British Columbia, the most Western province in Canada, has for decades withstood a reputation as holding higher-than-average real estate prices, particularly in the province’s urban markets. Thanks to the lure of living in view of mountains and the Pacific Ocean within a more temperate climate, housing prices – be it detached homes or condominiums – have been steadily increasing over the last few decades. With the last year and a half overtaken by the global pandemic, many Canadians are perceiving value in owning more space, living close to natural sights, and within more sparsely populated areas. This has led to an influx of new residents in British Columbia, which in turn has triggered another boom in the housing market. Here is how this population influx has impacted the Vancouver real estate market, and what lies ahead for this BC city.
A Slow Cooling of Housing Markets Across British Columbia
After a blistering spring season, the British Columbia real estate market is showing signs of cooling. While not monumental in change, the fact that major real estate markets are decreasing is welcome news for hopeful homebuyers across the province. Monthly sales records were a staple in the beginning of 2021, however these past couple of months have seen the home sale and listing activities in the Metro Vancouver area calm down. In support of this, Keith Steward, Economist for the Real Estate Board of Greater Vancouver, states, “Metro Vancouver’s housing market continues to experience strong seller’s market conditions, although the intensity of demand has eased from what we saw throughout most of the spring. The past two months have shown a market that’s shifting toward more historically typical conditions.”
The Metro Vancouver area totalled 3,762 home sales in June 2021. While this is an astonishing 54% increase over June 2020, it is a welcomed 11.9% decrease compared to the 4,268 homes sold in the month prior. Following this trend, the REBGV reports that 3,326 residential homes were sold in July 2021, another month-over-month decrease of more than 11%. While monthly sales are still slightly above typical values, the market is beginning to return to typical conditions. “Moderation was the name of the game in July,” said REBGV’s economist Keith Stewart. “Home sales and listings fell in line with typical seasonal patterns as summer got going in earnest in July. On top of moderating market activity, price growth has leveled off in most areas and home types.”
A big issue seen across the country over the last year has been an uneven balance between sales activity and new listings. This has led to increases in home prices in practically every city and town in Canada. With prices well above seasonal averages, many industry observers expected inventory in Vancouver to climb as the incentive to sell increases, but the willingness to buy begins to drop. Should this play out in real time, it may in fact help to level out skyrocketing property prices.
In June 2021, there were 5,849 new homes listed on the Multiple Listing Service (MLS) in Metro Vancouver – a slight 1.1% increase compared to June 2020, but a 17.9% decrease compared to May 2021. Once again, in July newly listed homes were down on a month-over-month basis when 4,377 homes were newly listed on the market. These numbers show that while the Metro Vancouver area is seeing less homes leave the market due to sale, the numbers of newly posted listings are not quite enough just yet to completely cool the market.
With not enough supply to counteract demand, prices remain steadily high in the Greater Vancouver real estate market. “Low housing supply remains a fundamental factor in Metro Vancouver’s housing market,” Stewart said. “Home sales remain above average and we’re starting to see price increases relent as well. Going forward, the supply of homes for sale will be among the most critical factors to watch. This will determine the next direction for house price trends.”
Typically, analysts like to see the sale-to-active listings ratio below 12% which will indicate a dip in market prices; when this ratio is greater than 20% for several months, prices tend to rise. In Greater Vancouver, the sales-to-active listings ratio was 33.8% come the end of July – not quite the number home buyers would like to see. This has helped keep average prices in the area stably high month-over-month. The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver has remained unchanged from June to July 2021, and is sitting at $1,175,500 – sellers aren’t complaining, but eager buyers are hopeful that this figure will be brought down as the year progresses.
What’s to Come for Vancouver Real Estate?
As summer draws to close and the more tolerable weather rolls in, there are hopes that the Metro Vancouver real estate market will also become more tolerable. It is expected that there will be minor changes as the last half of the year continues, but no major market level-off is expected until 2022.