Having emerged from the third wave of the COVID-19 pandemic, Vancouver’s luxury home market could see further stabilization towards the end of 2021.
In its 2021 Mid-Year Canadian Luxury Real Estate Market Report released last week, Engel & Völkers predicted that Vancouver will experience more normal market conditions come the fall. The luxury brokerage anticipates that this transition will be driven by Canada’s recently-changed mortgage stress test rules.
“While Vancouver is still in a seller’s market, the city will begin to see a normalization period and return to a more balanced market in the fall,” said the report. “Driving this trend will be Canada’s new mortgage stress test, which Engel & Völkers reports will greatly affect first-time homebuyers in Vancouver.”
With 2022 looking like “a big year for real estate” thanks to low inventory and returning immigration, Engel & Völkers stated in its report that the luxury market will continue to grow with an increased number of ultra-luxury home sales. As reopening continues to roll out across the country, Vancouver is expected to see a surge in both national and international migration, particularly from areas like Hong Kong and California, the report explained.
Andrew Carros, License Partner at Engel & Völkers Vancouver, said in the report that local buyers have been a main driving force behind the city’s housing market during the pandemic, which is typically buoyed by international buyers.
“The $4 million plus and $10 million plus brackets have been really interesting during this time, and we’re seeing more prestigious listings selling and coming to the market,” said Carros. “Buyers are recognizing that real estate is a valuable and stable investment, despite rising home prices.”
These days, buyer confidence in Vancouver’s real estate market as an opportunity for investment and primary residences is keeping conditions strong, with buyers purchasing property as a means to transfer money and expand their investment portfolios, the report says. Property appreciation and low interest rates have given individuals the ability to leverage their assets.
Meanwhile, Vancouver’s recreational market continues to see a high volume of sales, with a focus on large spaces and resort-style amenities. Homes at all levels within the premium and ultra-luxury areas of the market are continuing to sell with an emphasis on quality over quantity, Engel & Völkers explains, with affluent buyers “not concerned with the amount of money they are spending on a home.”
Analyzing the first six months of 2021, Vancouver’s luxury market started off strong with a 52 percent year-over-year increase in sales in January. The condo segment also had a powerful head start in the first month of the year, when 57 units sold that were priced between $1 million and $3.99 million. In February, the volume of home sales was up 73 percent compared to February 2020. However, fewer listings entered the market compared to the previous year, with 13 percent fewer homes listed in the premium market and two percent fewer properties listed in the ultra-luxury segment that month.
March 2021 was the best-performing March in a decade, with a 126 percent annual increase in home sales and a 166 percent rise in the number of Vancouver homes sold that were priced at $1 million or higher. April and May marked a turning point in the market, observing a downwards trend in both sales and listings. During April, 2,155 homes sold in the premium segment, and 81 in the ultra-luxury market. In the same categories, 1,781 and 74 homes sold during May. The market continued to normalize in June, as homes sold in the $1 million to $3.99 million range dropped by 11 percent month-to-month.
