November Market Update

November Market Update

Why home sales haven’t bounced back despite lower interest rates

There’s a common assumption in real estate that when interest rates go down, sales surge. Yet here in the South Surrey we’re seeing just the opposite: even as borrowing costs ease, transaction volumes remain muted. Understanding why is key for both sellers and buyers in this evolving market.

1. Affordability is still stretched

• The drop in mortgage rates is welcome, but prices remain very elevated in our market. Many buyers who entered the market pre-pandemic or during rapid growth now simply find themselves stretched—even with a rate drop. 

• According to the Fraser Valley Real Estate Board (FVREB), new listings in 2024 hit a 10-year high while sales dropped to the lowest in a decade.

• In short: cheaper financing helps, but the principal amounts and other costs (down payments, taxes, maintenance) are still high, causing buyer hesitation. 

2. Buyer psychology & timing are at play

• Many potential buyers are on the sidelines, waiting for a clearer signal: “Will prices drop further? Will rates go even lower?” That waiting-game means fewer are pulling the trigger now. 

• Also, economic uncertainty (job market, inflation, cost of living, increased government debt) is making buyers cautious about committing long-term. 

3. Increased supply is shifting market balance

• As listings increase, buyers are finding they have more choices, and sellers are feeling more competition. In a market with more supply and fewer urgent buyers, transactions naturally slow.

• The data show we are in a buyer-favoured market in South Surrey, rather than the scorching seller-market of a few years ago.

4. Legacy of prior high rates and mortgage-stress still lingers

• Many recent buyers locked in higher rates, or are renewing mortgages at much higher payments than those who locked in earlier. This “hangover” effect means fewer households are in a position to upgrade, trade up or invest now. 

• Also, lenders and buyers remain cautious: the mortgage stress test remains in place, meaning qualification assumptions are higher, which restricts effective buying power.

What this means for South Surrey sellers & buyers

• Sellers: Realistic pricing, excellent presentation (staging, repairs) and clear positioning are more important than ever. The urgency is less; buyers are taking their time.

• Buyers: This is a moment to negotiate—not just on price but on terms. However, affordability is still a barrier: having budget discipline and realistic expectations will pay off.

• Everyone: Patience is key. While lower rates help, the market is not simply going to “turn around” overnight. The underlying fundamentals—income growth, affordability, consumer confidence, supply/demand—have to align.

In short: Lower interest rates are a necessary but not sufficient condition for a robust rebound in home-sales activity in our area. Until affordability improves more meaningfully and buyer confidence returns, we’re unlikely to see a full recovery in transaction volumes.
 

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