VANCOUVER, BC – October 2, 2024 – Home sales in Metro Vancouver saw a slight year-over-year decline in September, with a 3.8% decrease, indicating that recent reductions in borrowing costs have yet to significantly stimulate demand.
According to Greater Vancouver REALTORS® (GVR), residential sales totaled 1,852 in September 2024, down from 1,926 in September 2023. This figure is also 26% below the 10-year seasonal average of 2,502.
“Many in the real estate sector have been looking for signs that lower mortgage rates are reigniting demand, but the data from September isn’t showing the surge they hoped for,” said Andrew Lis, GVR’s director of economics and data analytics. “Sales continue to trend about 25% below the 10-year seasonal average, which has been the case for several years. While sales are slightly behind our projections, we remain hopeful 2024 will still outperform 2023.”
In September 2024, there were 6,144 new listings for detached, attached, and apartment properties on the Multiple Listing Service® (MLS®) in Metro Vancouver, reflecting a 12.8% increase compared to the 5,446 listings in September 2023 and a 16.7% increase above the 10-year seasonal average.
The total number of homes listed for sale in Metro Vancouver reached 14,932 in September 2024, a 31.2% increase from 11,382 the previous year, and 24.2% above the 10-year average of 12,027.
The sales-to-active listings ratio across all property types in September was 12.8%, broken down as 9.1% for detached homes, 16.9% for attached properties, and 14.6% for apartments. Historical data indicates that when this ratio falls below 12% for a prolonged period, prices face downward pressure, while a sustained ratio above 20% can lead to upward pressure on prices.
“With some buyers hesitant, inventory levels have remained high, offering more choices for those still in the market,” Lis explained. “However, with increased options, prices have stayed relatively stable over the past few months. September has now shown small declines across all segments, primarily because sales haven’t kept up with new listings, pushing the market closer to a buyer’s market. With two more policy rate decisions expected this year, and potential further reductions, demand could pick up if buyers re-enter the market later this fall.”
The MLS® Home Price Index benchmark for all residential properties in Metro Vancouver is currently $1,179,700, representing a 1.8% decrease from September 2023 and a 1.4% decrease from August 2024.
Detached home sales in September 2024 reached 516, a 9.8% decrease from the 572 sales in September 2023. The benchmark price for a detached home stands at $2,022,200, a 0.5% increase from last year but down 1.3% from August 2024.
Apartment sales totaled 940 in September, down 4.9% from 988 the previous year. The benchmark price for an apartment is now $762,000, a 0.8% decrease from both September 2023 and August 2024.
Attached home sales saw a positive trend, reaching 378 in September 2024, a 7.4% increase compared to 352 sales in September 2023. The benchmark price for townhouses stands at $1,099,200, a 0.5% increase from last year.
Canada’s Economic Outlook: Interest Rate Cuts and Modest Growth Ahead
The debate continues over the direction of Canada’s economy, as the Bank of Canada (BoC) faces critical decisions on interest rates. With recent gross domestic product (GDP) data showing mixed results, economists and financial markets remain divided on whether the central bank will opt for a 25 or 50 basis point rate cut at its next policy meeting on October 23. Meanwhile, Deloitte Canada’s fall economic outlook predicts a steady decline in interest rates over the coming years, with the BoC’s rate falling below 3% by mid-2025.
Mixed GDP Signals and Market Reactions
Canada’s GDP expanded by 0.2% in July, exceeding expectations, but preliminary data for August shows the economy stalling. As a result, third-quarter growth is now forecasted at an annualized rate of just 1%, significantly lower than the BoC’s July forecast of 2.8%. Despite this, financial markets have given a slight edge to a 50 basis point cut, with a 52.3% probability according to LSEG data, up from earlier expectations of a smaller reduction.
The U.S. economy is also playing a role, with easing inflation in the world’s largest economy creating more room for the BoC to lower its rates without putting downward pressure on the Canadian dollar. The U.S. Federal Reserve’s next meeting in November is expected to result in a rate cut, further influencing the BoC’s decision.
Economists remain split on the size of the upcoming cut, but many are leaning towards the larger 50 basis point reduction, citing weak GDP growth and rising unemployment, which currently sits at 6.6%.
