“Higher, higher” is not only the title of a favourite children’s book, but more recently also the mantra for the unstoppable pandemic housing market.
The real estate frenzy continued with astonishingly high sales and skyrocketing prices, pricing out young buyers and triggering calls for the government to step in with policies to temper growth.
Countrywide, home sales set a fresh record in March at 69,421 units, marking a 5.2% monthly gain and a 50% increase above pre-pandemic February 2020 levels.
B.C.’s performance is aligned with the broader picture due to low mortgage rates and pandemic-era changes in preferences, including demand for additional space and a move towards suburbs and smaller markets.
Households looking to buy or move up in future years may have also pulled forward purchases. Provincial sales reached a seasonally adjusted 14,090 units, up 7.8% from February and more than double pre-pandemic February levels. Regionally, the month saw a mix of performances among real estate board areas. Sales broadly rose, with Greater Vancouver sales up 22% as demand rotated away from the Fraser Valley after a huge February gain. Sales continued to rise in the northern and southern Interior markets but eased on the Island. Nevertheless, sales are at record highs across the province.
Supply conditions remained tight to drive price acceleration. While more sellers are testing the market, higher listings are being far outpaced by demand. Sales-to-inventory ratios are well into seller’s market conditions in all regions, with a provincial ratio above 60%. Typically, a range of 15% to 20% is considered a balanced market.
The average Multiple Listing Service price reached a seasonally adjusted $915,464, marking a 5% increase from February and a 20% ($154,000) rise above year-ago levels. A portion of this increase reflects sales of larger homes and more detached product, but the quality-adjusted housing price index also shows year-over-year growth of more than 10% in most markets, with an accelerating trend in recent months.
Prices will continue to lift but market conditions are expected to soften as we move toward the end of pandemic. •
Bryan Yu is chief economist at Central 1 Credit Union.