Price declines and new supply hitting the market will woo buyers back to Vancouver’s new home market in the coming months.
But the challenges the market faced before the pandemic caused activity to grind to a halt haven’t gone away and will continue to weigh on the buyers and builders alike.
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That’s according to Matthew Boukall, vice president of real estate services firm Altus Group, who hosted a webinar yesterday exploring the state of the national residential real estate market during the pandemic.
During his presentation, Boukall addressed a number of opportunities and challenges for the Vancouver new home market as it attempts to shake off the effects of the pandemic-related business shutdowns and adjust to the social distancing requirements now in place for the foreseeable future.
In assessing the opportunities for the market, Boukall said that new home sales in Vancouver were strong leading into March when COVID-19’s spread began affecting activity. Sales were up in the first quarter over the previous year and when the pandemic did hit, Vancouver and the broader province had less severe restrictions than many other parts of the country.
Of the few new project launches that did occur during the very muted spring period, Boukall said the developments saw “reasonably strong demand” from homebuyers. For active projects that launched prior to the pandemic, he said that incentives had attracted consumers, leading to better sales figures.
As these dynamics played out, Boukall noted that new condo prices in Vancouver were declining. For projects that launched in 2020, prices on a per square foot basis were down three percent year-over-year. This affordability improvement, along with new supply set to arrive on the market as builders begin launching projects again, will bring buyers back to the market.
When it comes to challenges for the market, the landscape doesn’t look all that different from the pre-pandemic period.
Boukall said that despite prices trending lower, they remain out of reach for many homebuyers. Foreign investment activity, which has been declining for years, will remain affected as government policies that curtailed it are still in effect. Finally, he said, long approval times and development charges continue to make it difficult for residential developers to bring projects to market.
For the Canadian new construction market as a whole, the Altus VP said two to three months of sales have effectively been lost as a result of the pandemic. Buyers who were sidelined by the pandemic are returning, but Boukall believes the winding down of government financial support programs is a major event to watch in terms of future market impact.