Interest Rate Path and Economic Growth Projections
In line with this uncertain economic backdrop, Deloitte Canada’s forecast for the coming years suggests that the BoC will continue to lower rates to support economic growth. Deloitte predicts the key interest rate will fall to 3.75% by the end of this year, with further reductions to 2.75% by mid-2025. This 2.75% rate is seen as neutral, meaning it neither stimulates nor restrains economic activity, and is higher than the rates seen before the COVID-19 pandemic.
Dawn Desjardins, Chief Economist at Deloitte Canada, noted that while the economy has slowed due to higher borrowing costs, the country is likely to avoid a recession. “It’s hard to argue that the economy is just skating through this period of higher interest rates,” she said, but pointed out that growth persists despite these challenges. Desjardins expects economic conditions to improve next year, as more rate cuts help to stimulate demand.
Labour Market and Inflation Considerations
Canada’s labour market has shown signs of softening, particularly as homeowners begin to face the reality of higher interest payments when refinancing their mortgages. However, Deloitte remains cautiously optimistic, suggesting that the labour market is not in crisis, even though weaker job vacancy rates and hiring challenges persist.
At the same time, inflation has fallen to 2%, reaching the BoC’s target in August. With inflation seemingly under control, the BoC has shifted its focus to economic growth risks, particularly in light of weak GDP growth. Economists from various financial institutions, including BMO, Desjardins Securities, and CIBC, generally agree that more rate cuts are likely, with many favoring 50 basis point reductions in the near term.
Looking Ahead: Risks and Opportunities
While the economy has yet to fully recover from the pandemic’s effects, key factors, such as climate change, could increase inflationary pressures down the road, warns Desjardins. These structural issues are expected to embed themselves in prices and may affect future monetary policy.
For now, the central debate revolves around whether the BoC should accelerate its rate cuts in response to economic underperformance, or if it should take a more cautious approach, given ongoing uncertainties and the potential for economic resilience in sectors like housing and household spending.
In conclusion, Canada’s economic outlook for the next several quarters hinges on the central bank’s ability to navigate slowing growth and inflation risks. With interest rates likely to decline further, both the BoC and the broader financial markets will be closely watching the data to determine the best course of action to support economic recovery and stability.
The real estate market in Metro Vancouver experienced a quieter-than-usual summer, with home sales on the MLS® system falling below the 10-year seasonal average in August.
According to the Greater Vancouver REALTORS® (GVR), residential sales totaled 1,904 in August 2024, marking a 17.1% decrease from the 2,296 sales recorded in the same month last year. This total was also 26% below the 10-year seasonal average of 2,572.
“Historically, August is slower than June and July, so this year’s numbers align with typical seasonal trends,” said Andrew Lis, GVR’s Director of Economics and Data Analytics. “However, sales are still about 20% below the 10-year average, signaling that buyers are feeling the strain of higher borrowing costs, despite two recent interest rate cuts this summer.”
In August 2024, 4,109 new detached, attached, and apartment properties were listed for sale, representing a 4.2% increase compared to August 2023. However, this total was 1.7% below the 10-year average. Overall, the total number of listings on the MLS® system in Metro Vancouver reached 13,812, up by 37% from the same month last year, and 20.8% higher than the 10-year average.
The sales-to-active listings ratio in August 2024 stood at 14.3%, broken down by property type as follows: 9.6% for detached homes, 18% for attached, and 17.2% for apartments. Historically, when this ratio dips below 12% for an extended period, it can create downward pressure on home prices. Conversely, a ratio above 20% over several months tends to drive prices upward.
“Buyers remain hesitant to enter the market, while seller activity is in line with historical averages. This has caused inventory to build, placing the market in a balanced state,” Lis noted. “With the Bank of Canada reducing interest rates again today and September historically seeing a rise in sales, we’ll be closely monitoring whether more buyers re-enter the market this fall.”
The benchmark price for all residential properties in Metro Vancouver is currently $1,195,900, a slight 0.9% decline from August 2023, and a marginal 0.13% decrease from July 2024.
Sales of detached homes fell to 509 in August 2024, a 13.9% decrease from the 591 sales seen in August 2023. The benchmark price of a detached home is $2,048,400, which represents a 1.8% increase from last year, but a slight 0.1% dip compared to July 2024.
Apartment sales took the hardest hit, dropping by 20.3% year-over-year, with 1,012 units sold in August 2024, compared to 1,270 in August 2023. The benchmark price for apartments stands at $768,200, a 0.1% decrease from last year, unchanged from July 2024.
