It’s Deja-vu as November sales mirror 2018
As Peter (Yogi) Berra famously said, “It’s Deja-vu all over again” but in this case it is in comparing Metro Vancouver’s housing market in November 2018 and what we are experiencing today. 2018, after all, was also a down market and that November’s housing sales across Greater Vancouver totalled 1,633 properties, eerily close to the 1,625 homes sold in November 2022. November of 2018 was also close to the end of a “normal” real estate market before the entire planet caught a fever that upturned housing sales and prices around the world.
Here is the statement from the Real Estate Board of Greater Vancouver (REBGV) in November 2018, which will sound very familiar today:
“Home buyers have been taking a wait-and-see approach. This has allowed the number of homes available for sale in the region to return to more typical historical levels,” the REBGV Chair said at the time. “This activity is helping home prices edge down, across all property types, from the record highs we’ve experienced over the last year.”
Deja-vu indeed. But there is one big difference. In November 2018, the benchmark detached house price in Metro Vancouver was $1.5 million and townhouses sold for $818,500. This November, houses were selling at a benchmark of $1.65 million and townhouses at $1.07 million. The typical condo apartment now sells for $60,000 more than it did four years ago.
Buyers should not make the same mistakes most did near the end of 2018 and pull away from a declining market. Those that bought into that dip were soon glad they had.
Yes, Metro Vancouver has returned to a rather staid sales and price environment, but things are stirring that may very well see sales and prices surpass even pandemic levels: these include immigration and a housing shortage, both hot issues that may come to a boil in 2023.
Recent data from Zonda (formerly Urban Analytics) showed that Metro Vancouver’s population will increase by 40,719 persons in 2023 (mostly due to record levels of immigration and migration from other provinces), while the number of new strata housing starts will be just 13,667 units and this gap will widen in 2024. Over the next three years, in fact, we will see a shortage of more than 27,000 rental and strata homes needed to keep pace with population growth.
Meanwhile new MLS® listings in November across Greater Vancouver were down 23% from a month earlier and 22% a year earlier. In the Fraser Valley, there were just 1,703 new listings, a decrease of 22% compared to October 2022 and a down nearly 19% from November 2021.
It is up to the private sector to deliver the necessary new housing, but developers are hamstrung by massive increases in government fees and charges on new development, significant construction cost inflation, high interest rates, lengthy project approval timelines and shortage of skilled construction workers. Some vendors are reluctant to list because they are waiting for prices to recover: however, we expect many are about to pull the trigger.
The provincial government has now waded into war on supply by eliminating the ability of a strata corporation to enforce a rental restriction and age restrictions (save being 55 plus). With this came a promise of thousands of properties that will come to market, the reality is like that it may just be a few hundred. And those first-time home buyer/occupiers will be competing for units with investors as these formerly restricted units now become open for all.
An indication of how quickly prices have changed is a recent notice from the BC Assessment Authority, which is preparing homeowners for sticker shock when assessment notices are mailed out in January. The caution reads
“2023 property assessments will be up in value about 5% to 15% for most homeowners despite the current declining real estate market – the reason being our legislated July 1 (2022) valuation date.”
The best advice: buy a home this winter when everyone else feels frozen out of the market. Sellers will welcome you with open arms, and you will be glad you purchased, likely sooner than you expect.
Highlights of the November 2022 report:
- Every condo can now be a rental, opening investor opportunities
- Gap between population growth and housing supply widening
- November sales second lowest for that month since 1987
- Richmond seeing sales recovery as foreign buyer ban looms
- Some markets are experiencing the lowest average prices in years
Here is a look at the regional markets and numbers:
Greater Vancouver: There were just 1,625 properties sold of all types in November compared with 1,923 sold a month earlier and 3,492 sales in November of 2021. Other than during the financial meltdown of 2008, where only 930 properties sold in November, the only November with a lower-sales level was 1987. Yes, 1987. Do you think there may be some pent-up demand building in the market? What’s interesting is how uneven sales are throughout the region. Some areas saw more sales this month compared to September. There is life creeping back into the real estate market. Just don’t tell the Bank of Canada (BOC), which is preparing the seventh increase in lending rates this year on December 7. We expect the increase will be 25 basis points, but it could go as high as 50 basis points if the BOC suspects the economy is improving and inflation is easing. The number of new listings in November dropped from October, 4,109 to 3,141 – far lower than the 4,036 in November 2021. The overall sales-to-new-listing ratio in November was 17.6%. By property type, the ratio is 13.2% for detached homes, 19.7% for townhomes, and 20.8% for apartments, while the composite benchmark is $1,131,600. This is a 0.6% decrease from November 2021, a 10.2% decline over the last six months, and down 1.5% compared to October 2022. Basically, this means a buyer’s market, with less than one of five homes selling and prices falling month-over-month since the spring. But, as the Chair of the Real Estate Board of Greater Vancouver noted, in respect to rising immigration and the shortage of listings, “our market remains one demand surge away from renewed price escalation, despite the inflationary environment and elevated mortgage rates.”
