Greater Vancouver Real Estate Sees Sharp Rise in Inventory Levels

Market conditions can be characterized as balanced at present in the Greater Vancouver market, but demand for detached and townhome properties tends to outpace strata condominiums. A serious uptick in inventory levels over the past year, in large part due to economic uncertainties, has left buyers skittish and waiting on the sidelines for conditions to improve. Conversely, homeowners who have listed their homes for sale are waiting longer to sell, with listings lingering on the market. Incoming offers often include a 30-day condition on the sale of an existing property.

With the average home price hovering near $1.3 million in 2024, Greater Vancouver remains the country’s most expensive housing market—a title it has held since at least 1994. Since then, values have climbed more than 325 per cent, representing an annual compounded growth rate of 4.95 per cent. Much of the growth occurred between 2004 and 2014, when prices rose by almost eight per cent annually. More recent pressures—including the pandemic and its aftermath, rapid interest rate hikes, the Foreign Buyer Ban, B.C.’s Short-Term Rental Accommodations Act, and uncertainty tied to U.S. Tariffs—have further challenged affordability.

From a historical perspective, today’s interest rates are lower than the 30-year average, but the steep escalation in housing values has made ownership significantly harder to achieve. Even so, some seasoned buyers are taking advantage of reduced spreads to move up into larger homes or different neighbourhoods, prompting an upswing in move-up activity.

Despite some barriers to entry, today’s entry-level buyers are benefitting from the best selection in years, along with the advantage of ample time to make decisions. First-time buyers are skewing older, with most being between the ages of 35 and 45 years. The lion’s share of activity tends to fall into the $500,000 to $600,000 price range, and occasionally falling into the $700,000 to $750,000 price bracket. At this level, options are typically limited to strata product in Greater Vancouver and Fraser Valley, although moving to outlying areas such as Chilliwack could result in freehold ownership.

While fear has diminished somewhat in recent months, navigating the market is the challenge moving forward. In a balanced market, it’s often best to sell first but have sights set on the future acquisition. If the decision is made to buy first, buyers are minimizing risk by ensuring a contingency clause is included regarding the sale of an existing property.

Inventory is unlikely to be absorbed until interest rates drop further. Rates remain the cornerstone of consumer confidence, and once they start to move downward, greater market activity is expected. In recent weeks, there has been greater chatter in the market regarding foreign buyers, with builders and developers seeking a lift of the current ban.

Supply shortages, while not an issue at present, are expected to be problematic down the road, unless scheduled construction projects move forward. In 2024 and 2025, condominium developments in Vancouver’s downtown core, west side and outlying areas were outright cancelled, forced into court-ordered sales or put on hold due to elevated interest rates and declining property values. Others shifted gears, with developers moving to rental accommodations as opposed to condominiums. While this solution appears to work at present, looking forward, it sets the stage for bidding wars due to shortages in 2028 and beyond.

Inventory, interest rates and price appreciation factor into the picture for the future. Ten years ago, a good income and adequate downpayment enabled entry into the market. Today, those are basic requirements complicated by the stress test and increased tax levels. Federal, provincial and municipal governments should be looking for ways to incentivize home ownership, whether it’s through a reduction in the provincial transfer tax, the Goods and Services Tax (GST), an increase in Land Transfer Tax rebates or by allowing first-time buyers to withdraw a higher amount from their RRSP tax-free through the Home Buyers’ Plan or First Home Savings Account (FHSA). As for the road ahead, buyers and sellers will need to navigate the market with the knowledge of current variables and those likely to impact conditions in the near future, since shifting conditions can quickly drive market transition.