Market IntelligenceEconomy

Real (Estate) Talk with Ryan Berlin - January 2020

 

Jan 17, 2020

Written by 

Ryan Berlin

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A strong finish to 2019 sets the stage for positive start to 2020If it’s true that it’s not how you start but how you finish that really matters, then history will look favourably upon the Vancouver region’s resale market performance in 2019. 

The year did get off to an inauspicious start, characterized by six consecutive months of year-over-year sales declines, which extended that particular streak to 17 months overall. The cumulative effect of this trend yielded sales 23% lower than during the same period in 2018. Having said this, there were signs that market conditions were improving as the year progressed, with year-over-year sales declines (the so-called “negative sales gap”) shrinking as summer approached. Then, beginning in July and continuing through December, a new trend prevailed, with each month during this period registering sales that were in excess of the same month one year earlier. Once the ball had dropped on the new year, there were 37% more sales in 2019’s final six months than there were during the same period in 2018.

In the end, the number of sales in the Vancouver region in 2019 as a whole was 1.5% higher than in 2018. While not of a great magnitude, this result is perhaps some vindication for a market that continued to demonstrate strong demographic and economic fundamentals despite a protracted period of slow sales activity.  

Having said all of this, it’s important to acknowledge that 2019’s sales count was 30% below what was achieved in 2017, and 19% below the previous-decade average, so it would be a stretch to conclude that the market has, overall, returned to its natural equilibrium based on what we saw in 2019. Furthermore, there does remain a significant stock of pent-up demand throughout the region, at least insofar as measured by per capita sales. Despite December’s sales-per-1,000-residents ratio, at 1.38, sitting 1% above the long-run average for the month, each of the previous 11 months in 2019 registered a deficit, including in March when the per capita sales ratio was 45% below the long-run average for the month.

Despite the significant shift in demand conditions over the course of 2019, prices were, interestingly, largely unchanged: the benchmark price of a home declined by 3%, while the average price increased by 2%, over the past 12 months.

Based on the momentum built through the latter half of 2019, signs that at least some pent-up demand is poised to be released (as would-be buyers re-enter the market after months on the sidelines), and continued strong labour market conditions combine with near-record population growth, 2020’s resale market has been gifted a headstart over that of 2019. Of course it’s not how you start, but how you finish, that matters--so watch this space as we closely follow what promises to be a fascinating journey for Vancouver’s housing market in 2020. 

The rennie review is produced each month by rennie intelligence, which includes the latest real estate data for Vancouver and the Lower Mainland's housing market. 

Our rennie intelligence team comprises our in-house demographer, senior economist, and market analysts. Together, they empower individuals, organizations, and institutions with data-driven market insight and analysis. Experts in urban land economics, community planning, shifting demographics, and real estate trends, their strategic research supports a comprehensive advisory service offering and forms the basis of frequent reports and public presentations. Their thoughtful and objective approach truly embodies the core values of rennie.

Written by

Ryan Berlin

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