Townhome sales also declined, with 370 transactions recorded in August 2024, down 12.3% from the 422 sales recorded in the same month last year. The benchmark price for townhomes is $1,119,300, a 0.8% increase from August 2023 but a 0.5% dip from the previous month.
Navigating the Real Estate Market: A Comprehensive Guide for First-Time Home Buyers
Entering the real estate market for the first time can be daunting, especially with the abundance of information and the significant financial commitment involved. As a seasoned real estate agent with over a decade of experience, I’ve encountered countless first-time buyers who believe that the right time to involve a real estate agent is when they’re “ready” to buy. However, the reality is that preparation should start much earlier. This guide aims to equip you with the knowledge and strategies necessary to navigate the market effectively and make informed decisions.
1. The Importance of Early Market Research:
Many first-time buyers delay engaging with the market, often because they feel overwhelmed or believe that market conditions are unfavorable. However, one of the most crucial steps in your home-buying journey is to understand the market well before you’re ready to purchase. This involves more than just casually browsing listings; it requires a proactive approach to gathering and analyzing data.
Start by familiarizing yourself with market trends and statistics. Websites like realtor.ca or rew.ca are excellent resources for keeping track of current listings and price movements. Additionally, watching educational videos, reading articles, and staying updated on market news will give you a broader understanding of the factors influencing property prices.
2. Understanding Specific Market Conditions:
The real estate market is not monolithic; it varies significantly depending on the location, type of property, and current economic conditions. For example, buying a one-bedroom condo in Port Coquitlam is a completely different experience than purchasing a detached house in Richmond. Each area has its own market dynamics, influenced by factors such as supply and demand, local amenities, and economic developments.
To make an informed decision, it’s essential to research the specific market conditions for the type of property and location you’re interested in. Look at recent sales data, compare prices across different neighborhoods, and consider the potential for future growth in the area. By understanding these nuances, you’ll be better equipped to identify a good deal and avoid overpaying for a property.
3. Financial Preparation: Laying the Groundwork for Success
Financial readiness is a critical component of the home-buying process. While most people know they need to save for a down payment, there are several other financial considerations that can significantly impact your ability to purchase a home.
– Pay Off Debt: High levels of debt, such as credit card balances or personal loans, can negatively affect your mortgage application. Lenders assess your debt-to-income ratio to determine your borrowing capacity. Paying down your debts before applying for a mortgage not only improves your chances of approval but also may help you secure a lower interest rate.
– Avoid Major Purchases: Large purchases, especially on credit, can reduce your borrowing power. For instance, taking on a new car loan can lower the amount you’re eligible to borrow for a mortgage by tens of thousands of dollars. It’s advisable to postpone any major purchases until after you’ve secured your home.
– Improve Your Credit Score: Your credit score plays a crucial role in determining the interest rate on your mortgage and the types of loans you qualify for. Take steps to improve your credit score by paying bills on time, reducing outstanding debt, and avoiding new credit inquiries. A higher credit score can open up more favorable loan options and save you thousands in interest over the life of your mortgage.
– Get Your Taxes in Order: Up-to-date tax filings are often required when applying for a mortgage. Ensure that your taxes are filed and any outstanding tax debts are settled well before you start the home-buying process. This will prevent delays and complications when you’re ready to make an offer on a property.
4. Building a Solid Savings Plan:
In addition to saving for a down payment, it’s important to have additional funds set aside for other expenses that come with buying a home. Moving costs, new furniture, home repairs, and unforeseen expenses can add up quickly. Establishing a rainy-day fund or a dedicated moving fund can provide a financial cushion and reduce stress during the transition to your new home.
Even if you already have enough saved for a down payment, continue to build your savings in the months leading up to your purchase. This extra financial padding will not only help cover unexpected costs but also give you more flexibility in choosing the right property.
5. Timing Your Entry into the Market:
Understanding market timing can be challenging, but being informed and prepared allows you to move quickly when the right opportunity arises. Real estate markets can change rapidly due to various factors such as economic shifts, interest rate changes, and local developments. By staying informed and financially prepared, you’ll be able to take advantage of favorable conditions when they occur.
Consider working with a real estate agent early in your process, even if you’re not ready to buy immediately. An experienced agent can provide valuable insights into market trends, help you identify emerging opportunities, and guide you through the complexities of the home-buying process.