Fraser Valley: Total home sales in the Valley were down 7% from October 2022 and off a whopping 57.5% from a year earlier, at just 839 transactions this November. New listings in November, at 1,703, were down 22% from October 2022 and down nearly 19% from November 2021. November ended with a total active inventory of 5,330, a 5.5% decrease compared to October, but 75% more than at the end of November last year. As for benchmark prices, at $1,404,900, the price for a detached home was down 2.2% compared to October 2022 and off 6.3% compared to November 2021. The townhomes benchmark price, at $799,400, was down 1.3% compared to October 2022 but up 3.3% from November 2021. At $518,400, the benchmark condo price decreased 1.8% compared to October 2022 and was up 5.2% from November a year earlier. Despite the slower action in November, the only Fraser Valley market with benchmark detached house prices under $1 million is Mission, at $941,200, a price up 43% from pre-pandemic 2019.
Vancouver Westside: Total housing sales in November were down 11% from a month earlier, at 342 transactions, the lowest level for the month since 2018. New Listings in November were down 13% compared to October 2022 and, due to slow sales in the two previous months, total active listings were 2,300 at month end, compared to 2,191 at that time last year and 2,355 at the end of October 2022. There is now an 8-month supply of homes on the market and the sales-to-listing ratio is running at 41%. If we ignore the historic pandemic market upswing, the benchmark detached house price, at $3,127,400, is up 10% from November of 2019 but has fallen 10.4% over the past six months. Benchmark townhouse prices are up 17.3% from three years ago but down 6.7% since June of 2022; condo benchmark prices are up 8.3% from 2019 but down 9.2% from six months ago. Something to watch: Vancouver’s new mayor and council are looking to overhaul the city’s Community Amenity Contributions to a less cumbersome fixed-rate charge for low-and-mid-rise strata projects, rather than time-consuming project-by-project negotiations.
Vancouver East Side: Wow, housing sales reached just 167 transactions in November, 14% lower than in October 2022, 57% below November of 2021 and even 8% lower than in November 2018. We find this hard to explain. By all measures the East Side should be much stronger: the new SkyTrain Subway coming; the new $2 billion St. Paul’s hospital underway; and provincial legislation that will allow higher density on detached house lots are among the reasons. The benchmark detached house price is now $1,716,500, about half the price as the Westside of the city and down nearly 12% from six months ago. One can buy an East Side condo apartment at a benchmark of $682,700, which is lower than North Vancouver, Burnaby, Richmond, South Delta and even Port Moody. There are some stirrings, however. With total new listings down 24% from a month earlier, the sales-to-listing ratio is above 50% for both detached houses and condos. Prices and sales should begin to increase in what is technically a seller’s market, but which we see as a buyer’s opportunity.
North Vancouver: November housing sales were 149 and new listings were 252, resulting in a sales-to-listing ratio that ranged from 29% for townhouses to 61% for condos and 79% for detached houses. By any measure this remains a seller’s market, though the composite home price has fallen10% over the past six months, to $1,326,100. There is a total 4-month supply of residential listings, which indicates a tilt towards a more balanced market.
West Vancouver: Only 28 homes sold in exclusive West Vancouver, where the composite home price in November was down 10% from six months earlier at a lofty $2,602,300. The typical detached house sells for $3,127,800, 19% higher than in pre-pandemic November 2019, but down 3.5% from November 2021. The inventory of residential listings is at a 25 month’s supply in this buyer’s market, where the sales-to-listing ratio is 25%, down from 70% in November 2021.
