Sometimes you just have to shake your head at the reports we read about the Greater Vancouver housing market. Such as quotes from regional politicians about how much they care about making homes more affordable while continuing to restrict supply. The latest knee-slapper is the supposedly surprising news that Greater Vancouver homeowners are far more likely to own multiple homes than anywhere else in the country, despite Vancouver being among the world’s most expensive cities for housing.
The reality, of course, is that Vancouver’s consistently elevated prices are the very reason some people want to own as many homes as possible.
What should be surprising is that more Vancouver homeowners don’t do the same thing, especially today with both mortgage lending rates and housing supply at incredibly low levels.
In Greater Vancouver the average value of a home—a composite of detached houses, condo apartments and townhouses—has increased by $351,000 in the past five years. Since July 2020, the average detached house price in Greater Vancouver has risen by $312,000, in a region where the average annual household income is $100,600.
In the past six months, the typical Greater Vancouver home has increased in value by 13%, while the annual interest rate on mortgage is less than 3%. Homeowners can do the math. Leveraging the existing equity in a home to buy another property makes sound economic sense. Many see it as only proven way to protect a family from the ravages of inflation. It shouldn’t be surprising.
In July, however, Greater Vancouver buyers of all types faced a dilemma: the number of new listings fell to the lowest level of any month this year, down 26.4% from a year earlier and 25.2% below the level in June 2021. Fraser Valley listings hit a 40-year low. It is normal in July for both sellers and buyers to take a summer breather, especially this year following record-breaking sale and price increases. July sales were down for the fourth straight month in a market distracted by great summer weather and the lifting of most COVID-19 restrictions. The concern, though, is whether there will be enough listings to meet the inevitable uptick in demand as the summer wanes.
The gap between listings and sales is tightening. In July only 4,377 new listings of all types of homes were added to the market, but sales totaled 3,372 transactions. Total active listings across Greater Vancouver are 12.2% lower than the 10-year average for July, while sales are 13% higher.
The result is that the July sales-to-active-listing ratio was 33.3% and this tightened to 37.3% for condominium apartments and 47.7% for townhouses, the most in-demand housing sector across the Lower Mainland. The benchmark townhouse price is now $949,900, up 16% – nearly $152,000 from the same month last year, a compelling reason for investors to buy another townhouse.
The problem is finding one. Aside from the lack of listings, there are only 1,149 new townhouses under construction in all of Greater Vancouver. In the City of Vancouver just 58 new townhouses have started this year. The townhouse shortage is acute in many markets where sales outstripped supply in July, including South Delta, Maple Ridge, Port Coquitlam, Port Moody and Whistler-Pemberton. In Port Moody, for instance, there were only 17 new listings for townhouses but 47 sales in the month, exhausting the total inventory of active listings. Many other markets, such as Coquitlam where July townhouse sales accounted for 95% of listings, are close to near-zero inventory.
Balance in our real estate market will never be achieved without some serious consideration on increasing the supply long term.