The worst of times; the best of times in the Metro Vancouver housing market
Highlights of the September 2022 Dexter Report
Five markets have composite home prices under $1 million
Home prices down for the sixth month in a row
Detached housing now firmly in a buyer’s market
Total residential sales in September test a 30-year low, but not as low as 2018, 2012 and 2008
Greater Vancouver condo sales are down 45.2% from a year ago
Surrey detached house sales tumble 67% year-over-year
To paraphrase Charles Dickens – as it relates to the housing market – these are the worst of times, these are the best of times, as we enter an Autumn that is also an anomaly.
Like the weather, the housing market is glorious for some but unnerving for others. We welcome the mild weather but wonder what it means in the long term. While we are happy to see a slight increase in homes for sale and prices coming off all-time highs, we are saddled with a lack of buyers and the market’s direction for inventory of homes. Many of us are also concerned about the political impact on the housing supply following upcoming municipal elections and the replacement of the provincial premier this year. There’s talk of supply, but we all know what talk really means.
September underscored all these concerns and contradictions. The benchmark price of a home in Metro Vancouver marked the six consecutive monthly decline to settle at $1,555,300, yet it is still the highest in the country and up nearly 4% from a year ago.
New listings of homes in September were 18% below the 10-year average, though the total number of active listings increased to 10,424 at month end (up 3% from August), because only 40% of new listings sold.
Sales of apartments, which had been leading the market for months, suddenly dropped 45.2% in September compared to September 2021, to just 888 transactions. Sales of detached houses and townhouses in Greater Vancouver totaled just 799 in September, down 44.7% and 52.6%, respectively from the same month a year earlier.
While balance is the theme based on the supply of homes available, the market is very much acting like a buyer’s market in many areas and product types. Yet we are hearing of more multiple offers occurring as buyers bid on properties just as other buyers want in as well.
A strange market indeed, and little wonder that many buyers and sellers have decided to sit it out and wait for the drama to settle. But, that may be a mistake for those buyers looking to (finally) get into a detached house in some municipalities.
Consider this: as the bellwether 5-year mortgage bank rate increased by 1.95% in the last six months, the price of a detached house in East Vancouver has fallen 10.6% at the same time; it has dropped by 13.4% in North Vancouver and by double-digits in East and South Burnaby, Port Coquitlam, Maple Ridge, Pitt Meadows and Ladner, compared to April 2022.
The benchmark detached house price in Greater Vancouver is now $173,400 less than it was six months ago, and it has fallen by $270,000 in the Fraser Valley.
That covers a lot of mortgage payments.
Political moves: There are politics at play in the housing market with upcoming elections and the change in the premiership of the province as both will intrude on the Metro Vancouver housing market.
At the municipal level, it seems assured that any new governments elected October 15 will try to increase the supply of new homes (or at least they should), but they will be primarily rentals, not strata houses. As of September 1, across Metro Vancouver, starts of new townhouses were down 30% from a year earlier and condo starts had plunged 42%, while new rental housing starts had increased 30% compared to 2021. Think about how townhouses have been the most sought-after product in our market over the last few years. Perhaps they this report should be part of required reading.
At the provincial level, the pretty much decided incoming premier, in fact, issued a new housing policy. It will likely face pushback from municipalities and strata corporations. And, if it ever does become law, it will prove more of a boon to real estate investors and speculators than to those seeking to buy more affordable homes.
Two examples: the new provincial housing policy includes a $500 million taxpayer fund to allow non-profits and tenants to purchase old “affordable” rental apartment buildings that come up for sale. This will simply increase the price of these aging properties and put taxpayers and former tenants on the hook for repairs and upgrades. The province has a record of paying far above assessment values for rental property. The policy would also allow the province to remove any ban on rentals in strata projects, despite Strata Corp.’s regulations; opening more supply for investors and allow for them to rent out their investment.
Bottom line: Buy the dip. Lower home prices since the spring now trump the modest rise in mortgage rates; and the modest increase in supply of homes for sale coupled with decreased demand allows room for careful shopping and price negotiations. Further, with immigration expected to hit record highs over the next two years and the price of residential land continuing to rise – it is now at $20 million per acre in most of Greater Vancouver – long-term home prices will go up again.