The journey to homeownership is filled with challenges, but with the right preparation, you can navigate the market with confidence. Start by educating yourself about the market, improving your financial position, and saving diligently. By taking these proactive steps, you’ll be in a strong position to make informed decisions and secure the home that’s right for you.
If you found this guide helpful, consider sharing it with others who might benefit from this advice. For more insights and tips, subscribe to my YouTube channel or reach out directly for personalized advice tailored to your specific needs.
Vancouver is facing a significant slowdown in housing construction, according to new data that confirms the fears of many industry observers. Despite a strong demand for housing and a unified push from all levels of government to boost supply, factors such as high interest rates, rising construction costs, and permitting delays are stalling new developments. This decline in construction activity raises serious concerns about the city’s ability to address its housing shortage.
Significant Drop in Housing Starts
The latest figures from the Canada Mortgage and Housing Corporation (CMHC) reveal that new housing starts in Metro Vancouver fell by 15% in July 2024 compared to the same month last year. This drop contrasts with an 8% increase in housing starts across other Canadian cities with populations over 10,000. While 2023 saw a record 33,200 housing units started in Greater Vancouver, the Conference Board of Canada predicts a decline to 28,800 units in 2024 and around 26,000 units annually over the next few years.
This slowdown is alarming given the city’s growing population and persistent housing demand. “It confirms what we feared,” said Mike Moffatt, an Ontario-based economist and senior director of the Smart Prosperity Institute. “Despite a growing population, the conditions for building new homes are not improving.”
A Perfect Storm of Challenges
The construction slowdown is attributed to several factors that have converged to create a “perfect storm” for developers. High interest rates, which have risen sharply over the past two years, are a major hurdle. These rates have increased borrowing costs, making it more expensive for developers to finance new projects. Additionally, rising construction costs, driven by supply chain disruptions and labor shortages, have further strained budgets.
Permitting delays also contribute to the slowdown. While governments at the municipal, provincial, and federal levels have expressed a commitment to increasing housing supply, the process of securing necessary permits remains slow and cumbersome. This bureaucratic bottleneck is a significant barrier to ramping up construction.
Even with a potential rebound in developer activity in the coming years, some experts worry it may not be enough to meet the housing demand in Vancouver and other major Canadian cities. “We’re basically treading water,” Moffatt said. “Even if interest rates fall and activity picks up, we’re not building nearly enough to address the shortage.”
The Broader Implications
The slowdown in housing construction has broader implications for the Vancouver housing market. In 2022, the CMHC estimated that Canada would need 5.8 million new homes by 2030 to restore affordability, requiring an additional 3.5 million units beyond the 2.3 million currently projected. Given this context, the current decline in housing starts is particularly concerning.
Bob Ransford, vice-president of development for Century Group, a Vancouver-based builder, remains cautiously optimistic. He believes that once interest rates stabilize, development will resume at a faster pace. “I’ve been through downturns before, and I’ve seen deeper ones than this,” Ransford said. “This is a pause driven primarily by interest rate movements.”
However, even if market conditions improve and government policies successfully encourage more development, another challenge looms: labor shortages. The B.C. Construction Association has long warned of a shortage of skilled workers in the province. Earlier this year, it estimated that by 2033, there will be 6,600 unfilled construction jobs in B.C. “We’re going from one problem to the next,” said Tony Letvinchuk, managing director of Macdonald Commercial Real Estate Services in Vancouver. “Even if we solve the market issues, we still need to find qualified workers to build the homes.”
Looking Ahead
While some industry experts remain hopeful that the housing market will recover in the next few years, the current slowdown highlights the challenges facing Vancouver’s housing sector. The decline in new housing starts is a setback in the city’s efforts to address its housing shortage and restore affordability.
The housing market in Vancouver is at a critical juncture. With population growth continuing and housing demand remaining strong, the need for new homes is more urgent than ever. However, unless the factors currently hindering construction are addressed, the city may struggle to meet this demand, prolonging the housing crisis and further straining affordability for residents.
In summary, the slowdown in housing construction in Vancouver is a troubling development that underscores the complexities of the city’s housing market. High interest rates, rising construction costs, permitting delays, and labor shortages are all contributing to a challenging environment for developers. While there is hope for a rebound in the future, the current situation suggests that Vancouver’s housing shortage may persist for some time.
