With February having come and gone, Vancouver’s housing market could be a “barnburner in March,” marking one of the busiest months in the real estate calendar.
In a monthly sales and listings report for the Greater Vancouver area, broker and chief economist at Dexter Realty, Kevin Skipworth, said that the number of sales and new listings recorded in February could be setting up March for intense market conditions.
“February, with the highest increase in listings in eight months and the fourth-highest home sales for the month in history, set the stage for what should be [a] barnburner in March, traditionally one of the strongest months in the Metro Vancouver housing market,” said Skipworth in the report.
The broker noted that March 2021 saw the highest number of both new listings and sales by month last year, establishing the all-time annual high of nearly 45,000 sales.
Home sales up 50 per cent from January
Across all property types, 3,451 homes were sold in Greater Vancouver during February, up 50 per cent from January and 30 per cent above the region’s 10-year average. However, there were fewer sales during last month than there were a year ago, with 3,852 sales logged in February 2021.
Condo apartments dominated housing sales as the number of units sold year-over-year was up five per cent compared to a 24 per cent sales drop for townhomes and a 17 per cent decline for detached properties over the same time period.
Greater inventory choices and lower prices fuelled condo apartment demand, even as supply was down 29 per cent year-over-year in February while some larger new condo projects stalled or have been completely pre-sold, Skipworth said. The benchmark price of a Greater Vancouver condo apartment was $807,900 in February.
Last month, 5,573 new listings were added to the market, more than the 5,191 properties added in February last year. Still, there were 7,062 active listings in Greater Vancouver at the end of February, an all-time low for the month. On average, 251 listings were added a day in February during the first week, rising to an average of 350 new listings a day in the last week of the month.
“So, barring a huge increase in listings, the start of the spring buying season should continue to see the higher prices and multiple offers that characterize a lack of supply amidst high demand,” said Skipworth.
The benchmark price for a townhome was up about six per cent – more than $64,000 – from January to $1,090,000. There was just one month’s worth of townhome supply across Greater Vancouver in February. By comparison, there was three month’s worth of detached housing in February as the benchmark price hit $2,044,800.
Rising rates won’t dent affordability too much
With home inventory still low and the Bank of Canada now into it’s rate hike cycle, Skipworth doesn’t expect sales this year to top 2021 records. The Real Estate Board of Greater Vancouver (REBGV) predicts total 2022 sales to drop 12.2 per cent from 2021, but prices will climb 8.9 per cent compared to last year.
However, it’s possible that sales levels could go higher over the next two months as purchasers try into a market with historically low mortgage rates, Skipworth explained.
“In reality, even the most pessimistic forecasts for a Bank of Canada rate increases this year –175 basis points – will not have much effect on what a buyer can afford,” he said.
For example, the average mortgage amount in Canada is about $371,500, which would equal a $1,485 payment with a variable-rate mortgage of 1.5 per cent and a 25-year amortization. An increase of 175 basis points would raise the same rate to 3.25 per cent, boosting the monthly payment to $1,807, $322 more per month.
Meanwhile, the composite home price in Greater Vancouver is expected to rise 0.75 per cent — an average of $9,000 — a month during 2022.
‘Cooling off’ period could confuse spring market
In the monthly market report, Skipworth commented on the provincial government’s proposal for a ‘cooling off’ period, which may result in fewer listings and delays within the market.
A ‘cooling off’ period would be implemented to give buyers an opportunity to reconsider and withdraw their offers. Already, British Columbia real estate boards have voiced their opinion on the matter in a 57-page white paper published by the British Columbia Real Estate Association (BCREA) in late February.
“The effect would be chaos, with a cascading effect,” said Skipworth. “A seller would not know for a week or so whether the sale was actually going through. If it didn’t, the next buyer would also have a mandatory grace period, and so on.”