Here is a close-up of regional markets
Greater Vancouver: September total housing sales, at 1,701 were still higher than in September of 2018, 2012 and 2008, which were the lowest levels for that month in 30 years. Sales were down 47% from September 2021. The composite home price, at $1,155,300, was up 3.9% from September 2021, but down 8.5% over the past six months, including a 2.1% decline compared to August 2022. The composite home price has been falling by about $6,000 per week since April. The good news is that new listings were up 27% from August 2022, and active listings at end of September were at 10,424, compared to 9,728 at that time last year and 3% higher than at the end of this August. The supply of total residential listings is up to 6 month’s supply, while the sales-to-listings ratio of 40% compares to 56% in August 2022 and 60% in September 2021. This market is technically balanced but leaning towards a buyer’s market, especially in the detached house sector.
Fraser Valley: The Fraser Valley Real Estate Board processed a total of 897 sales in September, a decrease of 11.8% compared to August 2022 and down 51.9 % compared to this time last year. With 2,272 new listings added in September, total listings were 5,805, up 52.3 per cent from a year ago. The sales-to-active listings are down to 15%, which the Board claims is ‘balanced’ but it looks more like a buyer’s market. All sectors saw benchmark price declines from a month earlier, with detached house prices down 3.4% to $1,462,000; townhouses off 2.3% to $822,400 and condo apartments slipping down 2.1% to $530,400. Prices have been decreasing month-over-month since April and the Board stated: “we anticipate prices may continue to decline across all categories.”
Vancouver Westside: Prices are defying the sales dip. In the first nine months of 2022, detached house sales on the Westside have fallen 24% compared to a year earlier and September detached sales reached just 54 transactions, down from 82 in September 2021. Yet the median detached house price in September was up more than 10% from both a month and year earlier, at $3,395,000. In fact, despite slower sales, the median price of both townhouses and condos were also higher in September than in the same month last year, with townhouses also up an average of $300,000 compared to a month earlier at $1,619,500, based on 33 sales in September. Apartment median prices are holding steady in the $810,000 range. The price resilience on the West Side is the envy of Metro Vancouver. Total sales in September were 301, down 21% from August 2022 and 47% below September 2021. Active Listings were at 2,378 at month end, up 4% a month earlier and new listings were up 23% compared to August 2022. The Westside is now a buyer’s market, but do not expect to see lower prices, despite the sales-to-listing ratio falling to 33%, the lowest level since 2018.
Vancouver East Side: The East Side is a relative bargain right now, but based on zoning, non-residential development and what land is selling for, expect prices to rise over the next few months. In September, for example a 1.2-acre land assembly for new townhouses in the Grandview-Woodlands area sold for the equivalent of $20 million per acre. Add in high construction costs, city development fees and other soft costs, and we are talking about perhaps the most expensive townhouses ever marketed east of Quebec Street. With the incredible job-generating development on the 450-acre False Creek Flats ramping up, and the density zoning along the new Broadway subway line, this could be the last year that the East Side is considered relatively affordable. This September, the median price of a detached house was $1,660,000, down more than $100,000 from both August 2020 and September of last year. At a median of $612,500, East Side condo apartments are less expensive than in Burnaby, North Vancouver, Coquitlam, or Richmond and nearly $200,000 less than on the Westside. The East Side is considered a balanced market, with a total 6-month supply of listings, a sales-to-listings ratio at 40% and total sales down 51% from a year ago. But don’t be fooled: the East Side is a prime market for savvy buyers who see where Vancouver is heading,
North Vancouver: Affordable housing is the main election issue for 50% of North Vancouver residents, according to a recent survey. And for good reason. Housing starts of all types are down this year and, as of the end of September, there were only 639 homes listed for sale. It is only a low 32% sales-to-listing ratio that is keeping the inventory at a 5-month supply. The result is that, despite slower sales, North Vancouver benchmark detached house prices have barely budged in a year, down 0.5% from September 2021 to $2,092,700 in September 2022. Only West Vancouver and Vancouver West Side have more expensive houses. In September total North Vancouver home sales reached 128 transactions, up 4% from a month earlier but down 44% from September of last year. Condo apartment sales are down 50% from a year ago, but the benchmark condo price is $787,200, up 6.5% from September 2021.
