Will new supply define the Vancouver real estate market in 2024? This is the expectation from many housing experts on the West Coast. But while inventories are widely anticipated to increase, it may not translate into lower home prices.
In October, residential property sales surged nearly four per cent year-over-year, totalling close to 2,000 units, according to the Real Estate Board of Greater Vancouver (REBGV) data. Despite the jump from the same time in the previous year, this is approximately 30 per cent below the decade average for this time of the year.
Stronger sales activity was supported by a boost in new residential listings, which climbed more than 15 per cent year-over-year in October to above 4,000 units. However, some are not convinced that demand is robust in the western city.
“With properties coming to market at a rate roughly five per cent above the ten-year seasonal average, there seems to be a continuation of the renewed interest on the part of sellers to participate in the market we’ve been watching this fall. Counterbalancing this increase in supply, however, is the fact sales remain almost 30 per cent below their ten-year seasonal average, which tells us demand is not as strong as we might expect this time of year,” said Andrew Lis, REBGV director of economics and data analytics.
Residential property prices continued to be elevated in the home stretch of 2023. The composite benchmark price in the Vancouver real estate market advanced at an annualized pace of 4.4 per cent to just below $1.2 million.
Vancouver Real Estate in 2024
According to the RE/MAX Housing Market Outlook report for 2024, the Vancouver real estate market is forecast to see price growth but a slowdown in sales activity, proving that supply could continue to be an issue for one of Canada’s largest cities.
Next year, home prices are expected to climb two per cent in metro Vancouver to a little more than $1.52 million. Residential property sales are anticipated to tumble by three per cent.
By comparison, other British Columbia real estate markets are projected to be mixed. The Nanaimo housing market is projected to see a two per cent jump in prices and flat sales activity. In the Victoria real estate sector, home prices are slated to tumble two per cent, and sales are estimated to be flat.
Despite higher prices, the Vancouver real estate industry is forecast to remain in balanced territory throughout 2024. Here are some other trends that industry experts believe will be seen:
- Semi-detached homes and condominium suites will be in high demand in Vancouver.
- First-time homebuyers and move-up families will be one of the most significant drivers.
- Younger adults in the technology industry will be purchasing new luxury builds.
Of course, interest rates will remain a massive influence in Vancouver, says Tim Hill, Real Estate Advisor, RE/MAX All Points Realty.
“Not unlike many other markets across Canada, interest rates are a huge influence in the market here, in Metro Vancouver. For example, the recent pause on rates by the Bank of Canada (BoC) could cause bond yield to go down, which in turn should bring us lower fixed rate mortgages, which is a welcomed outcome for homebuyers, especially first timers,” said Hill in the RE/MAX HMO report. “It is anticipated that we will see a two per cent increase in overall price in 2024, while also seeing a decrease of three per cent in sales activity in 2024. The main causes for this are lack of housing inventory, and an increasing competitive market, which continue to drive demand.”
In October, the total number of residential properties listed for sale in the Vancouver real estate market surged nearly 13 per cent year-over-year. However, with approximately 11,600 active listings, this was only 0.6 per cent above the ten-year seasonal average.
New supply could be coming online, too, as new housing construction activity has been strong. According to the Canada Mortgage and Housing Corporation (CMHC), housing starts have soared 37 per cent in the first ten months of 2023 compared to the same span a year ago, totalling 28,121 units.
“With more supply in the form of resale inventory, and weaker demand in the form of slower sales, we’ve seen market conditions overall adjust towards more balanced conditions. It’s noteworthy that the multifamily segment remains more active than the detached segment at this time,” said Lis in a separate report. “While the highest borrowing costs we’ve seen in over a decade continue to constrain affordability, a silver lining for buyers is that price increases have abated with these more balanced market conditions, meaning purchasing power is holding steady for the moment.”
Is the Bank of Canada Cutting Interest Rates?
After the Federal Reserve signalled three rate cuts in 2024 following the December Federal Open Market Committee (FOMC) policy meeting, the futures market was already pencilled in that the Bank of Canada (BoC) would slash interest rates by early 2024. This could prove to be the jolt for the Vancouver real estate market next year, from solid new housing construction activity to lower mortgage rates that could entice prospective homebuyers.