Market Newsletter
2023 GREATER VANCOUVER AREA MARKET RECAP AND 2024 OUTLOOK
Year in Review
Navigating the tumultuous waters of global unrest, climate crises, and economic fluctuations, 2023 emerged as a year fraught with challenges. The real estate sector, a pivotal player in this dynamic landscape, confronted escalating construction costs, soaring municipal charges, and borrowing expenses. Despite unyielding Canadian demand for homeownership, the intersection of an affordability crisis and soaring mortgage rates compelled potential buyers to approach the market with caution.
From a developer's perspective, addressing the housing crisis requires embracing higher density and offering diverse housing options. In April and September of 2023, inCAN published articles highlighting government housing initiatives, including zoning bylaw amendments aimed at increasing density to alleviate pressing issues. Additionally, policies promoting development near transit hubs, abolishing parking requirements in Vancouver, constructing homes on public land, and revising developer fees were introduced. These measures were crafted to boost housing supply and enhance affordability.
On a positive note, despite these headwinds, inCAN Developments continues to be active in both the Metro Vancouver and Greater Toronto areas. In 2023, the company successfully launched a boutique mid-rise condominium project in Markham and progressed with a couple acquisitions for future developments in the Vancouver’s west-end neighbourhood. Both the inCAN team, and its valued customers expressed optimism and excitement about the future.
2023 Real Estate Recap
Closing the chapter on 2023, Metro Vancouver's housing market exhibited commendable resilience, defying the highest borrowing costs in decades. The Real Estate Board of Greater Vancouver reports that residential sales in the region totalled 26,249 transactions, a 10.3% decrease from sales recorded in 2022, and a 41.5% decrease from the 44,884 sales in 2021. 2023’s sales total was 23.4% below the 10-year annual average.
The Metro Vancouver home price average ended with a 5% plus gains across all market segments still demonstrated the strong demand and attractiveness of the Vancouver real estate. The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,168,700. This represents a five per cent increase over December 2022 and a 1.4 per cent decrease compared to November 2023.
The narrative of 2023 unfolds as buyers cautiously enter the market, displaying selectivity, while sellers remain hesitant to list or sell at less-than-optimal prices.
Looking Ahead in 2024
The Vancouver real estate market, characterized by its peaks and valleys, stands at the precipice of a positive turn. Drawing from extensive experience, the belief resonates that the market has bottomed out, substantiated by several positive indicators:
High Demand for Housing:
Despite record-low sales, the demand for housing in Vancouver remains robust. The city's allure persists, fueled by its reputation as one of the most desirable places to live, work, and raise a family.
Supply and Demand Dynamics:
The persistent housing crisis, stemming from a shortage of homes, is now under focused governmental scrutiny. This concerted effort is expected to inject more housing options into the market, fostering favorable adjustments in home prices and steering towards a more balanced housing market.
Stabilization of Mortgage Rates:
Following a phase of escalating interest rates, indications of economic deceleration suggest a potential decline in mortgage rates later this year. CMHC Insured five-year mortgage rates could drop as low as 4.79%, providing opportunities for prospective homebuyers, especially those considering variable rate mortgages.
Enduring Dream of Homeownership:
Despite economic challenges, the intrinsic value of homeownership remains steadfast. Escalating local rents and uncertainties surrounding rental tenure propel individuals towards the security, certainty, and long-term appreciation that homeownership affords.
Aid for First-time Homebuyers:
Recognizing the formidable task of homeownership for first- time buyers, an array of tools has emerged. The federal government's introduction of the tax-free First Home Savings Account, allowing contributions of up to $8,000 per year, coupled with the Home Buyer's Plan facilitating RRSP withdrawals for first-time home purchases, seeks to streamline the path to homeownership.