Residential property sales in Metro Vancouver. Source: GVR
While Metro Vancouver1 home sellers appeared somewhat hesitant in January, new listings rose 31 per cent year-over-year in February, bringing a significant number of newly listed properties to the market.
Greater Vancouver REALTORS® (GVR)2 reports that residential sales3 in the region totalled 2,070 in February 2024, a 13.5 per cent increase from the 1,824 sales recorded in February 2023. This was 23.3 per cent below the 10-year seasonal average (2,699).
“While the pace of home sales started the year off briskly, the pace of newly listed properties in January was slower by comparison. A continuation of this pattern in February would have been concerning, as it could quickly tilt the market towards overheated conditions.”
Andrew Lis, REBGV director of economics and data analytics
“With new listings up about 31 per cent year-over-year in February, this will relieve some of the pressure that was building in January and offer buyers more choice as we enter the spring and summer markets.”
There were 4,560 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in February 2024. This represents a 31.1 per cent increase compared to the 3,478 properties listed in February 2023. This was 0.2 per cent below the 10-year seasonal average (4,568).
The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 9,634, a 16.3 per cent increase compared to February 2023 (8,283). This is three per cent above the 10-year seasonal average (9,352).
Across all detached, attached and apartment property types, the sales-to-active listings ratio for February 2024 is 22.4 per cent. By property type, the ratio is 16 per cent for detached homes, 27.9 per cent for attached, and 25.9 per cent for apartments.
Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
Sales-to-active listings ratio – February 2024. Source: GVR
“Even with the increase in new listings however, standing inventory levels were not high enough relative to the pace of sales to mitigate price acceleration in February, with most segments of the market moving into sellers’ territory,”
Lis said.
“This competitive dynamic has led to modest price growth across all market segments this month, but it’s noteworthy that benchmark prices remain below the peak observed in the spring of 2022, before the market internalized the full effect of the Bank of Canada’s tightening cycle.”
The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,183,300. This represents a 4.5 per cent increase over February 2023 and a 1.9 per cent increase compared to January 2024.
Sales of detached homes in February 2024 reached 560, an 8.3 per cent increase from the 517 detached sales recorded in February 2023. The benchmark price for a detached home is $1,972,400. This represents a 7.2 per cent increase from February 2023 and a 1.5 per cent increase compared to January 2024.
Sales of apartment homes reached 1,092 in February 2024, a 17.7 per cent increase compared to the 928 sales in February 2023. The benchmark price of an apartment home is $770,700. This represents a 5.6 per cent increase from February 2023 and a 2.5 per cent increase compared to January 2024.
Attached home sales in February 2024 totalled 403, a 10.1 per cent increase compared to the 366 sales in February 2023. The benchmark price of a townhouse3 is $1,094,700. This represents a 4.2 per cent increase from February 2023 and a 2.6 per cent increase compared to January 2024.
1 Areas covered by Greater Vancouver REALTORS® include: Bowen Island, Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.
2 On February 12, 2024, The Real Estate Board of Greater Vancouver changed its organizational name to the Greater Vancouver REALTORS®.
3 GVR is now including multifamily and land sales and listings in this monthly report. Previously, we only included detached, attached, and apartment sales, and these additional categories, which typically account for roughly one to two per cent of total MLS® activity per month, are being included for completeness in our reporting.
“January saw very few projects release new inventory into the market. The story of the month was centred around incentives on existing inventory, targeted toward both prospective buyers and agents. As we enter February, we are starting to see increased foot traffic at Sales Galleries that is likely to carry forward into the Spring. Anticipated project launches in February will serve as a good litmus test for market breadth and will help developers, many of which are in “wait and see” mode, decide whether to enter the market.”
– Garde MacDonald, Director of Advisory
NAVIGATING TODAY’S MARKET ENVIRONMENT: UNRAVELING THE COMPLEXITIES
Describing the current market environment as merely “tricky” would be an understatement. Costs related to financing and construction are on the rise, while revenues remain stagnant. This disparity has constrained developers from introducing new supply to the market and has heightened the criteria they require before initiating contract writing. Paradoxically, there is an unprecedented level of pent-up demand from buyers. However, their aspirations of homeownership are hindered by a lending environment that leaves much to be desired, deterring many from entering the market until interest rates begin to decrease in the latter half of this year.
In January, three presale projects were unveiled, introducing 434 units into the market. A significant portion of this new inventory originated from Encore, the second tower in Beedie’s Fraser Mill’s development. Encore has made a notable impact on the market, with 50% of its inventory sold within the first month of sales. Although detailed pricing information is scarce, it is estimated that Encore has achieved a gross blend of $1,075 per square foot, surpassing Debut’s $1,050 per square foot yet remaining below the $1,140-$1,150 per square foot range typical of towers along the North Rd Corridor.
As we analyze these recent developments, the future of the real estate market relies on a delicate equilibrium between cost, demand, and access to financing. Encore’s launch exemplifies how opportunities still exist for developers who can entice buyers with a competitive price point amidst a challenging economic landscape.
Presently, vacancy rates in Metro Vancouver linger at a meager <1-2% across most submarkets, reflecting more rental friction than actual vacancies. This condition has contributed to an 8% rise in average rental rates in 2023, with new rental leases experiencing an even more substantial surge of 24%. This escalation is propelled by a growing number of renters, constituting approximately 34% of Canadian households, a demographic expanding at twice the rate of homeowners. This trend is fueled by affordability challenges and a considerable influx of individuals arriving through immigration, study, and work permits, who primarily rely on rentals upon their arrival.
The supply side of the market also confronts its own hurdles, notably a prolonged shortage in purpose-built rental construction. This issue, stemming from historical underinvestment, witnessed rental starts accounting for only 7% of all housing starts in 2010. Although initiatives such as the CMHC rental housing subsidiary have recently bolstered this figure to 38% as of 2022, challenges persist. Additionally, the removal of the 5% GST cost on purpose-built rentals and policies prohibiting short-term rentals aim to alleviate some pressure by promoting more long-term rental availability. Despite these efforts, the rental market continues to play catch-up, contending with lengthy timelines required to bring new rentals to market, which can span 3-7 years.
In the near term, some relief may be anticipated as interest rates adjust, potentially easing vacancy rates as prospective homeowners transition out of the rental market. However, the structural challenges within the rental market are expected to persist.
NEW YEAR, NEW PROJECTS, AND ENHANCED MARKET INCENTIVES
With the arrival of February comes the Lunar New Year, sparking anticipation for a resurgence in market demand and a surge in project unveilings. The market’s momentum has largely been fueled by active initiatives that offer substantial incentives. For instance, in Burnaby, buyer incentives range from $20,000 to $40,000, accompanied by realtor bonuses scaling between $5,000 to $10,000.
MLA Advisory forecasts the launch of five presale projects in February, introducing a total of 770 units to the market. Among these, Juno by StreetSide in Surrey City Centre stands out by relying on its 10% deposit structure to attract investors. Offering such minimal deposits at the commencement of the sales program is a daring strategy that could yield significant appeal. This approach, coupled with the project’s extended build-out period, underscores the tactics developers are employing to capture interest, especially during a period of subdued overall market activity.
Presale Units Forecasted. Source: MLA Canada
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