Positive signs beyond the headlines

While year-over-year sales were down 25% in the Lower Mainland last month, April marked the 4th consecutive month of the sales gap narrowing, with prices beginning to move upwards.

“Vancouver’s Housing Market is Dismal”; “From Boom to Bust”; and “The Losses Get Larger”. These media headlines following the release of the latest MLS real estate data for the Lower Mainland are both dramatic and certain in their assessments--but do they truly and accurately reflect the current dynamics in today’s market? In short, and with all due respect, no.   

Before explaining why, it’s always constructive to frame the Lower Mainland’s housing market with some basic truths based on empirical evidence. First, demand (sales) is lower than it was last year and compared to the past-decade average for April as buyers have remained patient and cautious. More specifically, the 3,141 total sales in the Lower Mainland (the area comprised by the Greater Vancouver and Fraser Valley real estate boards) in April 2019 was 25% lower than one year ago, and 37% below the past-decade average for April.

Second, supply (inventory) has expanded rapidly over the past year: the 21,324 listings in April were 36% higher than in April one year ago. An important note to make here is that despite the relatively steep increase in inventory on a year-over-year basis, today’s inventory is exactly in line with the past-decade average for April.

In response to these clear trends in supply and demand, prices have predictably moved downwards, with the all-property-type benchmark price for the Lower Mainland, at $955,400, was 7% below where it was at this time last year.

For many market followers, this narrative is already well-established; however, there are a number of key metrics that both provide additional perspective on current dynamics and hint at the medium-term direction of the market. Here are the 4 things you need to know.

1. With a 15% sales-to-listings ratio, Metro Vancouver’s market is balanced. While conditions favour buyers when it comes to more expensive homes, and sellers still have the upper-hand when it comes to the less expensive ones, the market is, overall, operating in a normal fashion.
2. The region has experienced 4 consecutive months of increasing sales, with April tallying the most sales in any month since July 2018.
3. As a result of the above, the sales gap versus 2018 continues to close: year-over-year in April sales were down 25%, the 4th straight month the gap has narrowed (from a high of 45% in December 2018).
4. Benchmark condo prices have now registered 3 consecutive monthly increases (marking the first time this has happened since the beginning of 2018); meanwhile, benchmark townhome prices registered their first month-over-month increase since June 2018.

While many would-be buyers continued to weigh their options in April (and with good reason: inventory was up for the 4th straight month), there is growing evidence that Metro Vancouver has reached, or is closing in on, an inflection point. In other (less nerdy) words, buyer patience may begin to wane in the near-term as activity picks up across the region.

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.

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.