Patience, Prices, & Predictions
As it continues to normalize, Metro Vancouver's dynamic housing market is presenting opportunities for discerning buyers and strategic sellers. Where are things headed as we look ahead to the rest of 2019?
Housing data for February 2019 paint a picture of a complex and evolving real estate market in the Greater Vancouver board area. As we have noted in previous editions of the rennie review, Metro Vancouver’s economic fundamentals remain robust, with the region clocking a sub-5% unemployment rate and year-over-year employment growth of 2.2% (almost 40% faster growth than the Canadian average over this period). Indeed, it’s these strong fundamentals that differentiate the current market adjustment from previous adjustments that were precipitated by external negative economic events. This underscores, more than anything else, that the market is normalizing.
Against Metro Vancouver’s strong economic backdrop, patience abounds on the parts of both buyers and sellers; urgency is not a feature of many housing deals in the current market. Would-be sellers are waiting for the price they think best reflects fair market value for their home (and nothing less!), while would be buyers have more options to choose from than at any point in the past four years, making them a rather discerning group.
This patience has yielded, among other things, more opportunities to move up-market or to up-size as the pricing gap between multifamily homes and single-family homes closes. As noted in last month’s rennie review, the price gap has been narrowing for some time and, in fact, the ratio of townhome-to-condo benchmark prices reached its second-lowest level in the past 15 years in February. The detached-to-townhome benchmark price ratio has also narrowed, albeit to a lesser extent, though February marked the lowest ratio since early 2011. While downsizing is less of an obvious value play for those looking to cash in the equity they have built up in their homes over many years, strategic buyers looking for more space or a new product type are benefitting from these current conditions.
Looking ahead, March is shaping up to be a bellwether of the market for the remainder of 2019. While the year-over-year change in sales has been negative for the past 12 months (in layman’s terms, sales in each of the past 12 months were lower than those in the same months one year previous), there has been some evidence of this trend abating, with the trajectory of the market in early 2019 converging with that of early 2018. We don’t see sales bouncing back to 2017 levels in the near-term, but after 12 consecutive months of negative changes in year-over-year sales, and based on past periods of sales slowdowns, we expect to see the number of sales in March 2019 down only 20% versus those in March 2018. To the extent that this is how the market evolves, it could portend a soft landing in the medium term, with the year-over-year declines in prices slowing as well.
Of course, there’s a saying that the purpose of market forecasting is to make astrology look respectable. Maybe, but regardless of which way the data point next month, they will likely paint a clearer picture of where we’re headed for the rest of the year.
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 edition of 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.