what you need to know about consumer sentiment in Metro Vancouver

• Buying intentions in Metro Vancouver are high and rising, particularly among the younger-adult and renter populations
• High interest rates are having an uneven impact on real estate decision-making
• Most people believe that home values will increase over the next year and that now is a better time to buy

Our recent survey of Metro Vancouver residents has yielded valuable insights into their housing market expectations and intentions, which in turn offer context for future market activity in this region.

THE SURVEY 

This spring, we completed our fourth semi-annual survey of consumer sentiment in Metro Vancouver (carried out by Mustel Group). As part of this, we surveyed 805 adults throughout the region about their views on the housing market, their personal finances, and how changing macroeconomic conditions are influencing their current and future housing-related decision-making. Below are some highlights from the survey.

THERE IS AN INCREASING DESIRE TO PARTICIPATE

Intentions to buy a home—that is, the proportion of respondents who are either in the process of buying a home or plan to in the next six months—have held relatively consistent over the past two years of our survey dating back to the fall of 2021, despite a changing macroeconomic landscape and real estate market that’s been through the ringer over that time period. 

As we’ve noted previously, buying intentions have increased modestly with each iteration of the survey, and that trend continued in the most recent survey period, with 39% of respondents indicating a desire to purchase. Buying intentions were highest among younger adults aged 18 to 34 (51%) and renters (44%).

Similarly, Intentions to sell a home—which includes those who are currently looking to sell their home as well as those planning to sell in the next six months—have been consistent over the past two years, having increased slightly from each of the previous two surveys, to 22%, in our most recent survey.

With MLS inventory in the Vancouver Region at an all-time low on a population-adjusted basis, the increase in selling intentions signals the potential for a much-needed expansion of supply in the coming months. That buying intentions continue to outpace selling inventions, however, suggests that market conditions aren’t terribly likely to favour buyers anytime soon.

HIGH RATES ARE FORCING SOME TO WAIT

While buying intentions, at 39%, are incredibly robust and reflect the presence of significant demand pressure, they are, at this juncture, merely intentions; they cannot be seen to directly translate to future behaviour. To wit, these 39% of survey respondents, when expanded to the population for the reign as a whole, would represent more than 461,000 households intending to buy—this, in comparison to the fewer than 45,000 MLS transactions that were realized in the Vancouver Region in the entirety of last year.

Unsurprisingly, one reason why some respondents might intend to purchase real estate in the next 6 months, but ultimately not follow through, is today’s high interest rates. In fact, more than half of respondents—56%—said that high interest rates are holding them back from buying and/or selling real estate. And, like buying intentions, those results are higher amongst the 18 to 34 age group (78%) and renters (68%).

This finding reinforces the reality that high interest rates don’t affect everyone equally. For example, first-time buyers and young adults (especially those who don’t have equity to leverage) are most impacted by the current high-rate environment.

RECALIBRATING EXPECTATIONS

Almost two out of three (60%) survey respondents indicated that they expect home values to be higher in one year than they are today. While this is about double the proportion from our 6-months-ago survey, sentiment has essentially returned to where it was one year ago. These views on home values are, in turn, having an impact on respondents' views about buying conditions—that is, whether they think it will be a better or worse time to buy residential real estate one year from now versus today. Sentiment on buying conditions has similarly shifted back to where it was 6 months ago, with just 20% of respondents today thinking it will be a better time to buy in one year compared with 38% who think it will be a worse time to buy in one year.

Respondents’ views on where interest rates will be one year from now are a mixed bag, with 40% expecting higher rates, 31% expecting lower rates, and 30% expecting future rates to be similar to today’s. These views reflect the uncertainty of this time, as well as the lack of unanimity on the message that will be sent by future data releases that will guide the Bank of Canada’s rate decisions. 

That the views of respondents on buying conditions in real estate have followed closely with their views on home values and not interest rates suggests that buyers’ perceptions of where housing prices are going are most important to them in guiding their decisions on

when

to buy. That said, while the direction of home values likely also impacts one’s intention to buy to some degree, currently-high interest rates still materially matter to would-be buyers—particularly younger ones and/or those of a first-time nature—through their impact on affordability.

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.