The Metro Vancouver housing market will see higher sales and modest price increases over the next two years, according to a Canada Mortgage and Housing Corporation forecast. The CMHC report forecasts income and population growth will not only support a rebound, but also create a balanced housing market in Metro Vancouver through 2020 and 2021.
While inventories of homes for sale are expected to decline slightly as sales increase, a growing number of newly constructed homes coming onto the resale market will help keep market conditions balanced overall through the end of the forecast horizon. Mortgage qualification rules will limit the borrowing capacity of some home buyers, which will limit price growth. However, it also said greater discounts on mortgage interest rates will lend support to the housing market.
CMHC predicts the average price of a home in Metro Vancouver in 2020 will go as high as $983,000 and up to just over $1 million in 2021. That compares with an average of up to $928,000 for this year, $966,866 in 2018, and $934,977 in 2017.
Townhouses and condominiums with prices under $700,000 in Metro Vancouver are expected to see the strongest demand, while the single-detached market is expected to remain soft, particularly with higher-end, multi-million dollar homes. As the market moves from buyers’ to balanced conditions, the CMHC says new condominium developments in Metro Vancouver are expected to see greater presale activity, which will encourage more development. Resale activity and house prices are expected to fully recover from the recent decline. Canada housing stats are projected to stabilize at levels in line with long-run averages, following two years of declines from elevated levels in 2017.
Vancouver is one of the most beautiful cities in the world; with a stunning setting between the North Shore Mountains and Pacific Ocean. We are considered the "Hollywood of the North", coming second to Los Angeles in TV production and third in feature film production. We are a Port City, tech hub, and front runner for sustainability. We also see the highest GDP growth of any province in Canada. It's no wonder our immigration rate is so high, attracting residents from all around the globe.
BC gets 15% of the total immigrants that come to Canada. Of that 15% the lower mainland gets 90%. When we look at interprovincial migration, BC gets 54,000 and the lower mainland gets 46% of that (25,000). Over the last 23 years, we've had 868,000 people move to our area. Looking at the next 23 years, we can expect 1.1 million people to migrate here. To house these residents, we will need another Vancouver, Burnaby, New West and Richmond! With the government pushing immigration, we will need many more homes to meet the impending demand.
After a major decrease in sales activity following the government implimented speculation taxes, vacancy taxes and foreign buyer taxes in 2018, we are starting to see another uptick in the market. Sales this September were up 41% versus last and only 2% lower than the 10 year sales average. Sales were 4% higher from August to September this year, a time when sales typically decline. If the fall is any indication of whats to come, I think its safe to say we can anticpiate a busy spring market in 2020. Looking at the market now, we are in balanced territory. For all property types, the sales-to-active listings ratio for September 2019 is 17.4 per cent. Generally, analysts say that downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.
So where are we headed? Well rental rates expected to increase faster than inflation. Rental demand will remain high throughout the forecast period, CMHC says, resulting in continued low vacancy rates and rising rents across the region. Real estate is set to appreciate as well - CMHC predicts that we will see moderate increases in home prices over the next 2 years. Simply put, Vancouver will always be a desirable city to live and invest in, therefore there will always be demand for housing. It's a great time to get into the market before we see another big resurgence in prices and sales.