In a decision that could set a significant precedent for rental markets in British Columbia, the Residential Tenancy Branch (RTB) approved a landlord’s request to increase rent by 23.5% over two years at a fourplex property. The ruling has sparked debate on whether rising interest rates justify such substantial rent increases, as landlords and tenants face the effects of economic turbulence.
The Situation: Financial Strain from Rising Interest Rates
The landlords purchased their fourplex in October 2021, securing a variable mortgage with a favorable rate of 1.9%. For years, variable mortgage rates had remained relatively stable, making this financing option attractive. However, beginning in 2022, the global economic landscape changed drastically due to the COVID-19 pandemic’s aftershocks, leading to soaring interest rates. By July 2023, the mortgage rate had ballooned to 6.65%, significantly impacting the landlords’ ability to manage their property.
According to the RTB’s ruling, the landlords experienced an unexpected financial burden as their mortgage payments more than tripled. Despite having a financial cushion for potential rate increases, the rapid and substantial rise in interest rates left them unable to maintain the property under the current rental income. They argued that without a rent increase, they would continue to incur financial losses, making the situation unsustainable.
The RTB’s Decision
In light of these circumstances, the landlords applied to the RTB for an extraordinary rent increase beyond the annual allowable limit, which was set at 3.5% for 2024. Under British Columbia’s Residential Tenancy Act, landlords can request additional rent increases if they can prove financial losses that could not have been reasonably foreseen when purchasing the property. The RTB agreed that the landlords had met this burden of proof.
“I find the landlords have been successful. They have proven, on a balance of probabilities, all the elements required to impose an additional rent increase for a financial loss for financing costs of purchasing the residential property under section 23 of the Regulation,” the ruling stated. The decision was made based on the landlords’ demonstration that the extreme rise in interest rates was not foreseeable, even with their careful financial planning.
The RTB approved a phased rent increase: 15.5% in the first year (3.5% annual allowable increase plus an additional 12%) and the remaining 8% in the second year, adjusted to align with the provincial maximum for that year. Even with this increase, the landlords admitted they would still struggle to break even, highlighting the severity of their financial situation.
The Tenants’ Response
The tenants, understandably, were not pleased with the ruling. They argued that the financial risks associated with a variable mortgage were well-known and that the landlords should have been prepared for rate fluctuations. They felt that the landlords were attempting to pass on the consequences of their investment decisions to the tenants, many of whom faced their own financial challenges.
One tenant reported that the landlords initially approached them in April 2023, requesting a $500 monthly increase to cope with their rising costs. The tenants declined, leading to the formal application to the RTB. Some tenants pointed out that despite the landlords’ current financial strain, the property itself was likely to appreciate significantly over time, suggesting that the situation might not be as dire as presented.
“The landlords should enter these kinds of financing circumstances with a cushion to absorb the rate variability,” argued the tenants. They also expressed concern that this ruling could open the floodgates for other landlords to seek similar rent increases, further exacerbating the affordability crisis in BC.
Industry and Government Reactions
The decision has ignited a broader conversation about the impacts of rising interest rates on the rental market and the potential for more landlords to apply for rent increases. David Hutniak, CEO of LandlordBC, expressed understanding of the challenges faced by the landlords in this case, noting that many in the sector are grappling with escalating operational costs, including taxes, insurance, utilities, and now interest rates. He highlighted that while this specific decision might be unique, it reflects the broader difficulties faced by rental housing providers across the province.
“High interest rates have exacerbated an already bad situation. Furthermore, a steady stream of regulation, layered upon layer, with rent control being the most notable, are pushing more and more rental housing providers to abandon the sector,” Hutniak stated. Although he had not reviewed the specifics of this case, he noted that the financial pressures described are widespread among landlords.
Minister of Housing Ravi Kahlon also weighed in, acknowledging the ruling’s significance. He emphasized that while the provincial government has kept rent increases at or below inflation since 2018, the policy allowing for extraordinary rent increases due to financing losses predates the current administration. Kahlon stated that this is the first time such an application has been granted since the province began collecting data in 2021. He has directed his staff to review the policy in light of this decision, signaling potential changes to protect tenants from similar rent hikes in the future.
A Precedent for Future Cases?
The RTB’s decision raises important questions about how landlords and tenants can navigate the economic challenges brought on by high interest rates. For landlords, it underscores the risks of relying on variable-rate mortgages, especially during periods of economic uncertainty. For tenants, it highlights the potential vulnerability to rent increases if landlords face financial difficulties.
