New Year, New Real Estate Market. Sort of.
As 2024 took hold, buyers appeared to embrace home buying more so than they did when 2023 began. Sales were up 39% in Greater Vancouver and 52% in the Fraser Valley year-over year.
Anticipation of future rate cuts were on the minds of many as they awaited the Bank of Canada’s first interest rate announcement in late January. And while some predicted the next Bank of Canada meetings in March and April could be the first rate cut since the spate of increases starting in 2022, sticky inflation and a Canadian economy sidestepping a recession could keep the current Bank rate in check until June or July.
Buyers don’t seem to want to wait, though, as market activity so far is indicating the pent-up demand can only hold off for so long.
Buyers braving winter.
There were 1,427 properties sold in Greater Vancouver in January this year. This was a 39% increase from the 1,030 properties sold last year in January. And this was the first month-over-month increase in sales since May of last year. You can only keep a good market down for so long.
Even with the deep freeze and snow event last month, buyers made their way out to go through the limited supply of listings, many surprised at how many were no longer available. As the temperature in January rose to finish the month, the real estate market seemed to see its temperature rise as well. Will February produce the first month with more than 2,000 sales since August? Likely yes, but that will require a few more sellers to jump into the market.
With this increase in activity, sales in January were 22% below the 10-year average, compared with sales in December and November that were 37% and 35% below the 10-year average respectively. The trends and numbers certainly show an increase in buyer activity. Stats don’t lie.
Sales are increasing but supply is needed.
With current sales, we continue to be in a balanced market with six months supply of homes overall in Greater Vancouver, falling back from seven months supply in December.
Vancouver’s West Side was higher in the region at eight months supply, while West Vancouver saw its lowest monthly sales since December 2008, clocking in at 21 months supply of homes available - a severe buyer’s market. Meanwhile its neighbour next door, North Vancouver, maintained four months supply, doing its best seller’s market imitation.
Burnaby North and South, New Westminster, Port Coquitlam and Ladner all finished January with four months supply of listings. Ladner didn’t see any condo sales in January, but then again there are only eight active listings and there were no new listings in December, proving you can’t buy what isn’t available. Pitt Meadows has the lowest supply in the region with only three months worth of listings available for buyers shopping in that city.
With the precipitous drop in total listings we saw through the last two months of 2023, January saw 3,875 new listings. This was the third lowest number of new listings for the month of January since the year 2000, but it was slightly higher than the number of new listings in January last year at 3,384.
The number of new listings in January were 13% below the 10-year average, which is an improvement from December with the number of new listings in that month being 25% below the 10-year average.
An opportunity for sellers.
There were 8,633 active listings in Greater Vancouver at the end of January after seeing 8,802 active listings at the end of December. It’s rare to see the total number of active listings end lower in January than in December, but after several listings expired at the end of December, January started with 7,828 active listings. And with fewer new listings in January than is typical, that hole is hard to dig out of.
Perhaps it’s a signal to sellers that the opportunity to list their home on the market is better than we’ve seen over the last year. Buyers are shopping and hoping that more sellers will list.
The detached market overall remains in buyer’s market territory with eight months supply of inventory, down from nine months in December. Townhomes slipped down to four months supply and condos continue to sit just above five months supply of listings.
The missing middle (eg. townhomes) had a 42% absorption rate in January with sales up 82% compared to January last year. This was higher than detached homes (33% absorption and sales 28% higher) and condos (37% absorption and sales 30% higher). Perhaps the provincial government’s small-scale, multi-unit housing plan should have focused on building more townhomes and row homes than three to six unit buildings scattered throughout the region.
As we start February, groundhogs in Canada indicated that we would see an early spring. Will we also see an early real estate market? The thought was it would depend on interest rates starting their decline. Despite a little more uncertainty as to when that might happen, buyers seem to be wanting to get on with finding their first or next home.
January was an indication that buyers are back, but the question remains – where are the sellers? A slower decline in interest rates may produce a more balanced market, as long we see more listings come on the market. The sudden rise in interest rates is keeping supply out of the real estate market, not just resale, but the much-needed new product that will fuel buyers in the years to come.
Bank of Canada governor Tiff Macklem recently said that high interest rates aren’t to blame for the housing crisis and that it can’t solve the housing crisis with interest rates. That seems to fly in the face of the fact that elevated interest rates are keeping new development at bay as higher interest rates add to the cost of housing and risk for developers. The extension of the Foreign Buyer ban until 2027 may also limit supply instead of providing more. The host of government regulations have not helped to build more supply in the real estate market and is doing the opposite.