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Vancouver, Canada Fall Real Estate Market Update

Blog by Mike Cook | September 2nd, 2021

Welcome to September. 

As we close out the summer I can't help but share my disappointment at the state of the COVID pandemic. For many of us it felt, albeit briefly, that we were putting this difficult period behind us and moving back to normalcy. Sadly, that does not appear to be the case. With deep politicization and polarization we see the virus doing what viruses do - mutating and wreaking havoc on may communities around the world. At 18 months in, some communities are seeing the highest infection rates so far. I personally find this incredibly disappointing and frustrating.  Where the whole thing will end, assuming it actually will end, is anyone's guess at this point.  I encourage everyone within my reach to get vaccinated and to stay safe.

How this will continue to affect the Vancouver real estate market is, again, anyone's guess. My view is that we'll see more of what we're seeing now - relatively low inventory and fluctuating demand. Non-resident buyers have been effectively taken out of the picture so the luxury property values will continue to be flat while "affordable" properties will continue their seasonal fluctuations. Supply has remained relatively low so values have held up even during times of lower demand. Price trajectories are currently mostly flat after the year's Spring appreciation, the magnitude of which varied based on property type and price-point.

Looking forward to the looming Federal election it's clear that all parties are feeling pressure to pull a rabbit out of the hat on the "National housing crisis". what this will mean for local values remains to be seen. One proposal is to ban all non-resident purchases for 2 years or so. BC has already virtually eliminated foreign buyers, however there are still a few lurking around. If a total ban is implemented I find it difficult to imagine existing home values benefiting in any way. Time will tell.

I believe that the best case for existing condo values moving forward is status quo - flat. I don't see a collapse looming nor do I see anything that will drive already high prices much higher. Inflation looms, lenders are being much more conservative in their mortgage lending and the government, acutely aware of a potential debt issue related to rising interest rates, has increased mortgage qualification stress-test standards.

For non-resident investor-owners (non Canadian tax payers) holding properties vacant, make sure to factor Vancouver City's Empty Homes Tax (3%) and the Province's Speculation Tax (2%) into your ROI calculations. You are currently paying up to 5% (of your property's BC Assessment value) in addition to regular property tax (and strata fees if applicable). This may rise to 7% if the Feds add their contemplated 2% vacancy tax. On luxury properties this adds up fast and significantly erodes your ROI. There are various ways to mitigate the taxes including rental or sale of the property. See the links below for details.

https://www2.gov.bc.ca/gov/content/taxes/speculation-vacancy-tax/how-tax-works/tax-rates

https://vancouver.ca/home-property-development/empty-homes-tax.aspx

Sorry for the doom and gloom but it's worth recognizing that Vancouver's real estate investment landscape has changed significantly over the past few years and those hoping for decent returns will face real challenges.

REBGV Monthly Stats:

Summer sees home listing supply decline across Metro Vancouver

While home buyers have remained active in Metro Vancouver throughout the summer, the supply of homes for sale has declined steadily since June.

The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totalled 3,152 in August 2021, a 3.4 per cent increase from the 3,047 sales recorded in August 2020, and a 5.2 per cent decrease from the 3,326 homes sold in July 2021.

Last month’s sales were 20.4 per cent above the 10-year August sales average.

“August was busier than expected, and listings activity isn’t keeping up with the pace of demand. This is leaving the market under supplied.” said Keith Stewart, REBGV economist. 

There were 4,032 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in August 2021. This represents a 30.6 per cent decrease compared to the 5,813 homes listed in August 2020 and a 7.9 per cent decrease compared to July 2021 when 4,377 homes were listed.

The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 9,005, a 29.7 per cent decrease compared to August 2020 (12,803) and an 8.6 per cent decrease compared to July 2021 (9,850).

“Housing supply is the biggest factor impacting the market right now. To help relieve pressure on prices and improve peoples’ home buying options, the market needs a more abundant supply of homes for sale.” Stewart said. “Housing affordability has been a key issue in the federal election. We encourage the political parties to focus on policy solutions that will help streamline the creation of more diverse housing options for hopeful home buyers today and into the future.” 

For all property types, the sales-to-active listings ratio for August 2021 is 35 per cent. By property type, the ratio is 25.3 per cent for detached homes, 51.8 per cent for townhomes, and 39.2 per cent for apartments. 

Generally, analysts say 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.

“When assessing the market, it’s important to understand that while year-over-year price increases have reached double digits, most of the increases happened three or more months ago,” Stewart said. “To better understand the latest home price trends in your preferred location and home type, talk with your local REALTOR®.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,176,600. This represents a 13.2 per cent increase over August 2020 and a 0.1 per cent increase compared to July 2021.

Sales of detached homes in August 2021 reached 945, a 13.7 per cent decrease from the 1,095 detached sales recorded in August 2020. The benchmark price for a detached home is $1,807,100. This represents a 20.4 per cent increase from August 2020 and a 0.3 per cent increase compared to July 2021.

Sales of apartment homes reached 1,631 in August 2021, a 22.4 per cent increase compared to the 1,332 sales in August 2020. The benchmark price of an apartment property is $735,100. This represents a 7.6 per cent increase from August 2020 and a 0.2 per cent decrease compared to July 2021.

Attached home sales in August 2021 totalled 576, a 7.1 per cent decrease compared to the 620 sales in August 2020. The benchmark price of an attached home is $952,600. This represents a 16.5 per cent increase from August 2020 and a 0.3 per cent increase compared to July 2021.

Download the August 2021 stats package.