As the housing affordability crisis continues to deepen in British Columbia, this ruling may lead to more landlords seeking similar rent increases, particularly if interest rates remain high. The outcome could have widespread implications for both the rental market and the broader housing sector.
At the same time, the government’s response to this case could influence future policy changes. If Minister Kahlon’s review leads to revisions in the regulations governing rent increases, it might provide additional protections for tenants while balancing the financial realities faced by landlords.
For now, tenants at the fourplex will have to prepare for a significant rent hike, while other landlords and tenants across the province watch closely to see what this decision could mean for them.
A recent Statistics Canada (StatCan) report reveals that short-term rentals, which could be repurposed as long-term housing, make up only a small fraction of the total housing stock in British Columbia. Despite efforts to regulate these rentals, their impact on overall housing availability remains minimal.
According to the report, the proportion of short-term rentals in B.C. that could be converted into long-term housing nearly doubled between 2017 and 2023, surpassing rates seen anywhere else in Canada. However, these “potential long-term dwellings” still account for less than 1% of all available housing units.
“In the housing market, short-term rentals still represent a small share of the total housing units,” the report’s authors noted.
This analysis coincides with the introduction of stricter regulations in B.C. designed to curtail the number of short-term rentals and boost housing supply. As of May 1, new rules restrict short-term rentals to homeowners’ principal residences, including basement suites or laneway homes on the same property.
Premier David Eby defended the legislation, stating, “The number of short-term rentals in B.C. has skyrocketed, removing thousands of long-term homes from the market. We’re taking strong action to rein in profit-driven mini-hotel operators, create new enforcement tools, and return homes to the people who need them.”
Despite these measures, StatCan’s data shows that short-term rentals eligible for long-term use comprised less than 0.5% of housing units in Canada’s five largest metro regions in 2021, with Metro Vancouver recording the highest rate at 0.45%.
These findings align with a 2023 report from the Conference Board of Canada, which concluded that Airbnb activity in most cities is too small to significantly affect rental prices.
“The short-term rental market simply isn’t large enough to influence rental prices meaningfully,” said Tony Bonen, an executive director at the Conference Board of Canada. He described the impact of short-term rentals on the housing supply as “a drop in the bucket.”
Bonen emphasized that the number of short-term rentals is too small to bring about widespread changes in rental prices. “If the goal is to reduce short-term rentals to lower rental prices across the market, it’s just not going to happen,” he added.
The StatCan report concentrated on short-term rentals that could be converted into long-term housing, specifically units listed for more than 180 days a year. Vacation properties like cottages and dedicated vacation homes were excluded. The report also acknowledged that housing affordability is influenced by many complex factors, including multiple-property ownership, population growth, and interest rates.
In Vancouver, around 2,400 short-term rental units in 2021 could have been used as long-term housing, representing 0.8% of all housing in the city. This was the highest rate in Metro Vancouver, but cities like Kamloops, Kelowna, and Victoria had even higher rates—1.4% in Kamloops and 0.9% in Kelowna and Victoria.
Tourist destinations such as Whistler, Sun Peaks, and Tofino had much higher rates, ranging between 20% and 40%. These areas are exempt from B.C.’s short-term rental regulations due to their importance in supporting tourism and stimulating the local economy.
Bonen noted that the remote locations and limited accommodation options in some of B.C.’s resort towns likely contributed to the higher proportion of short-term rentals suitable for long-term use. “Short-term rentals have filled a gap in some of these harder-to-reach areas,” he said, emphasizing the need for a balanced approach in resort communities.
“The major challenge remains making rent affordable for Canadians,” Bonen concluded. “While regulating short-term rentals can be part of the solution, it’s not going to have a substantial impact on its own.”
Metro Vancouver’s housing market is experiencing a surge in newly listed properties, with inventory rising nearly 20% year-over-year in July. Despite this increase, the number of transactions has not kept pace, highlighting a disconnect between supply and demand.
According to the Greater Vancouver REALTORS® (GVR), residential sales in the region totaled 2,333 in July 2024, a 5% decrease from the 2,455 sales recorded in July 2023. This figure is 17.6% below the 10-year seasonal average of 2,831, suggesting that buyers remain cautious despite favorable market conditions.