Richmond: The federal Prohibition on the Purchase of Residential property by Non-Canadians Act, passed earlier this year, comes into effect January 1, 2023. The Act bans foreign home buyers for two years, with fines of up to $10,000 for any industry player working with a foreign buyer. Total lunacy, when one considers that Ottawa is trying to boost immigration levels to record highs, but that is government for you. Richmond traditionally has a larger share of foreign owners than most of B.C. and we expect a small surge in foreign transactions by year-end, despite the onerous 20% tax on foreign home buyers. Sales in November were the same as in September 2022, though down 14% from October, at 210 transactions. The composite home price is $1,107,300, down 7.4% from six months ago. However, the sales to new listing ratio is 70% and there is 5-month’s supply of homes listed for sale, with new listings down 35% from October 2022 and down 42% from a year ago. We are calling this a balanced market, with a chance for a sales rally before year-end.
Burnaby East: Just 14 homes sold in November, the lowest for the month in years and even 18% below November 2018 and a startling 68% less than in November 2021 and 32% below October 2022. Still, more homes are being added to the market, with a total inventory of 88 properties at month’s end. The sales to listing ratio is 38%, also the lowest level in at least four years, and there is a six-month supply of residential properties on the market. November’s composite home price, at $1,107,700, was nearly 10% less than six months ago and down 1.6% from October 2022.
Burnaby North: Total housing sales in November were 92 – down from 96 (-4%) in October 2022 and down from 137 (-33%) in pre-pandemic November 2019. The average detached house price is 30% higher than three years ago, but down 9.2% from May 2022, at $1,992,100 as of November. Condo sales dominate this market, mostly due to rapid development in the Brentwood area. Condo benchmark prices are now just 6% higher than a year ago, at $704,600, but have been declining steadily at 1% for the past six months. New listings were down 20% compared to October 2022 and 26% below November 2021. This is considered a balanced market with a sales-to-listing ratio of 48% over the past two months.
Burnaby South: Metrotown in Burnaby South is considered downtown Burnaby and the huge tower developments taking place attest to this. Land prices have soared: recently a 1.8-acre high-rise mixed-use residential land assembly at the corner of Willingdon and Kingsway Avenue sold for $145 million, or a stunning $80 million per acre. The current housing market is subdued, however, with November total sales down 3% from October 2002 and 23% less than in November 2021, at 118 transactions. The benchmark condo price is $752,300, unchanged from October 2022, but up 6% year-to-year and 27% higher than in pre-pandemic November 2019. Townhouses sell for $994,200, highest benchmark in Burnaby, and detached houses demand a benchmark of just over $2 million. This considered a seller’s market, as there is only a 4-month’s supply of total listings, and the sales-success ratio is running at a healthy 68%.
New Westminster: It is not only housing sales, which fell 73% year-over-year in November to just 65 transactions, but housing starts that are worrisome in the Royal City. So far this year just 702 new homes have started in New Westminster, down from 1,327 at the same time in 2021. Condo starts are down 60% to 535 this year, but, thankfully, townhouse starts have nearly doubled to 106 units. New listings in November were down 12% from a month earlier and the total inventory, at 292, was 6% lower than in October 2022. After a 36% run-up over the past three years, the benchmark detached house price is now only 1% higher than a year ago, at $1,444,500 in November. Condos prices have slipped down 6% in the past six months, to a $628,600 benchmark, while townhouse prices are still up nearly 10% from a year ago at a benchmark of $893,200. With about a 4-month supply of total listings and a sales-to-listing ratio of 51%, New Westminster is a seller’s market and will remain so if listings remain low.
Coquitlam: Fast-growing Coquitlam is looking at changes – read increases – in development cost charges in 2023, but it is not likely to slow construction. This year more than 3,500 new homes have started in Coquitlam, including 3,000 apartments, nearly double the pace of 2021.
As is the case in most markets, November sales were down, dropping 32% from October to 134 transactions, almost identical to November 2018 (135). The composite home price, at $1,057,000, is virtually unchanged (up 0.5%) from a year ago and 32% higher than three years ago in pre-pandemic November 2019. New listings in November were down 27% compared to October 2022 and 24% lower compared to November 2021. With a sales-to-listing ratio of 54% and a total inventory of 582 homes, this is a balanced market.
