For the last decade, including during the coronavirus pandemic, Vancouver has had one of the hottest real estate markets in the world. Much like Toronto and Montreal, many Canadians and newcomers are attracted to the Vancouver real estate market, despite soaring costs that are only intensifying amid multi-year low inventory levels.
Will dwindling supply and sky-high prices create a barrier to entry? Or will homebuyers find their way into the Vancouver real estate market, as conditions stabilize?
Until there is more supply coming online in Vancouver, many argue that it will continue to be challenging to achieve home ownership in this major urban centre. But is housing inventory really that low in the nation’s third-largest city? Let’s see what the latest figures reveal.
Vancouver Real Estate Inventory Plummets to Lows Last Seen in 2016
According to the Real Estate Board of Greater Vancouver (REBGV), current inventory and real estate listings have failed to keep up with demand.
In August, there were just over 4,000 new detached, attached and condominium properties listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver. This is down 30.6 per cent year-over-year, and down 7.9 per cent month-over-month.
The total number of residential properties listed for sale in Vancouver was 9,005, tumbling at an annualized rate of 29.7 per cent. This is also 8.6 per cent down from July.
Moreover, the sales-to-active listings ratio stood at 35 per cent in August across all property types. REBGV notes that when this ratio exceeds 20 per cent, home prices tend to increase. Here’s a breakdown for the final full month of summer 2021:
- Detached: 25.3 per cent
- Townhomes: 51.8 per cent
- Apartments: 39.2 per cent
New housing construction took a breather in August. According to Canada Mortgage and Housing Corporation (CMHC), housing starts topped 1,900, down from just over 2,500 at this time last year. However, year-to-date, housing starts have totalled more than 19,000, up from 14,363 in the first eight months of 2020.
“Since the last half of 2019, the total number of homes for sale has hovered at near-historic lows, despite higher-than-typical sales and new listing activity,” the REBGV wrote. “The increasing correlation between sales and new listings over the pandemic is consistent with more buyers selling their current homes and purchasing other, typically larger, homes.”
Still, REBGV hints that tepid relief could come in the fourth quarter when the number of listings increase, although it would remain below the normal level.
But how did the broader Vancouver real estate market perform in August?
Is the Housing Market Cooling Down?
Despite significant growth this year, the REBGV’s economist noted that much of the growth took place at least three months ago.
REBGV data highlighted residential sales increased 3.4 per cent year-over-year in August but noted a 5.2-per-cent decline on a month-over-month basis. In total, 3,152 home sales were logged, up 20.4 per cent above the 10-year average for the month of August.
The MLS® Home Price Index composite benchmark price – which industry experts say is a more accurate measure than average or median price – was up at an annualized rate of 13.2 per cent, rising to $1,176,00. Month-over-month, prices remained flat.
On a monthly basis, here is how Vancouver real estate prices performed:
- Detached: +0.3% to $1,807,100
- Attached: +0.3% to $952,600
- Apartment condos: -0.2% to $735,100
“Housing supply is the biggest factor impacting the market right now. To help relieve pressure on prices and improve people’s home-buying options, the market needs a more abundant supply of homes for sale,” said REBGV Economist Keith Stewart in a news release.
“When assessing the market, it’s important to understand that while year-over-year price increases have reached double digits, most of the increases happened three or more months ago,” Stewart added.
Vancouver’s Housing Affordability Issues Intensify
Until the Vancouver real estate market gets more supply, the housing affordability crisis will likely only get worse. Even before the COVID-19 public health crisis fuelled enormous growth in housing prices and sales activity, especially in detached property types, prompting worries that this red-hot market would leave many Vancouver families on the sidelines.
The Canadian Housing Statistics Program recently published a report that revealed the median price-to-income ratio in Vancouver was 7.4, higher than the overall British Columbia housing market, which recorded a ratio of 5.4. To put this into perspective, this is more than double that of Atlantic Canada’s provinces.
Suffice it to say, saving up for a down payment has become harder in the Vancouver real estate market. Unfortunately, this could be the case until inventory returns to historical averages.