Suburban safety valves close as prices rise in step
The shocking shortage of homes for sale across Metro Vancouver has had the unsettling effects of levelling residential prices and stunting supply from Burrard Inlet to well south of the Fraser River. The suburban safety valves for those seeking more affordable homes have nearly vanished.
The price gap between the average home price in Greater Vancouver and the eastern Fraser Valley was once a canyon: today it is a creek.
In October 2019, just three years ago, the composite home price difference between Greater Vancouver and the Fraser Valley was $272,500. This October that had narrowed to less than $150,000. In the detached housing market, it now costs nearly the same to buy a house in North Burnaby ($1.74 million) or East Vancouver ($1.71 million) as in South Surrey-White Rock, where the October benchmark was $1.76 million. A house in Langley ($1.45 million) is higher than in New Westminster or Port Coquitlam and within $50,000 of a detached house in East Burnaby.
The composite benchmark price in Chilliwack in October, at $800,000, was higher than in New Westminster ($749,200); and within $200,000 of most of the Tri-Cities market.
This price-gap shrinkage is the result of and a key reason for the current lack of new listings on the Metro Vancouver market. In the misty past – like 36 months ago – Greater Vancouver homebuyers could count on selling and downsizing to a smaller, pleasant Fraser Valley community and pocketing a healthy premium. First-time buyers would start their real estate ascension buying in the eastern Valley and, if desired, leverage up to a place in Greater Vancouver.
Now, though, many homeowners are reluctant to list because their exit strategy has been blocked. It is difficult to downsize or upgrade to a place 30 or 60 kilometres away when the home prices are nearly identical or you are you don’t feel you will be able to find a home to purchase.
The effect has been devastating.
In October, Greater Vancouver saw 3,455 homes sell but only 4,120 new listings were added to the market. With an 86% sale- to-listings ratio in the month, nearly every listing that came on the market sold – and in some areas like Burnaby, Coquitlam, Port Moody and Tsawwassen, there were more sales in the month than there were new listings.
In the Fraser Valley in October there were 1,938 total sales and a mere 2,188 new listings. That is a sales-to-listing ratio of 88.5%.
Will there be any properties for sale on the Metro Vancouver market by the end of 2021? At the rate of decline in the number of active listings, it would seem we could very well run out. For years, there’s been a concentrated, coordinated push by all three levels of government to hold back housing demand. But now we’re left with a complete lack of supply, the lowest levels ever recorded at this time of year.
Maybe one day we’ll stop saying how low the number of active listings is and that each month won’t be setting a record for how low they are. Likely not in the near term though. At the end of October there were 8,492 active listings available for sale in Greater Vancouver, which was less than the 9,728 active listings at the end of September. Sales for the month, however, were up 11% from September and 22.4% above the 10-year October average.
In the Fraser Valley, there were just 3,447 active listings in October, down a stunning 49.8% from October 2020 and nearly 10% lower than in September 2021. But total sales were the third-highest for October on record, 18.2% higher than in October of last year and nearly 5% higher than in September 2021.
As we have seen for some months, year-over-year condominium apartment sales in October tracked above last year while detached and townhouse markets are showing less sales than in the same month a year ago.
Compared to October 2020, the number of apartment sales in October this year were up 14%, while townhouses were down 22% and detached home transactions down 18%. On the supply side, the number of new listings for detached homes in October was down 29% year over year with active listings down 24%, townhouse new listings were down 22% with active listings down 47% and apartment new listings down 25% and active listings down 38%.
And, unlike other years, we can’t expect a surge of new housing starts to provide the necessary inventory. Across all of Metro Vancouver, total starts as of September were down 37% from August to just 14,109 units – and 24% of these were rental units.
Highlights of the Metro Vancouver market October 2021
- Communities with less than one-month inventory of homes: Coquitlam, Port Moody, Port Coquitlam, Maple Ridge, Pitt Meadows and Ladner
- Markets with sales-to-new-listing ratios higher than 100%: Coquitlam, New Westminster, Maple Ridge, Pitt Meadows, Port Moody, Sunshine Coast.
- Biggest month-over-month detached house price increase: Pitt Meadows (up 4.6% from September.)
- Biggest month-over-month detached house price decline: Vancouver West Side (down 1.3% from September).
- Condominium sales as a percentage of the total market: 50%