“The trend of buyer hesitation that began a few months ago persisted in July, even after the Bank of Canada reduced the policy rate by a quarter percentage point,” said Andrew Lis, GVR’s director of economics and data analytics. “Given the recent half-point decline in the policy rate and the abundance of inventory, it’s surprising that transaction levels are still below historical norms as we reach the mid-summer point.”
In July 2024, there were 5,597 newly listed detached, attached, and apartment properties on the MLS® in Metro Vancouver. This represents a 20.4% increase from the 4,649 properties listed in July 2023 and is 12.7% above the 10-year seasonal average of 4,968.
The total number of properties currently listed for sale on the MLS® in Metro Vancouver is 14,326, a 39.1% increase from July 2023, when there were 10,301 listings. This is also 21.5% above the 10-year seasonal average of 11,788.
The sales-to-active listings ratio for July 2024 across all property types is 16.9%. For detached homes, the ratio is 12.8%; for attached homes, it is 20.1%; and for apartments, it is 19.3%. Historical data suggests that home prices face downward pressure when the ratio stays below 12% for a sustained period, while upward pressure occurs when it exceeds 20% over several months.
“The market is experiencing balanced conditions, with inventory levels not seen in years,” said Lis. “Price trends across all segments have leveled out, with modest declines month over month. While it’s uncertain if softening prices and improved borrowing costs will encourage buyers as we approach the fall market, it’s worth noting that it can take time for better borrowing conditions to translate into increased transactions. We will be monitoring the market for signs of increased activity in the coming months.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,197,700. This represents a 0.8% decrease from July 2023 and a 0.8% decrease compared to June 2024.
Detached home sales in July 2024 reached 688, a 1% increase from the 681 detached sales recorded in July 2023. The benchmark price for a detached home is $2,049,000, representing a 2.1% increase from July 2023 and a 0.6% decrease compared to June 2024.
Sales of apartment homes totaled 1,192 in July 2024, a 6.9% decrease from the 1,281 sales in July 2023. The benchmark price for an apartment home is $768,200, which is a 0.3% decrease from July 2023 and a 0.7% decrease compared to June 2024.
Attached home sales in July 2024 amounted to 437, a 6.2% decrease from the 466 sales in July 2023. The benchmark price for a townhouse is $1,124,700, representing a 1.4% increase from July 2023 and a 1.2% decrease compared to June 2024.
Metro Vancouver has just experienced the largest quarterly presale inventory release since mid-2022, according to a recent report by real estate sales and marketing firm MLA Canada. The second quarter of 2024 saw a significant influx of new units hitting the market, with varied absorption trends across the region.
In Q2 2024, around 5,850 units were released: 1,600 in April, 2,000 in May, and 2,250 in June. This surpasses the supply release of over 3,000 units in October 2023 and is comparable to Q2 2022, which saw approximately 5,900 units released.
However, despite this surge in inventory, sales velocity in the presales market has been slow. Demand, as measured by the number of units sold and same-month absorptions, was higher in previous quarters than in Q2 2024. MLA Canada notes that while same-month absorptions were notably high at the start of the year, fueled by projects that had been previewing for months, absorption rates began to decline by May and June. This decline can be partly attributed to the seasonal shift from the active Spring market to the slower Summer months.
Overall, in the first half of 2024, the Lower Mainland saw an average same-month absorption rate of 33%, with 2,848 units sold out of 8,593 released units across 68 projects. Interestingly, the Fraser Valley outperformed the Greater Vancouver region, with more units sold (1,631 out of 4,546) and released than Greater Vancouver (1,217 out of 4,047). The Fraser Valley’s higher sales-to-listings ratio, at around 36%, compared to Greater Vancouver’s 30%, is largely due to its more competitively priced offerings.
Due to reduced sales velocity, developers are extending the length of sales campaigns, and sales teams are no longer seeing towers sell out within weeks of launch. This has led to increased competition among developers, resulting in more options and incentives for prospective buyers.
Looking ahead, MLA Canada projects 10,500 units across 42 more launches in the second half of the year, with an average same-month absorption rate of 35%. Although this level of activity is an improvement from 2023, it remains below historical norms and is expected to align with slower years.
“Presale buyer urgency is low, and almost every deal involves negotiations, especially at the higher end of the pricing spectrum,” said MLA Canada’s Director of Advisory Garde MacDonald. “We foresee that the remainder of the year will build on existing trends. While we anticipate a seasonal upswing in the Fall, the market outlook for H2 2024 does not look markedly different from today.”
