There are signs of the beginnings of a slowdown in Vancouver’s housing market, according to a report by RBC Economics this month.
The market rebounded following the COVID-19 shutdown in the spring, with all types of home sales up by 10.5% year-over-year in September.
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But September also saw new listings fall by 24% month-over-month, and it was the first time new listings fell nationally in five months.
This could transition into a return to the pre-pandemic housing market conditions where demand outstrips supply.
“The market has fully recovered — expect some cooling ahead. We believe the spectacular rally over the past five months has exhausted pent-up demand created earlier this spring. This, and tight supply will restrain activity this fall,” reads the report.
“But September could be a turning point with the first drop in new listings in five months signalling the wave of sellers is receding. If sustained, a lack of supply will increasingly restrain activity again.”
Over the coming months, other factors will come into play, such as low interest rates, mortgage payment deferral expirations resulting in forced sales, changing housing needs, almost non-existent immigration, and additional waves of the pandemic.
But unlike the pre-pandemic period, the market is showing clear trends of stronger activity for single-detached and other low-rise homes. Condominium homes have been performing weaker, and the number of condominiums put up for sale has risen much faster than the number of low-rise homes this past summer.
Nationwide home prices in September increased by 10.3%, the highest increase in three years. Single-detached dwellings saw a 12% year-over-year growth, while condominiums were half that rate at 6.2%. In Vancouver, condominium prices have “flattened” relative to pre-pandemic levels.
“The penchant for low-rise properties with more living space (and a yard) has also fuelled activity in suburbs, exurbs and cottage country markets,” continues the report.
“Condo prices, in fact, have already stagnated over the past six months both at the national level and in some of Canada’s largest markets (including Vancouver, Toronto and Hamilton)… Growing interest in living outside major metropolitan areas is also heating up prices rapidly in smaller markets.”