The current high interest rate environment continues to contribute to a slower pace in the newer, entry-level resale market as prospective buyers cautiously monitor the market for deals, awaiting clarity on future rate decisions.
March finished with total inventory five percent higher compared to the previous month, driven mainly by a twelve percent surge in the one-bed condo market. Despite this, sales in the monitored markets remained relatively stable, with a total of 301 homes changing hands in March 2024. However, it's essential to note that sales are nearly 20 percent lower compared to the same period last year.
The newer, entry-level resale market continues to provide excellent buying opportunities for those willing to navigate the higher interest rates for the foreseeable future. There are instances of newer condos trading near or below replacement value. For instance, in Surrey City Centre, there have been several sales of two-bedroom condos trading in the $850 per square foot range, while comparable homes in new presales are priced closer to $1,050 per square foot.
Having said that, when comparing resale prices of one and two-bedroom condos to recently launched presale projects across most Metro Vancouver markets, there appears to be a diminishing premium between the two options. This trend is attributed to a slower and more competitive presale market, with developers introducing pricing incentives to stimulate demand. Consequently, this presents an opportune time to invest in presale properties, especially those with a 2-4+ year completion timeline, allowing purchasers to navigate the current interest rate environment while securing the most competitive pricing.
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The newer, entry-level resale market continues to provide excellent buying opportunities for those willing to navigate the higher interest rates for the foreseeable future. There are instances of newer condos trading near or below replacement value.
Manraj Dosanjh
Dexter Realty
Extreme sellers markets for townhomes in key Metro Vancouver neighbourhoods.
Nearly half of the available supply of newer, entry-level townhomes is located south of the Fraser (Surrey, South Surrey, and Willoughby, Langley). These are also the only three markets where you will find entry-level townhome supply for less than $1,000,000. This pattern also holds true for most new townhome presale supply being brought to the market.
New presale townhome product is limited north of the Fraser, with Coquitlam being responsible for the majority of the new supply. The median list price of newer, entry-level townhomes in Coquitlam is $1,200,000, the most affordable north of the Fraser.
South Surrey and Willoughby are extreme seller’s markets with sales-to-active ratios of 48 and 50 percent respectively. This surge in sales activity has led to increased interest at newly launched townhome communities in these areas.
North of the Fraser, Richmond and North Vancouver also face a supply shortage, with sales-to-active listing ratios of 29 and 50 percent respectively. Vancouver’s Westside is the only tracked sub-market in a buyer’s market, with only one sale recorded in March 2024 and 35 active listings reported at the end of the month. The median list price is $1,799,900, the highest in the region.
An opportunity for buyers looking for newer one-bed condos.
The sold-to-listings ratios, which indicate a balanced, buyers', or sellers' market, decreased over the month in the one-bedroom condo segment, signaling a shift towards a more balanced market. This might indicate that both first-time home buyers and investors, who are particularly active in this sector, are stepping back as they wait for more clarity on future interest rate adjustments.
This trend was notably evident in Willoughby, Langley, and Coquitlam, where sales saw a significant decrease and inventory experienced growth throughout the month.
The median sale price of newer one-bedroom condos in East Vancouver in March 2024 was the lowest among all markets north of the Fraser River, standing at $586,000. Transit-friendly areas such as Coquitlam, Burnaby and Richmond all recorded median sale prices higher than East Vancouver.
Over the past five years, Willoughby, Langley, has seen the strongest median sale price growth at 52 percent, while Downtown Vancouver has the weakest at eight percent. In South Surrey, there's only one newer one-bed condo listing, highlighting the need for new supply in this growing pocket of the region. This a greenlight for presale purchases in the neighbourhood.
A lack of townhomes puts pressure on the two-bedroom condo market.
Increasing prices in the townhome sector will continue to exert more pressure on two-bedroom condo prices as buyers adjust their affordability expectations. The lack of townhome product north of the Fraser is a significant factor driving the active two-bedroom condo market in areas such as Coquitlam, Burnaby, and North Vancouver.
Burnaby accounts for 25 percent of all available two-bedroom supply and nearly one-third of all sales that occurred in March 2024.
Similarly, as was the case for one-bedroom condos, Willoughby, Langley experienced a significant increase in newer, two-bedroom condo inventory over the month, rising by 50 percent to 45 listings by the end of March.
For those deliberating between one or two-bedroom condos, Willoughby, Langley presents the smallest price gap at $154,000, whereas Downtown Vancouver demands up to $800,000 for the additional bedroom.
Big opportunity for buyers in the market for newer single-family homes.
The newer, entry-level single-family market continues to be dominated by buyer’s market conditions across Metro Vancouver to start 2024. This is a stark contrast to the same time last year when six out of the nine markets tracked were all seller’s markets.
Newer, entry-level single-family sales decreased by 15 percent over the month and are down 34 percent compared to March 2023. Primarily driven by young families seeking more space, the entry-level market remains a challenging product type to get into given today’s mortgage borrowing requirements.
Surrey presents the most affordable entry point with a median list price of $1,689,000 at the end of March 2024. Westside Vancouver is the most expensive at just under $4,000,000.
There’s nearly a $700,000 to $800,000 price difference between entry-level townhome and single-family homes in Fraser Valley markets. This will continue to put pressure on demand for townhomes in areas such as South Surrey and Willoughby, Langley.
Reasons why you should consider newer-home resale data:
- Facilitates wise choices in new pre-sale purchases by providing valuable comparables, offering insights into product considerations for both personal use and investment.
- Great for those looking to purchase housing that is still in the early stages of its lifecycle – this means less repairs & maintenance during the first few years of ownership.
- More recent building and developer history – provides assurance and certainty when making one of the most important transactions of your life.
- Homes include some of the latest design and technology – great for resale value.
- Monthly sales statistics crucial for evaluating and planning new housing developments.
- These figures are routinely used by industry stakeholders such as real estate developers to understand the value of land, and anticipated market values for newly completed homes.
Read more market insights by Manraj Dosanjh
