Vancouver’s housing supply crunch is resulting in fewer home sales.
According to the Real Estate Board of Greater Vancouver (REBGV), January home sales slowed from a record-setting pace last year -- something that correlated with a dwindling number of available properties in the pricey city.
REBGV says home sales totalled 2,285 in January, marking a 15% drop from December 2021 and a near 5% decrease from 2,839 in January 2021. It’s important to note, however, that January’s home sales were 25.3% higher than the 10-year average, says the board.
Vancouver’s real estate board recorded 4,170 new listings in Metro Vancouver last month, a figure that has dropped almost 7% from 4,480 homes last January but more than double December 2021, when just 1,945 homes were listed.
The total number of homes currently listed for sale on the MLS® system in Metro Vancouver is 5,663, a 31.85% decrease compared to January 2021 (8,306) and an 8.2% increase compared to December 2021 (5,236), according to REBGV. For all property types, the sales-to-active listings ratio for January 2022 is 40.3%. By property type, the ratio is 28% for detached homes, 51.6% for townhomes, and 49.7% for apartments.
"Generally, analysts say downward pressure on home prices occurs when the ratio dips below 12% for a sustained period, while home prices often experience upward pressure when it surpasses 20% over several months," reads REBGV's monthly market report for January.
Not surprisingly, home prices are rising in the west coast city. The benchmark home price climbed to more than $1.2M in January, up 2% from the month prior and 18.5% from January 2021.
According to REBGV economist Keith Stewart, the lack of supply coupled with homebuyers taking advantage of low interest rates while they last has resulted in the exceptionally tight market.
“Our listing inventory on MLS is less than half of what would be optimal to begin the year. As a result, hopeful homebuyers have limited choice in the market today,” he said, in a statement. “This trend is causing fierce competition for a scarce number of homes for sale, which, in turn, increases prices.”
When interest rates increase, many experts predict British Columbia's home sales could drop further -- BC Real Estate Association (BCREA) says as much as 25%.
“As we approach spring, we’ll keep a close eye on the impact of rising interest rates on buyers’ willingness to buy and on whether more home owners will opt to become sellers in what’s traditionally the busiest season of the year,” Stewart said. “With home prices reaching new highs in recent months, the need has never been greater for government to collaborate with the building community to expedite the creation of housing supply and provide more choice for those struggling to buy a home today.”
Of course, this applies not only to Vancouver, but the rest of the country as well; in December, there were fewer properties for sale across the Canada than any time on record.
