A new report released today by Engel & Völkers has determined that the housing market in Metro Vancouver has transitioned into a buyer’s market — particularly for luxury housing.
Based on industry data, overall sales in the region in March dipped 46.3% below the 10-year sales average for the month, which happens to be the lowest since 1986.
Conversely, the total number of listings in April, buoyed by low sales numbers, climbed by 46.2% in April compared to last year, and these conditions pushed down the benchmark price in the city by 8.4% over the same period in 2018.
But these same conditions that have caused prices to fall may also open up housing ownership opportunities to a segment of prospective homebuyers later this year.
“With buyers holding on the sidelines creating less demand, sellers are reacting by adjusting prices down to sell in a buyer’s market. This increase in affordability, coupled with steady interest and mortgage rates, may help boost the market this spring,” reads the report.
However, younger prospective homebuyers hoping to pass the heightened mortgage stress test are struggling to overcome the new requirements, and this has negatively affected the demand of Vancouver’s once-robust housing market.
“We’re seeing millennial buyers apply for mortgages, but struggling to secure them due to the mortgage stress test. Some are finding their way around the test limitations by turning to their families for financial assistance and engaging parents and grandparents as co-signers,” the report continues.
“Interestingly, and in contrast to the ‘avocado toast’ theory, millennials are showing more responsible financial behaviours and creating savings, willing to forgo certain luxuries like cars in order to make first-home purchases.”
The report notes that its analysts expect fixed mortgage rates to fall in the next two quarters, which may potentially help boost home sales later this year.
For the time being, an increasing number of younger homebuyers have been pursuing alternative housing markets — more affordable housing markets out of the city and in the suburbs, such as Burnaby, Langley, Surrey, and Delta.
“The condominium and attached dwelling market in developing areas continues to remain strong. A growing market segment is looking for affordable but livable family homes as detached homes increase in price,” adds the report.
The most expensive prime location for real estate remains West Vancouver, followed by the waterfront areas of West Point Grey in Vancouver and downtown Vancouver.
When it comes to secondary ski, ocean, and recreational properties in Whistler, Sun Peaks, Big White, and on Vancouver Island, recent taxation changes on such properties are beginning to have a significant impact on these secondary homes.
Over in Victoria, the capital region’s luxury market has also seen a dip, transitioning into a buyer’s market as well. Its active listing inventory for April saw an increase of 37.4% over the same period in 2018, which has largely affected the $1+ million home category.