Summer has officially begun and COVID appears to be almost under control. So what does this mean for the housing market in the months ahead? It’s true that summer is typically a time when the housing market slows down and this will likely be the case to some varying degree, although I still expect this summer to be busier than normal. Sanctions are being lifted, but as of writing this report the US borders are still closed and most people I talk to don’t have plans to travel beyond our BC borders. Sellers and buyers who have been avoiding the housing market due to fear of the spreading virus may now find these slower months the perfect time to enter the market. The only problem? We are still facing a huge housing shortage that is not going to get better anytime soon.
For those of you who have been on this mailing list for a while now you will be fully aware of my views on our current housing shortage, and the reason we have been experiencing sky-high housing prices. With local municipalities making it very difficult for developers to bring new properties to the market, whether it be through zoning regulations or years-long approval periods for permits, our housing shortage doesn’t seem to have a solution coming anytime soon. Although, I do have a few thoughts on that which I will be discussing next week. As borders begin to open again so too does the flood of new immigration. The federal government knows that if we want to keep our standard of living Canada’s population has to increase. We currently have an aging population entering retirement and there are not enough people in the younger generations to replace them in the workforce, and when you have a falling birthrate as we do it means immigration is the only solution.
There are approximately 300,000 people living in Hong Kong who hold Canadian passports and many of them are considering moving to Canada as a way of escaping political instability. As well, the current government expects 350,000 new immigrants to Canada each year, the majority of which are expected to settle in Toronto, Montreal, and Vancouver. So what does this mean for us? Well, I expect that our current housing market will only be facing more demand and prices will continue to climb until either the provincial government tries to step in and slow the market down through some sort of regulation, or take a carrot and stick approach with the municipalities (such as Vancouver) to encourage the cities to densify and remove red tape for developers.
July Market Report
While still elevated, home sale and listing activity in Metro Vancouver has eased back from the record-setting pace seen in March and April of this year. The Real Estate Board of Greater Vancouver reports that residential home sales in the region totalled 3,762 in June 2021, a 54 per cent increase from the 2,443 sales recorded in June 2020, and an 11.9 per cent decrease from the 4,268 homes sold in May 2021.
Last month’s sales were 18.4 per cent above the 10-year June sales average.
There were 5,849 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service in Metro Vancouver in June 2021. This represents a 1.1 per cent increase compared to the 5,787 homes listed in June 2020 and a 17.9 per cent decrease compared to May 2021 when 7,125 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 10,839, a 5.1 per cent decrease compared to June 2020 (11,424) and a 1.2 per cent decrease compared to May 2021 (10,970).
With low interest rates, a growing economy, and an improving job market, the Metro Vancouver housing market continues to enjoy solid economic fundamentals. We’re now seeing a market that’s beginning to normalize from the torrid pace in the spring. This is making multiple offers less common, allowing subjects to be seen on offers more frequently again, and is making new price records less likely.
For all property types, the sales-to-active listings ratio for June 2021 is 34.7 per cent. By property type, the ratio is 27.5 per cent for detached homes, 49.2 per cent for townhomes, and 37.1 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 $1,175,100. This represents a 14.5 per cent increase over June 2020 and a 0.2 per cent increase compared to May 2021.
Sales of detached homes in June 2021 reached 1,262, a 45.7 per cent increase from the 866 detached sales recorded in June 2020. The benchmark price for detached properties is $1,801,100. This represents a 22 per cent increase from June 2020 and is virtually unchanged from May 2021.
Sales of apartment homes reached 1,774 in June 2021, a 60.5 per cent increase compared to the 1,105 sales in June 2020. The benchmark price of an apartment is $737,600. This represents a 8.9 per cent increase from June 2020 and a 0.1 per cent increase compared to May 2021.
Attached home sales in June 2021 totalled 726, a 53.8 per cent increase compared to the 472 sales in June 2020. The benchmark price of an attached home is $946,900. This represents a 17.4 per cent increase from June 2020 and a 1.1 per cent increase compared to May 2021.