Condos alone can’t meet buyer demand
Sales of condominium apartments accounted for 53 per cent of all housing sales in Greater Vancouver in November 2021, with a 33.3% surge in transactions compared to November of 2020, but the record-setting sales pace may underline desperation in the market.
In the Fraser Valley, November sales of condo apartments were up 42.8% from November of 2020 and the benchmark price was up 21.7 per cent compared to November 2020.
We suspect more buyers are opting for a condo apartment because there is simply such little choice amidst unprecedented low inventory across all of Metro Vancouver. As well, apartments attract more investors than other sectors of the housing market, which further reduces the inventory. This is seen in pre-sales of new condo projects, in both Greater Vancouver and the Fraser Valley.
At least six new condo projects in Surrey, for example, completely pre-sold a total of 1,400 new condos since the summer. One high-rise project in central Surrey pre-sold 365 condos in a single weekend in mid-November.
Metro Vancouver saw 15 new condo projects, with a total of 2,525 units, released in October and this was followed by 1,796 pre-sale condos released in 13 projects in November. Yet Canada Mortgage and Housing Corp. reports that, even with 25,000 new condos under construction across Metro Vancouver, there were less than 1,500 condo units unsold as of November 1, the lowest level in three years.
As the demand increased, the price of the most affordable housing option has risen in step. As of November, the benchmark price for a resale apartment in Greater Vancouver was $752,800, up 11.1% from November of last year and 0.9% higher than in October 2021. In the Fraser Valley, the benchmark price for a apartment is now $530,400.
The average pre-sale price for a new condo in Metro Vancouver is now $1,050 to $1,150 per square foot, based on recent pre-sales. This means that a typical one-bedroom 480-square foot new condo costs around $500,000, and this average holds steady throughout most Metro Vancouver suburbs. Investors and owner-occupiers continue to buy due to expectations that prices will be even higher in the months and years ahead, which does appear certain due to the stubbornly low inventory.
The housing supply issue in Metro Vancouver is seriously out of whack with market demand. We have seen recent municipal and provincial government attempts to increase supply, but it is too little and too late to correct the current shortage any time soon.
Across Greater Vancouver the total inventory of homes for sale is stuck at a two month’s supply while the sales-to-listing ratio is running at 83% on average and cresting at over 100% in many markets.
With December looming, a month when listings traditionally fall to the lowest level of the year, Greater Vancouver will likely see the smallest ever inventory of homes to begin a New Year. The lowest we’ve seen at the start of a year is at 6,200 active listings. We will likely have less than 6,000 at the end of December which would translate into less than 5,000 active listings in Greater Vancouver when 2022 starts, after all the expired listings come and go at the end of December.
To put this in perspective, over the last six years, the average number of active listings to finish the year has been 8,440 while in the previous 20 years it’s been 12,015 homes.
If you have considered selling any type of property, list now and prepare for offers. If you need to wait until after the seasonal holidays, list early in January.
Highlights of the November 2021 house market:
Highest year-over-year detached house price increase in Greater Vancouver: Maple Ridge, up 34.1%
Biggest year-over-year detached house sales drop: Surrey, down 33.1%
Most expensive condo market: West Vancouver ($1.16 million)
Least expensive condo market: Surrey ($433,000)
Average sales-to-listing ratio, Greater Vancouver: 87%