Market Insights Report: April 2024

Sellers, assemble!

With more listings, there must be more sales! At least that’s what you’d assume. It’s not often talked about but the term pent up supply is something that showed to be true with the surge of listings in April. New listings in Greater Vancouver came on last month like we haven’t seen since the fast-paced market of 2021— up 41% compared to March — giving buyers far more to choose from in many areas.

Even with the continued hesitation from the Bank of Canada with perhaps signs of that first interest rate cut coming further out, buyers have some decisions to make. Wait it out or take advantage of long sought after listings and jump on the almost 2% lower fixed rate mortgages that have been available in 2024? Almost like the Canucks waiting for the perfect shot, buyers hesitate for a rate cut that realistically doesn’t impact the mortgage product of almost all buyers since fixed rates are not tied directly to the Bank of Canada rate. Perhaps the Bank of Canada’s first interest rate cut is a psychological move for buyers more than anything. Ask a mortgage broker, buyers are not taking up variable rate mortgages right now. That pent up demand can only wait so long.

Government policies could have a negative effect on housing supply.

On April 16th, the federal government released its annual budget, which included a host of promises on building more housing, renter protections and a proposed change in how capital gains are taxed. Going from 50% of the gains being taxed to two thirds being taxed on gains above $250,000 signals that wealth is the target of the federal Liberal government. There were ripples through the property market as some owners sought to sell properties prior to the June 25th potential change in capital gains treatment. Short term gain for long term pain.

While an attempt to fund programs and perhaps housing, this will be a disincentive to sell property and limit an already tight housing market from seeing more resale homes available for buyers. Metro Vancouver and many parts of Canada do not have a speculation problem, they have a property holding problem. Homeowners focus on keeping the properties they purchase, and this tax change will only intensify that focus. And with new federal and provincial anti-flipping taxes, again, this creates more of a disincentive to sell. Wrong policies at the wrong time. For those with the ability to purchase, it will only add to the value of the property you buy. As much as government policy tries to change the market, supply and demand will ultimately determine what the values are.

For renters, expect to see landlords selling at a greater pace and fewer buyers investing to provide private rental stock in the future. Today’s policies, both federally and provincially, do not bode well for the supply of homes going into the future. With fewer strata resale homes being built, more onerous regulations for landlords, and a signal that investment in the property market is not welcome by our governments, expect this to impact the supply of rental and resale homes.

Sales are picking up speed, setting the scene for an exciting May.

There were 2,831 properties sold in Greater Vancouver in April, following 2,415 in March and 2,070 in February. This was a 3% increase from the 2,741 properties sold last year in April after a year-over-year decline in March. This is the 4th straight month-over-month gain in the number of properties sold, showing more buyers being enticed to the market by greater selection and adjustments to the current fixed rate mortgages. And in looking at the sales during the month, the pace moved quicker after mid-month which should lead to May producing yet again a month-over-month gain in the number of homes sold. It’s likely we could see a repeat of the sales in last May at 3,400 – which would be the first month with over 3,000 sales since then. With the added number of listings, there will be more sales. Just don’t tell the Bank of Canada after its reluctance to decrease its rate during the spring for fears of heating up the spring market.

While April sales are up from last year, they were 12% below the 10-year-average after being 30% below the 10-year average in March and 23% below the 10-year-average in February. With demand increasing and even with an increase in the number of listings, multiple offers are still occurring. Some areas and product types continue to be in short supply, leaving buyers with the spectre of competition. We are still not yet at balance overall in the market, but buyers have the greatest opportunity they have seen in a long time – even with interest rates where they are. Detached homes and condos showed the same level of sales in April compared to last year, while townhouse sales were up 16% year-over-year.

Big jump in listings could keep prices flat.

Even with the increased listings in April compared to the previous month, there is still only four month’s supply of homes overall in Greater Vancouver, falling from 5 months in February and 6 months in January. Technically this is a seller’s market, but about as streaky a seller’s market as we’ve seen. It makes the Canucks look like a model of consistency.

If it seemed like there were more for sale and open house signs out there, that’s because there were 7,229 new listings in Greater Vancouver that came out in April. This was way above last April’s total of 4,399 new listings, producing another consecutive month of year-over-year increase in new listings. And this was the highest number of new listings by month since the spring of 2021, which was a real estate market like no other we’ve seen. Is this rush of listings fuel for a significant increase in sales? It will certainly add to the number of transactions and likely keep prices relatively flat over the next few months.

The number of new listings in April was 29% above the 10-year average. There was a feeling that many sellers were waiting for the spring market before listing, and that came to fruition in April. This is likely a result of pent-up supply and likely some sellers reacting to changes to government legislation for short term rental bans, tenancy changes, property flipping taxes and capital gains changes – oh my. What’s changed in real estate this year? More like what hasn’t.

Active listings are up significantly from last year.

There were 12,491 active listings in Greater Vancouver at month end, compared to 10,552 at the end of March and 9,634 at the end of February. The count of active listings is up significantly year-over-year, though, with 42% more than at the end of April 2023. The detached market overall has moved up to six month’s supply from 5.5 in March, keeping it in a balanced market. Vancouver’s East Side is bucking this trend though, sitting with four month’s supply and producing some interesting multiple offer sales. Townhomes remain at three month’s supply and condos stay at four month’s supply - keeping both in seller’s market conditions.

This is not yesterday’s real estate market. And while the numbers overall show seller’s market conditions, savvy buyers and sellers will find market activity will depend on the area and type of property. Look closely at the numbers to understand the market where you are. Absorption rates for detached homes were down to 33% from 44%, while townhouses and condos were down 44% and 42% from the previous month at 53% and 48% respectively. There simply are not enough townhomes being built in Metro Vancouver, and this will continue to be one of the most competitive segments of the market.

If April was the bellwether month for listings, will those April listings translate into May sales? Or will the continued hangover of the Bank of Canada pulling their interest rate carrot away keep many on the sidelines until that signal comes to start buying. If you are a buyer, ask yourself if you want to wait for everyone else or instead take advantage of a market that’s finally seeing some choice.

Read the full Dexter Realty report and see data from each Lower Mainland community.