Welcome to the May Metro Vancouver Real Estate Market Update. The market continues to show signs of cooling, and last month’s slew of negative news—alongside the latest real estate statistics—supports this trend. Sales are currently 30.5% below the 10-year average, while new listings are 9.3% above that same benchmark. This means the inventory is piling up. In fact it is 45.9% above the 10-year average, the highest level in a decade.
As shown in the table below, the sales-to-active listings ratio remains relatively stable across all three housing categories. This ratio measures supply and demand—lower ratios indicate weaker demand and greater downward pressure on prices. The trend across the board suggests prices are declining in all categories.
The negative headlines suggest the market is unlikely to rebound anytime soon. Just last month, another development project went into receivership: the Chloe project in Kerrisdale (click here). Of the 42 pre-sold units, only 22 have closed, leaving the developer unable to meet loan payments. This underscores the risk for buyers who purchased pre-sale condos at peak prices. By the time these units are completed, falling values can result in a financing shortfall—forcing buyers to come up with larger down payments. Furthermore, with rising unemployment, some purchasers may face financial challenges by the time they need to close.
This helps explain why the Belvedere Condo project in Surrey held a one-day, 25% off sale (click here). Breaking even can be better than paying ongoing interest on a developer loan. With 2,500 completed but unsold condo units in Metro Vancouver—and projections suggesting this could rise to 3,700 by year-end—this was an opportune time to get rid of the remaining units before more come on the market.
Adding to the bearish sentiment, land values in parts of Vancouver covered by the Broadway Plan have reportedly fallen by 50% (click here). Meanwhile, Rennie Group, one of Vancouver’s top real estate marketing firms, announced a 25% staff layoff—a stark reflection of how professionals within the industry view the near-term outlook.
On the interest rate front: although the Bank of Canada held its overnight rate on June 4th, most banks expect 2 to 3 cuts in 2025—except Scotiabank, which predicts no cuts this year, but a total reduction of 0.75% in 2026. This would bring the overnight rate from 2.75% down to 2.00%, and potentially the prime rate from 4.95% to around 4.20%.
TD, CIBC, and RBC forecast 0.50% in rate cuts in 2025, with TD and CIBC expecting no change in 2026, while RBC anticipates a 0.25% increase in 2026. BMO is the most aggressive, predicting 0.75% in cuts this year, followed by a hold in 2026.
However, fixed mortgage rates may not drop much further. In fact, based on recent movements in the 5-year Government of Canada bond yield, fixed rates appear poised to rise in the near term. As such, I don’t expect interest rates to significantly boost housing demand this year.
Don’t forget it’s Father’s Day on June 15th.
Enjoy the rest of your month.