West Vancouver: It may be because, with the highest household incomes in B.C., rising mortgage rates have less effect on the housing market, but West Vancouver appears to blithely ignore the current turmoil. Total housing sales in September were down 41% from a year earlier, to 42 transactions, but total listings are almost the same, at 599. The sales-to-listing ratio is a sluggish 22%, the lowest in four years. Yet the benchmark home price is up 1.2% from a year ago and a West Vancouver detached house price has also remained constant from September 2021, up 2.6% to $3,264,900. This is technically a buyer’s market for those who can afford it.
Richmond: The current inventory of 1,279 active listings is among the healthiest in suburban markets and low sales – just 210 in September, down 51% from September of last year and down 4% from a month earlier – should keep the supply growing. New listings were up 25% from August 2022 and the sales-to-listing ratio is running at 45% in what is seen as a balanced market. The benchmark detached house price is down a modest 5.2% from six months ago to $2,081,500; townhouses benchmark at just over $1 million and 115 condos sold in September at a benchmark price of $703,900.
Burnaby East: Only 17 homes of all types sold in September, down 55% from the same month last year and the lowest level since September 2018, when an avalanche of government anti-demand measures came into force. The composite home price is $1,113,200, down 6.6% from six months ago, and the detached house price has dropped 11.2% in the same period to $1,784,800. New listings in September are flat compared to August 2022 and down 45% compared to September 2021. The inventory of total listings is steady at a 4 month’s supply, which is seen as a seller’s market with a sales-to-listings ratio of 63%.
Burnaby North: Total housing sales in September were down 41% from a year earlier to 111 transactions, while total active listings were 431 at month’s end, down 4% from a month earlier and 41% below September 2021. This is a seller’s market with just a 4-month supply of listings and the sales-to-listing ratio of a robust 57%. The composite benchmark home price is down 5.8% from six month ago to $997,800, the only Burnaby market below $1 million.
Burnaby South: Detached house prices dropped 10.2% over the past six months to $2,079,400 as total sales in September dropped 22% from a month earlier and 48% from a year before, to just 96 transactions. Condo benchmark prices are down 6.6% since April, when interest rates began increasing, to $750,300. Active listings were 454 at month end compared to 547 at that time last year, and up 5% at the end of August 2022. This is considered a balanced market with a sales-to-listing ratio of 44% and a 5-month’s supply of homes for sale.
New Westminster: Just 9 detached houses, 7 townhouses and 51 condo apartments sold in the Royal City in September. Total transactions are the lowest in decades, 4% below even the slow market in September 2018. Prices have been falling about 1% since April and settled at $808,500 in September. Condos, the biggest seller, have seen benchmark prices drop 5.2% in the last six months and were down 2.6% from August to $633,800. The housing inventory is holding at a 4-month supply and the sales-to-listing ratio was 39% in September, a sharp drop from 65% a month earlier. For these reasons, New Westminster remains a seller’s market, despite the slow sales and price declines.
Coquitlam: A huge increase in new homes is coming to Central Coquitlam as a total of 18 towers, including six condo towers with 3,000 homes, was approved for the corner of Lougheed Highway and Barnet Highways in late September. The first of the new units are two to three years away from occupancy, however. Currently, there are about 683 total active listings on the Coquitlam market, including 151 new listings for condo apartments in September. Total home sales in September reached 142 homes, down 10% from a month earlier and 43% below September 2021. Condo sales are down 40% year-over-year and the benchmark price is 5.6% lower at $661,900. Detached houses, with 52 transactions, are selling at a benchmark of $1,779,200, down 8.4% from six months ago. This remains a seller’s market, however, with a sales-to-listings ratio at 44% and just a 4-month supply of homes.
