B.C.’s housing market matches mid-2000s highs

After a scorching pace of early-year activity, housing demand in the Lower Mainland looks to have stabilized at a lower but still robust pace.

August Multiple Listing Service sales for the combined Metro Vancouver-Abbotsford-Mission region came in at 5,154 units, up 1.8% year over year and consistent with July gains.

While the sales trend is 35% below the March record, levels remain elevated and in line with previous cycle highs from the mid-2000s. Unadjusted August sales were nearly 50% higher than same-month 2019 and 35% higher than the August average for 2010-19. Low interest rates, pandemic demand for space (although moderating) and signs of higher condo apartment demand as investors look to the return of immigrants, students and tourists are supporting demand. At the same time, affordability erosion has priced more buyers out of the market, while less restrictive public health measures have pivoted attention away from the market.

Greater Vancouver real estate board data showed a 21% year-over-year increase in apartment condos sales as detached and townhome sales fell from a year ago.

Price growth has slowed with the declining sales cycle but has remained well supported due to low inventory. The average price came in at $1.1 million in August. This was up 1.4% from July, but the trend has slightly eased since the spring. This partly reflects types of homes sold and was still 12.5% higher than a year ago. The benchmark home value, which adjusts for quality of homes sold, rose 0.5% from July and came in 17% above year-ago levels. Apartments (up 9.4% year over year), lagged behind ground-oriented property growth, which exceeded 20%.

New listings have declined alongside sales as both buyers and sellers took a step back. Active inventory is sitting at four-year lows, which have kept the market firmly in favour of sellers and supportive of prices. The fall months could bring a substantial increase in listings as more owners take advantage of high prices and re-engage with the market, but unlikely sufficient to drive a price correction.

B.C. international trade flows pulled back sharply in July, pointing to a partial reversal of the strong upward trend of much of the pandemic. Based on Statistics Canada data, Central 1 calculated a 9.5% decline in goods exports from June while imports fell 7.5%. That said, trade volume far exceeds pre-pandemic levels, and year-over-year export growth reached 42.8%, while imports gained 11.6%. •

Bryan Yu is chief economist at Central 1 Credit Union.