There is evidence that the condominium housing market in Metro Vancouver could see its largest upswing in years starting this spring, according to a new report by Dexter Realty this week.
Government interventions over the past few years compounded by COVID-19’s impact on central areas of the region have tempered the condominium market significantly.
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However, market demand for single-family detached homes and townhomes has outpaced available supply, pushing prices upwards.
Overall home sale volumes in February 2021 reached the highest monthly level since June 2017, propelled by detached homes and townhomes.
Based on the Real Estate Board of Greater Vancouver’s (REBGV) report for February 2021, detached homes now sell for over $1.62 million, which is an average increase of $221,000 from February 2020, with sales up by 80% year-over-year. Detached prices are also 14% higher than this time last year.
Townhome sales are up by 82% year-over-year, with benchmark prices now at $840,000, representing a 7% year-over-year increase and 3% one-month increase from January 2021.
There is now a “chronic shortage of townhouses” in Metro Vancouver, despite a 21% increase in new listings in February. For instance, the number of townhome sales in the Vancouver Westside in February 2021 were the highest since June 2017, and there were almost twice as many townhome sales as active listings last month.
The supply shortage in townhomes is now spilling over into the condominiums, which are the next comparatively affordable option besides townhomes. Over the past year, condominium prices have increased by only 2.5% to $697,500.
Demand for condominiums could be further driven by the confidence and effectiveness of vaccinations, leading to the return to normality and reversing some of the urban exodus trends experienced over the past year.
Other major recent factors for the strong housing demand over the past seven months include record low mortgage interest rates.
“Detached houses have been the headline news in Metro Vancouver for the past year, but we believe February marked the beginning of a major shift towards the townhouses and condominium sector,” reads the report.
“Investors, we believe, are pivoting to condos, looking towards the easing of pandemic regulations that will bring vibrancy back to downtowns and foreign students back to Metro Vancouver campuses.”
Condominium activity has quickly surged to an average pace of 62 sales daily.
The average days on market for a condominium home is now 33 days, down from the previous average of 44 days in January 2021. Detached homes are now average at 39 days (down from 51 days in January 2021), while townhomes are at 22 days (down from 34 days in January 2021).
The Dexter report states condominium developers are feeling “a sense of urgency” in new sales in February 2021, when 1,400 new condominiums started construction and 1,759 existing condos were sold.
According to MLA Canada, condominium launches are expected to accelerate over the coming months. In the area around SkyTrain Burquitlam Station alone, it is anticipated there will be a release of 5,256 condominium units this year.
“Governments are essentially continuing to print money; we have incredible interest rates that allow the cost of borrowing to be a fraction of what it was just 12 to 24 months ago,” said MLA Canada president Ryan Lalonde.
“You have pent-up demand of almost one-and-a-half years, and so the outcome that we’re anticipating for [the rest of] 2021 is far different than what we saw in 2019. And what we even saw in 2020, our expectation is that prices will keep surging and sales ratios will be strong as they’ve ever been in almost every major market.”
Strong market conditions are expected to escalate beyond 2021; the supply shortage vs. strong demand gap will widen in 2022 and 2023 because of the lack of condominium construction that happened in 2018 and 2019, and the added slowdown last year due the pandemic.