Slow Sales & a Policy Push Though sales reached a three-decade March low last month, the year-over-year decline in sales moderated for the third consecutive month -- an indication of the market coming in for a soft landing.

As has been widely reported, the total number of sales in the Greater Vancouver board area in March 2019, at 1,734, was the lowest March tally since 1986. In a more recent context, it has now been 14 consecutive months that the region has recorded a negative (i.e. below-zero) change in year-over-year sales—bang on the average duration of sales slowdowns witnessed over the past decadeand-a-half.

As our slowdown is now distinctly average, and considering the region’s robust demographic and economic fundamentals, a change in market trajectory could be expected in the near-term. This notion is buttressed by the fact that March’s total inventory of available homes was, again, right at the past-decade average for March; furthermore, condo inventory actually remains constrained, at 6% below its historical average.

In diving below the surface of these high-level metrics, we see that the real ongoing story related to sales in Greater Vancouver has to do with price points: less expensive homes continue to attract demand, while the overall slowdown in sales has been driven largely by patient buyers at the high-end of the price spectrum (or those knocked down the price ladder by restrictive housing policy).

Indeed, reports of the demise of the Greater Vancouver housing market have been greatly exaggerated, as the market for homes selling for less than $500K remains strongly favourable to sellers (as measured by its 29% sales-to-listings [S-L] ratio). Furthermore, the market for homes selling for between $500K-$1M remains balanced, reflecting a sustainable environment that serves both buyers and sellers well. Rounding out the market are price points at $1M and above: it is here that conditions favour buyers, with a S-L ratio of only 8%--thus putting downward pressure on these higher prices as buyers weigh their options.

Price point is driving much of the current activity, indicating that buyers may be more comfortable committing (and more able to commit) financially when the stakes (i.e. prices) are lower and, hence, they are more willing to “compete’ for their new home. This is supported by data showing that homes under $750K are selling for 96% of their original list price, while homes at $750K and above are selling for only 94%. While this differential is not enormous, it reflects a dynamic that has prevailed since the middle of 2016, when the most recent slowdown in price growth began.

Despite softening prices, interventionist housing policy and the restrictive stress test implemented by the OSFI have created challenging buying conditions, particularly for first-time buyers. This has not gone unnoticed by the federal government who, as part of their 2019 Budget presented last month, introduced a plan to assist new market entrants make their first purchase. In a nutshell, the First-Time Home Buyer Incentive Program will involve a shared-equity mortgage with CMHC, with the federal housing agency providing interest-free loans of up to 5% for the purchase of an existing home and up to 10% for that of a new home.

At this point the details of the program are thin, and so too is the likely pool of beneficiaries; regardless, the plan represents the first buyer-side support— and acknowledgment of challenging purchasing conditions for many—from any level of government in more than a year. Though buyers will likely remain patient in the coming months, early signs of momentum for Greater Vancouver’s housing market may be starting to emerge.

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. View the latest editionof the rennie review.Each month, rennie intelligence produces the rennie review, which includes the latest real estate data for Vancouver and the Lower Mainland’s housing market. In addition to presenting detailed neighbourhood-level stats, the rennie review also includes current rennie projects, featured listings, client testimonials, our take on the latest market conditions, and more.