Last week I was part of a presentation called shifting migration and purchasing trends that was hosted by the real estate board’s chief economist Keith Stewart. Before going into this month’s monthly newsletter I wanted to share some of the data that was discussed in the presentation, and share some graphs that help illustrate what is happening in our local real estate market.
Since 2015 we have been seeing the average lending rate for a 5-year mortgage anywhere from 2.5% to just under 4%. Last year we saw interest rates drop to as low as 1.5% and since spring they have been hovering around 2%.
What the graph below will illustrate is that over the last year with plunging interest rates short-term affordability has significantly improved. This has happened by allowing borrowers to increase their income multiple when looking for a loan, which gives them greater buying power. What this means is that everyone who qualified for a mortgage is able to borrow about 1x more than they have previously over the last half decade.
Home prices have begun to moderate (they had to) and we are not seeing the dramatic increases in prices that we saw last year. However, the market is still steady (as you will see below in the monthly report) and home prices are holding. As the world continues to finish the battle with Covid we will start to see immigration slowly begin to increase further into 2021, however, we do not expect immigration numbers to start to fully recover until 2022. As immigration begins to recover we can expect to see around 70k people annually land in the Greater Vancouver Area and call this home.
Monthly Market Report
Metro Vancouver’s* housing market saw more moderate sales, listings and pricing trends in July compared to the heightened activity experienced throughout much of the pandemic.
The Real Estate Board of Greater Vancouver (REBGV) reports that residential home sales in the region totaled 3,326 in July 2021, a 6.3 per cent increase from the 3,128 sales recorded in July 2020, and an 11.6 per cent decrease from the 3,762 homes sold in June 2021.
Last month’s sales were 13.3 per cent above the 10-year July sales average.
Moderation was the name of the game in July. Home sales and listings fell in line with typical seasonal patterns as summer got going in earnest in July. On top of moderating market activity, price growth has leveled off in most areas and home types. There were 4,377 detached, attached and apartment homes newly listed for sale on the Multiple Listing Service in Metro Vancouver in July 2021. This represents a 26.4 per cent decrease compared to the 5,948 homes listed in July 2020 and a 25.2 per cent decrease compared to June 2021 when 5,849 homes were listed. July’s new listings were 12.3 per cent below the 10-year average for the month. The total number of homes currently listed for sale on the MLS system in Metro Vancouver is 9,850, an 18.5 per cent decrease compared to July 2020 (12,083) and a 9.1 per cent decrease compared to June 2021 (10,839).
Low housing supply remains a fundamental factor in Metro Vancouver’s housing market. Home sales remain above average and we’re starting to see price increases relent as well. Going forward, the supply of homes for sale will be among the most critical factors to watch. This will determine the next direction for house price trends. For all property types, the sales-to-active listings ratio for July 2021 is 33.8 per cent. By property type, the ratio is 25.5 per cent for detached homes, 47.8 per cent for townhomes, and 37.3 per cent for apartments.
Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,175,500. This represents a 13.8 per cent increase over July 2020 and is unchanged from June 2021.
Sales of detached homes in July 2021 reached 1,050, a 6.3 per cent decrease from the 1,121 detached sales recorded in July 2020. The benchmark price for a detached home is $1,801,100. This represents a 21 per cent increase from July 2020 and is unchanged from June 2021.
Sales of apartment homes reached 1,666 in July 2021, a 19 per cent increase compared to the 1,400 sales in July 2020. The benchmark price of an apartment property is $736,900. This represents an 8.4 per cent increase from July 2020 and a 0.1 per cent decrease compared to June 2021.
Attached home sales in July 2021 totalled 610, a 0.5 per cent increase compared to the 607 sales in July 2020. The benchmark price of an attached home is $949,400. This represents a 16.7 per cent increase from July 2020 and a 0.3 per cent increase compared to June 2021.