Wednesday, May 05, 2021

Vancouver housing market overview - April 2021

This post presents some graphs that demonstrate the overall status of the Greater Vancouver housing market (specifically REBGV but the basic analysis extends to FVREB as well)

First, housing transactions:

Sales are very strong, but interestingly so too are new listings. This has led to months of inventory being higher than it would be otherwise. There is a fair amount of supply that is available for sale and owners are finding the impetus to have it placed on the market. New listings have been trending above average since late summer of last year (partially making up for lost ground earlier in the year, but they have remained robust.

Second: prices relative to inventory:

Over the past 14 years the relationship that mohican developed has been validated time and time again. It is pretty "obvious" that more supply for sale means relatively lower prices (and conversely less supply for sale means relatively higher prices), but the remarkable aspect is how predictable this is. More supply for sale is the only way price growth can moderate. There are a few ways this can happen, but a significant contributor will be new construction.

Speaking of new supply:
Housing construction activity over the past five years has been sustained and significant. There are significant numbers of units being built and now completing. There is no doubt in my mind these new units are part (though by no means all) of the reason we are seeing new listings trending higher.

Population growth:
International components of population growth have been very low due to travel restrictions. This will not last forever, but has led to significant easing of pressure on the rental market. (Anecdotally there is a lot more choice available and rent rates are not under upwards pressure, for those fortunate enough to be in a position where they aren't discriminated against in our private markets). Natural increase is near zero. Population growth from here on out will be primarily from interprovincial migration (Alberta mostly, and unless their economic underpinnings improve I think we will see movement to Alberta dwindle in the years ahead), and international migration (slated to increase over the coming years). Looking at the paltry and dwindling natural increases fully explains why immigration numbers are being ramped up.

Taking a longer view, Vancouver is going to remain a region increasing in population and it will need housing to accommodate this growth. This will mean significant pressures on infill in existing lands, and this invariably manifests as speculation. Lower density properties (i.e. single detached homes) are only becoming more scarce but are still coveted for lifestyle and status reasons. I do not see this pressure abating anytime soon, and I can assure you we don't need offshore money to lock this in.

Anyways, get vaccinated. If BC doesn't get sufficiently vaccinated, life is going to be very hard for a lot of people.