The signs of distress are everywhere. Many of Vancouver’s priciest condos are being offered at big discounts.
One downtown condo that was bought for almost $3 million is now on the market for $2.3 million. At the elite, funky Alberni, designed by starchitect Kengo Kuma, an “extremely high” inventory of 26 condos is for sale, says realtor David Hutchinson. At the similarly over-the-top Hotel Georgia, 14 units are listed. The 48th-floor penthouse was once put on sale at $35.8 million, now it’s going for $20.8 million. In the neo-futurist Vancouver House, where Hutchinson says even storage lockers have sold for $150,000, more than 30 opulent apartments are up for grabs. There have only been three sales in six months, and those are smaller units going at about 10 per cent below list price.
This inflated inventory coincides with a residential highrise construction boom in Metro Vancouver, including glamorous Westbank condos about to be finished at Oakridge Park and in downtown’s sky-high Butterfly. This isn’t to mention thousands more coming on stream in new highrise clusters in Burnaby and beyond.
Many of these condos have been aimed at the international market. Analysts point to globalization, particularly the trans-national effects of China’s depressed housing sector. China’s massive housing market is bursting after an incredible bubble. As Vancouver’s Steve Saretsky says, there has been a drastic drop in what was once an “unprecedented Chinese appetite to take capital out of the reach of the Chinese government” — mostly by investing in Western real estate.
There is no doubt values in Vancouver and Toronto, which are among the world’s most unaffordable cities, were impacted dramatically by what economists dub “China shock.” The B.C. Business Council’s David Williams and former Simon Fraser University professor Josh Gordon showed how the volume of money pouring out of China into real estate into Australia and Canada jumped by up to six times between 2016 and 2019.
David Ley, University of B.C. geography professor emeritus, describes how a decade ago large Vancouver property developers opened scores of sales offices in East Asia to serve business-class immigrants and other affluent transnationals.
At the time, the director of marketing at Westbank, Michael Braun, said: “China is now a big part of this business … right now I have a rule when we talk about projects: If the Chinese market doesn’t want it, I have no interest in it.”
Even though developers of both high- and medium-end Vancouver condos continue to market in East Asia, distributing most of their advertising in both English and Chinese languages, there are strong signs “China shock” is easing, becoming unpredictable.
As Saretsky notes, the overall price of homes in Greater Vancouver is down by just 3.6 per cent compared with two years ago (and by 7.5 per cent less in Greater Toronto). Values would be lower if not for rapid population growth through international migration. Nevertheless, Saretsky says the pounding on luxury condos is intense.
“Globalization is now reversing,” says Saretsky. “What happens if further Chinese wealth destruction necessitates Chinese liquidation of foreign housing ownership?”
Michael Peregrine of Santiago Capital says that over the last 10 years China’s property market has “fallen precipitously.” And there is “more downside to come.”
The problem has been that many real estate companies in English-speaking countries integrated East Asia’s housing boom into their profit dreams.
“The higher Chinese property prices went (valued at US$50 trillion), the more wealth was generated that could then be invested in other property markets around the world,” Peregrine writes in a 50-page report.
“The Chinese property juggernaut (bought) massive foreign housing inventory at inflated prices,” says Peregrine. “It forced locals to pay up in their own markets to compete against Chinese investors.”
Now China’s boom, which was fueled by debt, is unwinding.
“Canada will be at the forefront of Chinese selling,” Peregrine says, particularly since both the federal and provincial governments have been instituting various forms of foreign buyer restrictions and vacancy taxes, albeit with loopholes.
“Toronto condo sales,” Peregrine says, “are already down 85 per cent from their peak volume in 2022.”
Analyst John Pasalis adds that this June a record number of Toronto condos are for sale.
All this financial destruction, however, doesn’t mean the river of money from China has dried up completely. China still has by far the world’s highest number of millionaires trying to get their wealth out, with Canada showing up as the fourth most desired country for international multimillionaires ready to pay for a so-called “golden passport.”
The Canadian condo scene now comes with trans-Pacific turbulence. Hutchinson says many of the scores of pricey condos now on the Vancouver market were originally “sold in presentation centres offshore.” Most were snapped up as pre-sales designed for flipping. Now many speculators are in a bind.
While their financial pain might end up going deep, there is a chance others could benefit, with a possible trickle-down effect on prices.
Still, in Metro Vancouver we’ve learned not to hold out too much hope for real affordability.
