Let there be listings.
At the midpoint of February, this month was as much a dark horse to hit 2,000 sales in Greater Vancouver as Billy Mack was to hit the #1 Christmas Song in Love Actually. And like this movie being 20 years old, the sales and new listing amounts feel like they are from 20 years ago. Lack of buyer and seller engagement continues to be one of the significant stories in the market.
As we’ve said before, Metro Vancouver real estate doesn’t have a speculation problem, it has a holding problem. Buyers are holding real estate and not turning into sellers which results in significantly fewer homes available for other buyers to purchase. But government policy continues to go after the demand side instead of encouraging supply from the existing home stock. Expecting new home construction to fill the void isn’t enough nor is it realistic.
The long pause.
With the Bank of Canada holding its rate at 5 percent at the latest meeting, and with the U.S. holding at 5.5 percent so far this year, the wait continues as to when we might see the first rate cut. The sentiment is that it’s coming. Canadian and U.S. inflation is showing signs of easing, and with the Canadian economy showing signs of weakness, logic would say that rates should be coming down sooner rather than later. Employment numbers remain relatively flat, though, which isn’t helping in the obvious decision. Canada will likely wait for our neighbours to the south to make the first move, which may come in June when the U.S. has its more in-depth policy decision meeting.
Optimism is rising in the market.
There were 2,070 properties sold in Greater Vancouver in February after 1,427 properties were sold in January this year. This was a 13 percent increase from the 1,824 properties sold last year in February. Even with one more day in February this year, there were 103.5 sales per day compared to 96 sales per day last year. So we can’t fully thank the extra day in the leap year for a better February. There is more buyer engagement. The latter half of the month certainly produced more sales, with the last week of the month showing 116 sales per day - a sign the real estate market is continuing to show more activity. This was also the first month since August of last year where total sales were over 2,000, as the fall suffered the fate of two summer interest rate increases by the Bank of Canada. Optimism is gaining in the market as buyers simply need to move on – literally.
Even with this increase in activity, sales in February were 23 percent below the 10-year average, compared to 22 percent in January, 37 percent in December and 35 percent in November. We’re still within a slower moving market, and with a few more listings coming on this month, buyers were given opportunity. And moving forward, they should take advantage of it. February isn’t traditionally a strong month for sales, so expect March to produce more sales, even with spring break in the middle of it.
Increased sales are resulting in less supply.
With the increase in sales, we saw a drop to five months supply of homes overall in Greater Vancouver, falling back from six months in January and seven months supply in December. Vancouver’s West Side dropped down to six month’s supply from eight in January and Vancouver’s East Side declined to four months (a technical seller’s market) from six months in January.
West Vancouver produced twice as many sales in February, bringing supply down to nine months from 21. The perpetually under supplied North Vancouver dropped down to three month’s supply with condos there at two month’s supply. Further east, Burnaby and beyond have four month’s supply of homes available, with the Tri-Cities down to three. Maple Ridge is the anomaly with five month’s supply after significant increase in new listings – up 92 percent compared to February last year and 54 percent compared to January. Active listing counts are up 47 percent compared to this time last year. Buyers, Maple Ridge is where the opportunities are!
Even with the extra day in the month, we only saw 4,651 new listings in Greater Vancouver. This was well above last year’s February total of 3,559 new listings, so that’s a good sign that sellers are coming back, perhaps in response to an uptick in buyer activity. Multiple offers have been occurring in the market more than last fall, an encouraging sign for those sellers who were afraid to enter a quiet market. The challenge of giving up lower mortgage rates continues for many homeowners who are unwilling to accept a higher mortgage rate to make a move. As renewals begin over the next few months and years and as rates start to come down, we’ll see this pent-up supply start to release more into the market. For some sellers, it may be better to take advantage of a lack of listings now, come on the market and work with a mortgage professional to find the right rate in anticipation of lower rates in the next few years. Date the rate and marry the house, as they say.
An opportunity for sellers.
There were 9,634 active listings in Greater Vancouver at month end, after 8,633 active listings at the end of January and 8,283 at the end of February 2023. The detached market overall has come down to six months supply from eight, putting it into balanced market territory. Townhomes remain at four months supply and condos dropped to four months supply from five – putting both into seller market conditions. Depending on price point and area though, some may be more in balanced market conditions. Absorption rates for detached homes were 39 percent for the month, while townhouses and condos were at 48 percent and 47 percent respectively. All segments saw lower absorption rates compared to last year in February, because of more new listings this year. As a result, we are seeing a gain in the active listing counts. This could bring more buyers to the market - again, a good sign for sellers.
Will March be the lion or the lamb in the real estate market? With a sizable increase in both sales and new listings in February compared to the previous month, will March continue down that path? After the provincial budget was announced, buyers and sellers will continue to navigate an incredible amount of policy changes, with an anti-flipping tax of 20 percent to start in 2025. The likely effect of this in the years to come will be a reduced number of listings as sellers hold on to properties more than they already are. Perhaps we’ll see a push to sell before 2024 ends, though.
Increased thresholds for the Property Transfer Tax exemptions starting April 1st will help those buyers purchasing up to $835,000 for resale and up to $1.1 million for newly constructed homes. The first-time homebuyer incentive has been discontinued at the federal level, much to the dismay of Dawson Creek which was the only region of B.C. where the program worked. Goodbye to bad legislation. Unfortunately, that was not the same for the Foreign Buyer Ban as the Federal Liberals announced a further two-year extension on that program which will now run until the end of 2026. All of which does not help but hinder supply of homes, which is the biggest challenge in the housing market, ironically identified by the government too. Too bad policy doesn’t align with reality.
Read the full Dexter Realty report and see data from each Lower Mainland community.
