As Peter (Yogi) Berra famously said, “It’s Deja-vu all over again” but in this case it is in comparing Metro Vancouver’s housing market in November 2018 and what we are experiencing today. 2018, after all, was also a down market and that November’s housing sales across Greater Vancouver totalled 1,633 properties, eerily close to the 1,625 homes sold in November 2022. November of 2018 was also close to the end of a “normal” real estate market before the entire planet caught a fever that upturned housing sales and prices around the world.
Here is the statement from the Real Estate Board of Greater Vancouver (REBGV) in November 2018, which will sound very familiar today:
“Home buyers have been taking a wait-and-see approach. This has allowed the number of homes available for sale in the region to return to more typical historical levels,” the REBGV Chair said at the time. “This activity is helping home prices edge down, across all property types, from the record highs we’ve experienced over the last year.”
Deja-vu indeed. But there is one big difference. In November 2018, the benchmark detached house price in Metro Vancouver was $1.5 million and townhouses sold for $818,500. This November, houses were selling at a benchmark of $1.65 million and townhouses at $1.07 million. The typical condo apartment now sells for $60,000 more than it did four years ago.
Buyers should not make the same mistakes most did near the end of 2018 and pull away from a declining market. Those that bought into that dip were soon glad they had.
Yes, Metro Vancouver has returned to a rather staid sales and price environment, but things are stirring that may very well see sales and prices surpass even pandemic levels: these include immigration and a housing shortage, both hot issues that may come to a boil in 2023.
Recent data from Zonda (formerly Urban Analytics) showed that Metro Vancouver’s population will increase by 40,719 persons in 2023 (mostly due to record levels of immigration and migration from other provinces), while the number of new strata housing starts will be just 13,667 units and this gap will widen in 2024. Over the next three years, in fact, we will see a shortage of more than 27,000 rental and strata homes needed to keep pace with population growth.
Meanwhile new MLS® listings in November across Greater Vancouver were down 23% from a month earlier and 22% a year earlier. In the Fraser Valley, there were just 1,703 new listings, a decrease of 22% compared to October 2022 and a down nearly 19% from November 2021.
It is up to the private sector to deliver the necessary new housing, but developers are hamstrung by massive increases in government fees and charges on new development, significant construction cost inflation, high interest rates, lengthy project approval timelines and shortage of skilled construction workers. Some vendors are reluctant to list because they are waiting for prices to recover: however, we expect many are about to pull the trigger.
The provincial government has now waded into war on supply by eliminating the ability of a strata corporation to enforce a rental restriction and age restrictions (save being 55 plus). With this came a promise of thousands of properties that will come to market, the reality is like that it may just be a few hundred. And those first-time home buyer/occupiers will be competing for units with investors as these formerly restricted units now become open for all.
An indication of how quickly prices have changed is a recent notice from the BC Assessment Authority, which is preparing homeowners for sticker shock when assessment notices are mailed out in January. The caution reads
“2023 property assessments will be up in value about 5% to 15% for most homeowners despite the current declining real estate market – the reason being our legislated July 1 (2022) valuation date.”
The best advice: buy a home this winter when everyone else feels frozen out of the market. Sellers will welcome you with open arms, and you will be glad you purchased, likely sooner than you expect.
Highlights of the November 2022 report:
Every condo can now be a rental, opening investor opportunities
Gap between population growth and housing supply widening
November sales second lowest for that month since 1987
Richmond seeing sales recovery as foreign buyer ban looms
Some markets are experiencing the lowest average prices in years