Port Moody: A 59-lot land assembly at Coronation Park has closed, four years after the detached houses were sold at an average of $2.6 million each, because the land development was finally approved. Now, of course the developer must go through rezoning and public hearings. So far this year 254 new multi-family homes have started in Port Moody and the city’s resale condo inventory jumped 21% month over month to a 7-month supply, the most new listings since May. A new city council has amended the city’s Development Approval Procedures Bylaw to allow applications to bypass review by the Land Use Committee and Advisory Design Panel, if they are being held up by an inability of the committees to meet. Housing sales in November fell 25% from month earlier and 46% year-over-year to just 33 transactions. The benchmark composite home price is $1,098,000, down 10% from six months ago, while the typical condo sells for $695,200, the highest price in the Tri-Cities and up 3.3% from a year earlier.
Port Coquitlam: Port Coquitlam is among the rare Greater Vancouver markets where the composite home price is below $1 million, at $894,300 in November. That failed to excite buyers, though, as sales fell to 39 transactions, down 37% from a month before and 69% lower compared to November 2021. Active listings at the end of the month totaled 183 properties, nearly unchanged from October 2022, though new listings were down 25%. This is a balanced market trending to a buyer’s advantage with a 5-month supply of properties and a sales success ratio above 40%.
Pitt Meadows: Aside from the Sunshine Coast, Pitt Meadows has the lowest composite home price in the Greater Vancouver region, at $865,300 in November. A drop in overall benchmark prices this year – down 13.2% in the past six months – has spurred sales with the highest month-over-month increase in the region. At 22 transactions, November housing sales were 5% higher than in October 2022 and 10% above September. This is reflected in total active listings, which were down 23% from October to 82 at the end of November. This is now a seller’s market with a sales-to-listing ratio at 78%, but with price opportunities for buyers
Maple Ridge: Prices and sales in Maple Ridge, which had been posting region-leading performance during the pandemic, have stalled with benchmark prices down or flat from a year ago and sales 53% lower. The November benchmark detached house is $1,182,900, down 17% over the past six months and 7.5% lower than three months ago. Total new listings are also tailing off, dropping 17% month-over-month, with active listings down 8% to 543 properties at the end of November 2022. The sales-to-listing ratio is running at 49%, however, in this balanced-but-bending to a buyer’s market.
Ladner: Detached house active listings are almost double where they were last year at this time while townhouses and condos are only sitting with 9 and 7 listings, respectively – condos have a 1-month supply. One has to wonder why there is so little development given the proximity to Vancouver – more growth is needed. Total housing sales in November fell 24% from a month earlier to 16, which was lower than in pre-pandemic November of 2018 and 2019. New listings were down 38% from October 2022 and there is now a generous 5-month supply with 83 active listings. The composite home price in Ladner is up just 0.6% year-to-year to $1,071,700, but prices of all property types have fallen by in the past six months. The benchmark detached house is down 16% since May 2022 to $1,298,700. With a sales-to-listing ratio of 70% in November, Ladner is a balanced market with a lack of inventory in the strata market.
Tsawwassen: Tsawwassen is among those detached housing markets which is giving back the huge price gains seen during the pandemic. November benchmark detached prices were 34% higher than in November 2019 but have fallen 15.5% over the past six months and dropped a further 4.2% from October 2022, to $1,464,800. Total residential sales in November, at 31, were 14% lower than three years earlier and down 15% from this October but were higher than in September 2022. Yet, technically this is a balanced-to-seller’s market because as new listings plunged 52% from October 2022, the sales-to-listing ratio hit 102%, about the same as during the red-hot market a year ago. There are now 150 properties for sale in Tsawwassen, equal to a 5-month supply. A sudden surge in sales could erase that supply, however, and put a plank under local prices.
Surrey: Sales in B.C.’s second-largest city have fallen sharply this year, with detached house transactions in November down 67.4% from a year earlier and off 8.5% from October 2002. Prices are firming, however, with the detached benchmark down just 3.7% year-to-year at $1,538,700. Condo apartment sales, aside from some strong pre-sale action in Central Surrey, were down 62% in November compared to a year earlier, at 120 sales, while sales of townhouses dropped 55% from year earlier to 120 transactions. Townhouse benchmark prices have stabilized, up 1.3% year-over-year to $821,400. The lowest price and biggest selection of condos are found in North Surrey, where there are 356 on the market and the benchmark price is $478,500.