The “fear of missing out” is one of the key factors driving buyers to snap up all available listings, resulting in the “frenzied” real estate market so far this year, according to a quarterly report by Urban Analytics on behalf of the Urban Development Institute.
UDI’s Q1 2016 State of the Market report, released this week, said, “While the current local economic factors seem reasonably strong, anecdotal analysis would suggest that the robust sales activity in the real estate sector of late can also be attributed to a ‘fear of missing out’ sentiment among prospective buyers in the marketplace.”
The report, which examines new home sales and housing starts in Metro Vancouver, observed that the local new home market set new records in 2016’s first quarter.
“A combined total of 6,231 newly built multi-family home sales were recorded in Q1 2016, up 18 per cent from the previous six-year record set last quarter. Frenzied home sales activity across the region has resulted in new lows for released new home inventory. At the end of the quarter, there were only 3,010 new multi-family homes available to purchase, down 64 per cent from the released 8,260 units recorded in Q1 2015.”
It added, “The townhome sector continues impress, with a record 1,268 sales reported in Q1 2016. Based on the 227 released and unsold new townhome units reported at the end of the quarter, there is an estimated two weeks’ supply of this product type in the market. Strong townhome sales can be attributed to a growing number of prospective purchasers seeking a family-oriented housing form and can no longer afford a single family home in the neighbourhood of their choice.”
The authors pointed to an overall increase in Metro Vancouver’s net population in 2016’s first quarter, up 7,200 people – although it noted that this is a slower rate of growth than the same period in 2015. It said this overall increase was attributable to a rise in interprovincial migrants, since international migration was negative in the quarter.
The report added that housing starts in the quarter were up 13 per cent year over year, resulting in the current ratio of 1.9 new Metro Vancouver residents per housing start, down from the 2.3 recorded in Q4 2015. “While this ratio is still considered to be healthy, it matches the previous four-year low and should be monitored closely to see if a potential trend is establishing,” reported the authors.
To read the full report, which includes detailed breakdowns of the Metro Vancouver housing market by property type and sector, click here