The Vancouver housing market has been one of the top real estate markets in all of Canada. This major urban centre has been witnessing jaw-dropping growth across the board, as a blend of families, young professionals and investors drive demand and in turn, home prices. What’s more, shrinking inventories are also supporting this tremendous price growth – a story that is playing out in many markets nationwide. With even more competition heading toward one of the country’s largest cities, it is going to be a challenge to douse the sizzling housing market anytime soon.
But have these sky-high valuations priced out too many Canadians in today’s pandemic boom? This is a concern, but many industry experts (including PricewaterhouseCoopers) still view Vancouver as a top housing market to watch heading into 2022 – and beyond.
Vancouver Named Top Housing Market to Watch
According to the second-largest professional services network in the world, Vancouver was named the top housing market to watch in Canada for the third consecutive year. Citing investors and developers alike, many experts are positive about the city’s economic outlook, driven in part by strong capital inflows and renewed immigration activity.
However, there are some concerns surfacing, including ballooning price inflation and immense competition for real estate. But PwC believes swelling intergenerational wealth could offset these worries.
“[In] the Vancouver census metropolitan area, 38 per cent of single-family home sales were non-market transactions. We can expect these types of intergenerational wealth transfers to continue to bolster our city’s housing market in the years ahead,” the company wrote.
Meanwhile, another non-residential segment of the Vancouver real estate market is generating attention: the industrial market.
PwC notes that industrial vacancy in the Vancouver area slumped to a record low of 0.7 per cent in the second quarter of 2021. This trend has pushed prices higher – net asking rents swelled 13.2 per cent during the April-to-July period – amid surging demand and a scarcity of available land.
“Some companies are adapting by investing in industrial strata opportunities instead of renting; there also continues to be a trend towards vertical industrial development in the region,” the report stated.
Overall, strong post-crisis economic growth, an abundance of capital, limited inventory and a looming population boom are all key performance indicators of a top market.
How the Vancouver Real Estate Market is Performing
According to the Real Estate Board of Greater Vancouver (REBGV), residential sales surged 11 per cent month-over-month in October, totalling 3,149 units. This was also 22.4 per cent above the 10-year average for the month of October.
REBGV data also show that prices continue to trend higher, with the composite benchmark price for all residential properties climbing 14.7 per cent year-over-year and 1.1 per cent month-over-month, to $1,199,400.
Here’s a look at how the housing market performed on an annualized basis:
Detached
- Home Sales: -18.4%
- Prices: +20.5% to $1,850,500
Attached
- Home Sales: -22.9% to 782
- Prices: +18.5% to $975,000
Apartments
- Home Sales: +14.7% to 1,570
- Prices: +9.5% to $746,400
“Home sale activity continues to outpace what’s typical for this time of year and the pool of homes available for sale is in decline. This dynamic between supply and demand is causing home prices to continue to edge up across the region,” said Keith Stewart, REBGV economist, in a news release.
On the supply side, housing stocks were on the decline. New residential listings plunged 27.3 per cent from September to 5,571 homes. Active residential listings also fell 13 per cent month-over-month, to 9,236 units. The sales-to-active listings ratio was 43.5 per cent in October. Plus, the months of inventory were below the 10-year average of about 4.7, clocking in at just more than two months.
New housing construction rates continue to rise, with housing starts rising at an annualized rate of 39.24 per cent to 1,774 units. Year-to-date, housing starts have surpassed 22,000 unit starts, up from 17,453 in the first 10 months of 2020, according to Canada Mortgage and Housing Corporation (CMHC).
“Rising fixed mortgage rates should eventually help ease demand, but for now sales remain strong and buyers with rate holds will remain motivated to find a property for the rest of the year,” Stewart added.
Record Low Inventories a Province-Wide Problem
It is not only Vancouver that is witnessing a supply problem. Across the province of British Columbia, housing stocks have plummeted in the wake of soaring demand, fuelled by historically low interest rates and pent-up savings. While new housing construction is on the rise, and policymakers are putting forward ideas to curb the enormous price growth, it does not change the narrative today that the chief “story across the province continues to be the record low number of listings,” says Brendon Ogmundson, chief economist of the BCREA.
Still, it is projected that brighter days are ahead for Vancouver in 2022, and many financial and real estate experts agree that any future hurdles won’t be enough to curtail the growth of one of the world’s biggest real estate markets.
Sources:
2022-01-10 14:52:21
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