Port Moody: Bucking a Metro trend, Port Moody saw total home sales leap 61% in September from a month earlier, though they were down 21% from a year before, with 53 transactions in September. The composite benchmark price was 5.4% lower than in April and 3% below August 2022, at $1,140,500. Detached houses are selling at a benchmark of $2,073,900, one of the highest prices in the region, but the price has been dropping slightly and steadily for six straight months. The inventory of total residential listings is down to 4-month’s supply in this seller’s market with a high sales-to-listing ratio of 60%.
Port Coquitlam: Just 40 homes sold in the smallest Tri-City community during September, down 36% from August 2022 and 49% lower than in September of last year. The benchmark house price posted the biggest drop in the Tri-Cities, falling 15.9% over the past six months to settle at $1,314,200. Townhouse prices are down 10.6% in the same period to $910,400, while condo prices have dropped 7.6% to $603,900, which is exactly the same as in the smaller Pitt Meadows community. The inventory is rising – new listings were up 20% from August 2022 and the sales-to-listing ratio is running at 40%. Technically a seller’s market, the sales and price trajectory indicate that buyers may find bargains this fall in Port Coquitlam.
Pitt Meadows: A mild sales rally in September, with transactions up 18% from a month earlier, disguises a quiet housing market as just 20 properties sold, down 51% from a year earlier. More homes are being listed, with 108 now on the market and new listings up 28% from August 2022. With the composite benchmark home price at $897,000, down 15% in the past six months, and the sales-to-listing ratio at 36%, this market is trending from a balanced to a buyer’s market.
Maple Ridge: One of the hottest housing markets over the past two years, activity as slowed as the pandemic eased. Sales were down 37% from year earlier, despite a 12% bump from August, for total transactions of 115 in September. Active listings, at 614 as of month end, were up from 320 at the same time last year and 2% higher than at the end of August. The composite benchmark home price has dropped 16.5% since April, the biggest price correction in Metro Vancouver. The typical detached house is down 17.1% in the same six-month period to $1,229,800. With a 5-month’s supply of total residential listings and a sales-to-listings ratio of 40%, compared to 79% in September 2021, Maple Ridge looks very welcoming to buyers.
Ladner: Ladner, where the local government is trying to revitalize the waterfront area downtown, has lost its bloom from the roaring housing market of a year or two ago. Total residential sales in September reached just 20 transactions, down 26% from a month earlier, 47% lower than in September 2021 and 62% below the pace in the midst of the pandemic in September 2020. Virtually no new homes, aside from subsidized rentals, are underway. Benchmark prices for detached houses are down 12.7% from six months earlier and dropped nearly 5% compared to August 2022, at $1,355,600. Townhouse prices have been declining about 1.5% month-over-month since spring, but condo apartment prices are holding relatively steady, up 1.1% from a year ago, at $708,900. This a balanced market with a sales-to-listing ratio of 50% and a 5-month’s supply of homes.
Tsawwassen: Total housing sales in September were down 63% from a year earlier and 16% lower than a month earlier to just 21 transactions, lower even than in September 2018, which is considered a 30-year low. Condo prices are holding their value – up 14% from a year ago and down just 0.4% over the past six months – but detached house benchmark prices have declined 8.4% since April to $1,540,500, and townhouse prices have dropped 10.3% in the same period to $932,900. New listings in September were down 8% compared to August 2022 and down 21% compared to September 2021. This is a buyer’s market, with a 9-month’s supply of homes for sale and a sales-to-listing ratio of 36%, down from 78% a year ago.
Surrey: B.C.’s second-largest city saw detached house sales drop by 67% in September compared to a year earlier, and down 18% from August 2022 to just 125 transactions. The average detached house price in September was down 4.6% month-over-month to $1,561,275. Both townhouse and condo apartment sales are now down 52% from a year ago and down about 20% from August 2022. Strata prices are holding firm, with the average townhouse price up 5.4% year-over-year and unchanged from a month earlier at $837,617. The average price for a condo apartment is down 4.1% from August 2022 to $517,742.