Greater Vancouver is likely to experience balanced market conditions that are expected to persist until the second quarter of 2023, with the “move-up and move-over buyers” leading demand in the region, according to the Re/Max 2023 outlook report.
With increasing interest rates, high mortgage payments and new regulations in the housing market, 2023 will bring new dynamics to transactions that will emphasize a “win-win” for both buyers and sellers, said Tim Hill, an agent with Re/Max All Points Realty.
Overall, average residential sale price is expected to drop by 5 per cent in the Greater Vancouver region, compared with a 3 per cent decrease in pricing across Canada, according to the outlook report.
Single-detached homes are still the most popular housing type as more buyers are looking to upsize. Access to transit is emerging as another must for homebuyers when looking at location, said the outlook report.
Most homebuyers will be weighing value against opportunity as more look to upsize in the coming year, says Hill.
“On the flip-side, first-time homebuyers will be able to take advantage of a cooling market and make offers with conditions,” he said.
“Interestingly, it will be first-time home buyers that will facilitate move-up and move-over buyers to sell their first properties and upsize. I believe this will be a major factor and growing trend in the GVA real estate in 2023.”
For many homebuyers, their decision-making has been centered around growing interest rates and how to navigate mortgage payments far higher than ever anticipated. According to Hill, these issues will fuel buyer-seller relationships in 2023 that emphasize creatively navigating transactions to ensure both parties walk away satisfied.
An example of this is sellers offering assumable mortgages, where the buyer takes over the mortgage from the seller.
“That's something that we’ve started seeing more of and is a really neat factor. Because if you've got a sub 2 per cent mortgage, that's a big selling feature right now, especially when we're looking at rates that are north of 5 per cent,” he said.
“Just looking at what are our options out there. It’s no longer as simple as just a transaction of buyer to seller. I think there's going to be more to it next year.”
Hill said that in 2022, market pressures pushed many buyers into making fast decisions to beat out tough competition.
“Whereas now, to put a deal together for both sides, there's going to be a lot more that goes into it. Sellers are going to likely need certain prices to be able to make the move happen, and buyers may need certain conditions as well. Even things like ‘subject to sale’ on purchases, we're seeing again now too,” he said.
The coming year will also bring the Home Buyer Rescission Period, previously known as “Homebuyer Protection Period” and “cooling-off period,” which is expected to be implemented provincewide on January 3, 2023. Hill said that this will allow his clients to make decisions without the pressure that others have faced in transactions made in 2022.
“Having that ability to really make the decision without feeling like you're under pressure is what I'm looking most forward to. I'm not a pushy person. It's a tough market when you've got to tell someone that a home could be sold by tomorrow. And that was just the reality of the market,” he said.
Condos in Greater Vancouver are expected to see a price drop in the coming year, with the luxury market expecting a slow start and then eventually balancing out in the latter half of 2023, according to the outlook report. The foreign buyer ban, which will come into effect in January 2023, will likely have an impact in the luxury market, says Hill.
“Some of the foreign owners will hold their properties since they can't buy back in. So, you might see a bit more of a stall in that marketplace as well while the unknown unfolds,” he said.
While writing the 2023 outlook, the B.C. government announced changes to strata regulations that Hill said is an “asterix” that may impact the next year in ways the report has not been able to take into account.
“I think that's a new variable that we're gonna have to really see how it unfolds,” he said.
“But I do think that that's going to stimulate some investors coming into the condo more, so we might not see as much downward pressure on condos as we expected.”