Every quarter, the Urban Development Institute releases its detailed look at Metro Vancouver housing market trends, including economic indicators, new construction, MLS® resales and a local affordability index. The report is co-sponsored by Fortis BC and Glacier Media, and prepared by real estate and planning consultants Urban Analytics.
Here are highlights from the latest report, on Q4 2013. For more details, you can read the full version here.
Balanced New Housing Supply and Demand
Overall housing starts for the recent quarter ( 3,994) are down 7% from last quarter but are up 11% from the same period last year.
Metro Vancouver now has 2,112,200 residents. Population change over the past quarter (+9,100) remains positive and is trending with the 2-year average. Population growth in Metro Vancouver continues to be driven primarily by international migration.
Population change per housing start has ranged between 2.3 and 2.5 over the past three quarters . It is in our view the current trend of ratios ( 2.3 to 2.5 ) is generally healthy for the new home market and rental market.
Metro Vancouver housing starts and population change graph.
Consistent New Home Affordability
The UDI and Fortis Housing Affordability Index shows the percentage of households that can afford to buy. It's broken down by area: Vancouver proper, Inner Metro (North Shore, Burnaby, Tri-Cities, New Westminster, Richmond, South Delta) and Outer Metro (North Delta, Surrey, White Rock, Langley, Pitt Meadows and Maple Ridge).
Affordability is calculated using prices of actively selling new projects, household income statistics from Statistics Canada and assumed down payments and mortgage rates.
Urban Development Institute affordability index for new housing in Metro Vancouver
Over the past year, general affordability for new concrete condominiums in Metro Vancouver has remained relatively consistent, but has decreased slightly in Outer Metro and Inner Metro.
The increase in affordability of new concrete condominiums in Vancouver proper can be attributed to an increase in competition in neighbourhoods such as Southeast False Creek as well as an introduction of new supply in Vancouver East.
Similar to concrete condominiums, affordability for wood frame condominiums has remained relatively consistent over the past year.
Townhomes in Outer Metro Vancouver continue to be affordable for two thirds of working households.
Steady Economic Indicators
Interest rates remain marginally higher than historic lows. It is likely that Bank of Canada policy makers will desire a relatively weaker Canadian dollar and as such are not likely to raise interest rates in the near future.
TSX and Dow Jones are performing well and oil prices are above the key benchmark of $100 bbl.
Consumer bankruptcies are at their lowest total since 2008.
The Metro Vancouver unemployment rate moved down to 6.3%. Rates have been trending lower since late 2009.
However, note that the workforce participation rate (currently at 65.1%) is below the 10 year average of 67%. This gradual drop can be attributed to many factors, with the most significant being the baby-boomer generation entering into the retirement stage in greater numbers. Local, downsizing baby-boomers continue to have a significant impact on the local housing market.
The full State of the Market report includes statistics on new housing sales and inventory levels, broken down by housing type, along with REBGV and FVREB resale data. Find it here.
