The real estate market in Vancouver started slow in January. In fact, 42.9% below the 10-year January sales average. New listings are slowly trickling in. 20.9% less than January of last year, but because of the slow sales, the total inventory is 32.1% higher than last January.
The sales-to-active listings ratio continues to head down pointing to weaker pricing power for all categories. However, townhomes and apartments have made price gains relative to last month as shown on the table below. It is a bit of an anomaly. Maybe it is due to some of those multiple offer situations I heard about anecdotally.
However, the general theme is down. From the Canadian Real Estate Association to the BC Real Estate Association to the Great Vancouver Real Estate Board, the general view is that sales volume has probably bottomed and price declines will probably continue in the first half of the year. What differs is the amount of recovery in the last half of the year. It depends on what each believes in terms of the timing of the rate cut by the Bank of Canada and the nature of the upcoming recession if there is one. Both are very difficult to predict. That is why the house values of the best-case scenario versus the worst-case scenario is so far apart. Below is an example from Oxford Economics’ analysis.
What Canada’s and Vancouver’s real estate market has going for itself is the immigration policy. Approximately 1.5 million immigrants will come to Canada in the next 3 years. If we assume the same geographic distribution as the 2021 Census, 14.9% of them will come to BC. That is 223,500 people. If you look at the chart showing housing starts in British Columbia from 1990 to 2021, you can see there hasn’t been a year over 50,000 units. Housing prices and rents are already too high. How can we accommodate all those people while making housing affordable? I don’t think we can. We cannot build housing fast enough.
The good news is that if you already have property in Vancouver, it should do well over the long term. I cannot see demand waning.
Have a great month and Happy Valentines!
