METRO VANCOUVER (NEWS 1130) – It seems Metro Vancouver real estate didn’t exactly stay down for the count.
Despite measures to slow the local housing market, there is more evidence it is ramping up again, and faster than anticipated.
“Since the bottoming out earlier this year, we have seen significant momentum building for the Lower Mainland / Metro Vancouver area,” says Bryan Yu, deputy chief economist for Central 1. “Sales have risen significantly, markets are tightening in terms of the sales-inventory ratio, and we think that prices are going to be following through 2020 and lifting values.”
The credit union’s latest BC Resale Housing Outlook points to a number of factors fueling the rebound.
“First of all, mortgage rates have come off substantially since a year ago, where many buyers are easily getting five year rates in the 2.5 to 2.6 per cent range. That’s been a significant driver for individuals waiting on the sidelines looking to get into the market. Adding to that has been a drop-off in home prices in the region by about 10 per cent.”
Yu says strong employment and pent up demand are also helping to offset the impact of the federal mortgage stress test and other provincial measures to dampen the Metro Vancouver real estate market.
Central 1 suggests local housing prices have already stabilized and Yu believes pressure is building in the market, especially for lower priced condos.
“We are currently expecting the median price through 2020 will be higher than it is in 2019 by close to 3.5 per cent, after about a 7.0 per cent drop this year. That momentum is building and sales will generally lead prices in the market as buyers start to pick out the units they want potentially get into some competition for those properties.”
The report forecasts a higher median BC home value of $542,000 for 2020 and $568,000 for 2021.
Housing starts were unscathed by the downturn, but the pace of growth will slow by 16 per cent in 2020, according to Yu.
While “a flurry of new construction” – driven by a surge in condominium construction in Vancouver – has lifted housing starts in 2019, many on-going projects were pre-sold in prior years when market conditions were stronger.
“Home ownership remains out of reach for many households,” says Yu. “Decades of insufficient construction of purpose-built rental building, rising price trends over the past 10 years and a growing population and economy continue to underpin a tight rental market despite rising rental construction trends in recent years. Mortgage stress tests have further added to rental market pressure with some would-be purchasers having to delay their purchase decisions due to more stringent qualification rates.”
Central 1 says the rental vacancy is at 1.4 per cent in the largest urban areas: Metro Vancouver, Victoria, Abbotsford-Mission and rent growth is expected to increase by between 4 and 4.5 per cent annually.
-With files from Richard Dettman