelines until 2nd quarter 2011. On average, major economists now predict a 100 basis point increase in the overnight rate over the next 15 months. Their outlooks, if accurate, imply a 4.00% prime rate by December 31, 2011. Prime rate is currently 3.00% and the 10-year average of prime is 4.50%.
Based on a 75-basis-point discount from prime, these forecasts suggests 5-year variable rates in the 3.25% range by year-end 2011.
Fixed-Rate Mortgage Forecast
Banks foresee 5-year bond yields climbing 117 basis points in the same 15-month timeframe. That would put the 5-year yield at 3.41% by the end of next year. The 10-year average of the five-year yield is 3.93%.
Assuming a typical 120 basis point spread above yields, these forecasts suggest deep-discounted 5-year fixed rates could rise to roughly 4.24% by year-end 2011.
The housing market is now generally stable, with prices remaining soft and taking longer to sell. This makes the market very price sensitive and in fact on average, only roughly 50% of homes are now selling. (averaging all types of housing and all areas)
These low rates combined with Housing prices remaining soft since this summer, and new motivated sellers entering the marketplace, means buying opportunities are popping up everywhere.