Hello March, see you in the Morning

Yes today marks the final day of February and March begins a few hours from now. March is a month we tend to consider springtime and for those in the southern latitudes it certainly is. For us up above the 45th parallel it is a transition month that can be warm and delicious or cold and snowy. Often it 's a bit of both.

March however is the typical time that real estate picks up in our local market. Buyers start peeking at new listings and sellers decide it's time to go on the market. I suspect we will see activity increase over the next several weeks. Tis cycle may just be a tell about the summer months ahead.

The new administration in Washington DC is definitely stirring things up. This tends to lead to market insecurity. One way or another markets will settle down regardless of the success or failure of incoming federal changes. 

I am mildly optimistic about this year's market. I feel like we will see a small drop in interest rates maybe down to the low sixes and mild appreciation. We are headed towards a 4 month supply of homes which tends to slow down the price pace a bit. I think we will see near neutral to full neutral market balance between buyer and sellers. This will lead to healthy home buying decisions as well as a more fair playing field for everyone.

Let's not get to out in front of that prediction, it is still a challenge to buy in our local market with the median price well above 1/2 million dollars, but with a plan buyers can execute and get it done.

Average list price in Vancouver well above $600k

As of today the average price for a home listed in the past 30 days in Vancouver is $626,995. But an interesting note is that the average sold price in the same time period is much lower at $539,736. The market activity is in the lower half of the price range. Price reductions are up over this last 30 day period as is the listed price per square foot. 

It is not at all unusual for higher end listings to require more marketing time than lesser priced homes. This can be a big part of why the discrepancy is so wide between average list price and average sold price.

We have been slowly picking up inventory over the last year or so. This past 30 days saw 315 new listings and 284 sold properties. That is actual a very healthy ratio considering it does not include new pending sales. Sales are up over the previous 30 days.

As we enter the final month of winter we will see an uptick in new listings, but barring any economic slowing we should see new buyers to the market as spring generally picks up steam for real estate. Interest rates have stabilized hovering around 7% with dips into the 6's and as is typical, credit profile can create a spread of a 1/2 point or more. Solid credit can get you under 7% bumpy credit will be in the mid to upper 7s. 

The 50 year running average for mortgage rates has been around 6.5% so currently market conditions are just a little high. For all the media bluster about rates being high, they really are close to average right now. We just came out of a ten year period with the lowest rates in the history of the 30 year mortgage that dates to the mid 1930s. We maneuver see sub 3% mortgage again and that is a big part of why people in homes with mortgage rates under 4% are so hesitant to move.

Anyone that is confident they will remain in the local market for at least 5 years ought to strongly consider owning rather than renting. Rents are very high right now and I do not see any significant relief over the next few years as demand continues to outpace supply. Even if you have to buy something that is not as nice as what you can rent, building up equity over time is worth it.

I see young people on social media complaining about how unaffordable houses are today. I assure you they were equally unaffordable in the 1980s when I was in my 20s and mortgage rates were 15% or higher. My wife and I started out in a tiny little one bedroom condo and worked our way up to a 4 bedroom house. This is still a viable path for young people today. 

Some on social media are angry that their parents have a 2000 square foot home with a mortgage of only $1500 and they can't even rent a dumpy apartment for that money. That is why they bought a home when they were young. The mortgage payment stays the same even as home prices rise. When they bought the house back in the day it was just as expensive relatively as it is now. You have to get into the market in order to get something out of it. Like most worthwhile endeavors it is hard to get in and many will have to make lifestyle sacrifices to do so. In the end it is worth it.

It's Snowing Today, Time for a Winter Reminder

When the weather gets wintry, homeowners and listing agents should be mindful to keep the driveway and walkways clear of snow and ice. Not only is it courteous, it sets a great first impression of the home. The potential buyers will feel positive about the owners and their willingness to care for the property. 

Sellers and listing agents should not be lulled into thinking no one will show the property during winter events. It will definitely be slower than typical, but many agents including me, will and often do show property in the snow. It is always positive to see a properly cleared home during these weather conditions.

A cleared walkway is inviting and adds tot he buyer's positive first impressions of the house. Locally we only have a few winter events each year but I can say I have sold properties many times where the client viewed the home on a day with snow cover. You should always be thinking of ways to make your home as warm and inviting as possible. Psychologically it can and will help your home stand out among the rest.

