bc’s improving sales activity in 6 charts

Back in September we proposed that this year’s Fall housing market would be defined by a simple question: would buyers take advantage of modest interest rate cuts (to that point) and what were decade-highs in inventory, or would they continue to postpone their purchases in anticipation of more meaningful interest rate declines tomorrow? Well, with a few more months of resale market data in hand, it’s pretty evident that a considerable number of buyers have chosen the former. This Fall we’ve witnessed a clear change in the trajectory of sales across all three of BC’s largest housing markets, a sign that we may finally be turning the page on what has been more than two years of exceptionally slow activity.

First, some historical context. White hot sales in 2021 and the spring of 2022 were quickly extinguished by the Bank of Canada as a result of one of the most aggressive interest rate hiking campaigns in its history. Housing market activity in the second half of 2022 was in stark contrast to the first half, and annual sales would finish the year in the range of 31% (Victoria) to 38% (Vancouver) below record levels in 2021 (Kelowna was in the middle at 36%). That was followed by further declines in 2023, with annual sales in these three markets falling to or near their lowest levels in a decade. Through the first half of 2024, all markets were on pace to see their third consecutive year-over-year decline in sales as high interest rates and high home prices continued to restrain demand. 

But with inflation holding below 3% and clear evidence of deteriorating labour market and economic conditions, the Bank of Canada began reducing its trend-setting interest rate in June. Further easing of monetary policy in the six months since, in tandem with descending government bond yields, put downward pressure on mortgage rates and improved affordability for homebuyers. Relatively flat home prices over this period only augmented the increase in purchasing power that came with each incremental rate cut. Over time, this has had the effect of pulling more buyers off the sidelines, which has buoyed sales activity. 
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Greater Victoria

Nowhere has this effect been more apparent than in Victoria. Monthly sales through the first half of 2024 had largely moved in parallel with suppressed levels in 2023, but in the second half they have taken a decisively different track. As of the end of November, Victoria has seen five consecutive months of year-over-year sales increases, with the spread between this year and last year becoming more pronounced in the Fall. In October, sales saw their largest September-to-October increase in more than two decades and, as a result, were up 62% relative to October 2023. That momentum was carried into November with sales up 40% from the previous November.

The cumulative impact of this has been sales that resemble more typical seasonal levels. In October, sales were at or above their prior 10-year monthly average for the first time since April 2022 (that’s 30 months). That trend carried into November, with sales at their long-run average level for the second consecutive month. Though sales activity remains well-below average on a per-capita adjusted basis (the population of Greater Victoria has grown some 20% over the past decade), getting back to average on an absolute basis is a sign that the market is on the road to recovery. The region is on pace to see total annual sales increase by roughly 10% year-over-year in 2024.

⁠The Vancouver Region

Sales in Vancouver have also taken a different trajectory this Fall, though the recovery has not been as prolonged as in Victoria. The shift began in earnest in October with sales spiking 41% month-over-month, which was more than five times greater than the typical 8% September-to-October increase. Like Victoria, this was also the largest September-to-October increase in more than two decades and translated into sales that were 34% higher than October 2023. The trend carried into November with sales up 29% relative to the previous November, the second consecutive year-over-year increase.

With stronger housing market activity this Fall, sales in Vancouver have moved closer to their long-run monthly averages, though they still have a little way to go before fully closing the gap. In October, sales were 7% below their prior 10-year October average, the closest they have been to average since June 2023. Year-to-date, sales in the region are 20% below the prior 10-year average and are on pace to finish this year roughly in-line with total sales in 2023.

⁠The Central Okanagan

Finally, there’s evidence that improving buyer sentiment has even found its way to BC’s Interior this Fall, with sales activity picking up in one of BC’s most challenged markets. Sales in the Greater Kelowna region have tracked well-below 2023 levels for most of this year, but have clearly shifted upward more recently to post two consecutive months of year-over-year increases. Like its peer markets, Kelowna saw a sharp uptick in activity in October, with sales climbing 30% month-over-month versus the typical 6% decline. This too was the largest September-to-October increase in more than two decades, propelling sales 37% higher than October 2023. In November, sales posted another large year-over-year gain up 26% relative to November 2023.

Where Kelowna differs from its peer markets is that even with improved activity this Fall, sales remain a long way from their long-run average levels. The Okanagan market has been especially slow this year as a result of a steep drop in demand from secondary and investor buyers, prompted by higher interest rates and a series of restrictive government policies. Sales in November were the closest they have been to their long-run monthly average since June 2023, but this was still 18% below typical sales in November. Through the first 11 months this year, sales were down 30% relative to their long-run average and the market is on pace to see its third consecutive decline in annual sales.

⁠more improvements on the way

Over the next couple of months, we expect sales in all three of BC’s largest housing markets to trend similar to the way they have this Fall—large increases relative to the prior year, but still below their long-run average levels (with Victoria being the exception, where we expect sales to hover around average). Another 50-basis-point cut by the Bank of Canada at its final interest rate decision in 2024, and additional cuts expected into 2025, will continue to improve purchasing power in the months ahead while elevated inventory levels should keep a lid on prices. Stay tuned in the New Year for our rennie outlook and our official takes on where BC’s housing markets could be heading in 2025.