The Vancouver real estate market has been in the news rather a lot recently, with long-standing records being broken. It is currently described as dismal, with both activity and sale prices down in March 2019, and it is unclear in what direction it will move next.
Vancouver was the Canadian property market on steroids. For example, the Teranet-National Bank House Price Index more than quadrupled from 2002 to its peak in July 2018. But things have changed considerably since then, and March of 2019 has been the weakest for the Vancouver housing market since 1986, according to the Canadian Real Estate Association (CREA).
Demand in Canada’s West Coast property markets fell in February 2019, with drastic declines in Vancouver and parts of British Columbia, and March continues the trend, with the sales-to-active listings ratio for all property types just 13.5%. The city is now very much a buyer’s market. Analysts usually expect prices to be forced down when this ratio drops below 12% for a length of time.
In March 2019, there were 1,727 residential sales in the Greater Vancouver Area, a 31.4% drop since the same time last year and a 16.4% decrease since February 2019. The number was also 46.3% below 10-year March average number of sales.
Maybe because it’s spring, March 2019’s number of sales represented an increase , of 16.4%, over the 1,484 sold in the previous month. Despite this, the number of Metro Vancouver homes listed for sale on the MLS® system in March, 12,774, was 10.2% up from the previous month, further indicating that homes are proving hard to shift right now. And this also represented a huge 52.4% increase from the March of the previous year.
|March 2019||March 2019 vs.|
|March 2019 vs.
|No. of Residential Sales in Greater Vancouver||1,727||-16.4%||-31.4%|
|No. of Homes Listed for Sale in Greater Vancouver||12,774||10.2%||52.4%|
Regarding prices, the MLS® Home Price Index composite benchmark price for Metro Vancouver is still over $1 million, but is -7.7% down from March of the previous year and slightly less (-0.5%) compared to the previous month. Broken down by property type, we can see that since March 2018 detached homes have seen the biggest fall (-10.5%) followed by attached homes (-6.0%) and condos (-5.9%). All experienced a slight decrease from the previous month.
|Property Type||Metro Vancouver|
|March 2019 vs|
|March 2019 vs
The current situation is strongly influenced by outside factors: the foreign buyers’ tax unveiled in 2016, the mortgage stress test that came into effect in the following year, and also the burden of increasing interest rates. Ashley Smith, president of the Real Estate Board of Greater Vancouver, says that:
“Housing demand today isn’t aligning with our growing economy and low unemployment rates. The market trends we’re seeing are largely policy induced….. Using public policy to delay local demand in the housing market just feeds disruptive cycles that have been so well-documented in our region.”
While it might be hoped that buyers take advantage of the new lower prices, it’s more usual that they stay on the sidelines seeing if prices drop still further. External factors could presumably be used to counter this situation, seeing as they have to some extent created it, or maybe the cooling of the Vancouver property market was inevitable and should be allowed to run its course.
The International Monetary Fund said recently that Canada’s biggest real estate markets are still at high risk of a sudden home price drop, and one wonders if fears about the possible bursting of the housing bubble will be voiced again.
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