Mortgage Outlook for 2025

I used an AI to summarize the mortgage market and project for the rest of 2025 and it produced an interesting article which I will post here unedited after making some personal notations and insights the AI may have missed.

In the following AI article, it mentions tariffs as a possible cause for rate increases due to the inflation tariffs sometimes have on the market. In essence this is true, when tariffs are added to imported goods, those tariffs are passed on to consumers in many cases. But using interest rates to control inflation isn't about the cost of goods as much is it is about the amount of money in circulation. Over the last several years the US Government flooded the market with cash along with low interest rates created a hot market that led to hyper-inflation. Tariffs tend to slow the market down. As prices rise, demand lowers. Tariffs will often motivate buyers of goods to seek products made domestically or from countries not exposed to the tariffs. In the case of Tariffs on Chineses goods, the Chinese government has long been known to manipulate their currency to counter tariffs keeping pricing relatively cheap against its competitors worldwide. I therefore do not believe that tariffs will have a substantial impact on rates and it is more likely to lower rates than raise them. With all that stated, let's move on to the AI generated article below.

As of early February 2025, mortgage interest rates remain a focal point for prospective homeowners and investors. Over the past few years, rates have experienced significant fluctuations, influenced by various economic factors. Understanding the current landscape and future projections is crucial for making informed decisions in the housing market.

Current Mortgage Rate Landscape

In January 2025, the average rate for a 30-year fixed mortgage was approximately 7.11%. This rate has been a point of concern for many potential buyers, as it remains elevated compared to historical standards. Despite efforts by the Federal Reserve to reduce interest rates on loans and credit cards, mortgage rates have not seen a significant decline. This resistance is primarily due to their close correlation with the 10-year Treasury bond yields, which have remained high due to ongoing inflation concerns. 

noradarealestate.com

Factors Influencing Mortgage Rates

Several key factors contribute to the current mortgage rate environment:

1. Inflation Concerns: Persistent inflation has led investors to demand higher returns on bonds, directly impacting mortgage rates. Proposed policies, such as increased tariffs, could further exacerbate inflation, maintaining upward pressure on these rates. 

   noradarealestate.com

2. Economic Policies: Government policies, especially those related to fiscal spending and trade, play a significant role. Expectations of increased government spending can fuel inflation, leading to higher mortgage rates as lenders adjust to anticipated economic conditions. 

   noradarealestate.com

3. Market Sentiment: Investor confidence and market sentiment influence demand for mortgage-backed securities. High levels of economic uncertainty make investors cautious, leading them to seek higher returns, which in turn elevates mortgage rates. 

   noradarealestate.com

Projections for 2025

Looking ahead, experts anticipate a gradual decline in mortgage rates throughout 2025, though rates are expected to remain above 6% for most of the year. Here are some projections:

• Early 2025: Rates are likely to hover between 6.5% and 6.8% as the Federal Reserve maintains a cautious approach to interest rate cuts.

• Mid-to-Late 2025: Mortgage rates could fall to the 6.0% to 6.5% range, with some forecasts suggesting a decline to 5.8% by Q4 2025. 

  myperfectmortgage.com

Major financial institutions have provided the following insights for Q4 2025:

• Fannie Mae: Expects the 30-year fixed mortgage rate to average at 6.2%.

• Wells Fargo: Projects rates to average around 6.3% by the end of the year.

• Goldman Sachs: Predicts rates will remain above 6% through 2025. 

  nbcnewyork.com

Impact on the Housing Market

Elevated mortgage rates have a direct impact on housing affordability. Higher rates increase monthly mortgage payments, which can deter potential buyers and slow down the housing market. However, a gradual decline in rates throughout 2025 may provide some relief, potentially stimulating buyer interest and activity in the housing sector.

Conclusion

While mortgage rates are expected to decline gradually in 2025, they are likely to remain above 6% for most of the year. Prospective homebuyers and investors should stay informed about economic developments and be prepared to adapt their strategies accordingly. Consulting with financial advisors and mortgage professionals can provide personalized guidance to navigate this evolving landscape.