Market Update

FEBRUARY 2024 PRESALE INSIGHTS: ENGAGING INTEREST IN A QUIET MARKET

Unlocking Opportunities: Presale Dynamics in February 2024

“January saw very few projects release new inventory into the market. The story of the month was centred around incentives on existing inventory, targeted toward both prospective buyers and agents. As we enter February, we are starting to see increased foot traffic at Sales Galleries that is likely to carry forward into the Spring. Anticipated project launches in February will serve as a good litmus test for market breadth and will help developers, many of which are in “wait and see” mode, decide whether to enter the market.”

– Garde MacDonald, Director of Advisory

NAVIGATING TODAY’S MARKET ENVIRONMENT: UNRAVELING THE COMPLEXITIES

Describing the current market environment as merely “tricky” would be an understatement. Costs related to financing and construction are on the rise, while revenues remain stagnant. This disparity has constrained developers from introducing new supply to the market and has heightened the criteria they require before initiating contract writing. Paradoxically, there is an unprecedented level of pent-up demand from buyers. However, their aspirations of homeownership are hindered by a lending environment that leaves much to be desired, deterring many from entering the market until interest rates begin to decrease in the latter half of this year.

In January, three presale projects were unveiled, introducing 434 units into the market. A significant portion of this new inventory originated from Encore, the second tower in Beedie’s Fraser Mill’s development. Encore has made a notable impact on the market, with 50% of its inventory sold within the first month of sales. Although detailed pricing information is scarce, it is estimated that Encore has achieved a gross blend of $1,075 per square foot, surpassing Debut’s $1,050 per square foot yet remaining below the $1,140-$1,150 per square foot range typical of towers along the North Rd Corridor.

As we analyze these recent developments, the future of the real estate market relies on a delicate equilibrium between cost, demand, and access to financing. Encore’s launch exemplifies how opportunities still exist for developers who can entice buyers with a competitive price point amidst a challenging economic landscape.

Presale Home Summary. Source: MLA Canada

RENTAL MARKET UPDATE: HISTORICALLY LOW VACANCIES AND SIGNIFICANT RENTAL PRICE INCREASES

Presently, vacancy rates in Metro Vancouver linger at a meager <1-2% across most submarkets, reflecting more rental friction than actual vacancies. This condition has contributed to an 8% rise in average rental rates in 2023, with new rental leases experiencing an even more substantial surge of 24%. This escalation is propelled by a growing number of renters, constituting approximately 34% of Canadian households, a demographic expanding at twice the rate of homeowners. This trend is fueled by affordability challenges and a considerable influx of individuals arriving through immigration, study, and work permits, who primarily rely on rentals upon their arrival.

The supply side of the market also confronts its own hurdles, notably a prolonged shortage in purpose-built rental construction. This issue, stemming from historical underinvestment, witnessed rental starts accounting for only 7% of all housing starts in 2010. Although initiatives such as the CMHC rental housing subsidiary have recently bolstered this figure to 38% as of 2022, challenges persist. Additionally, the removal of the 5% GST cost on purpose-built rentals and policies prohibiting short-term rentals aim to alleviate some pressure by promoting more long-term rental availability. Despite these efforts, the rental market continues to play catch-up, contending with lengthy timelines required to bring new rentals to market, which can span 3-7 years.

In the near term, some relief may be anticipated as interest rates adjust, potentially easing vacancy rates as prospective homeowners transition out of the rental market. However, the structural challenges within the rental market are expected to persist.

NEW YEAR, NEW PROJECTS, AND ENHANCED MARKET INCENTIVES

With the arrival of February comes the Lunar New Year, sparking anticipation for a resurgence in market demand and a surge in project unveilings. The market’s momentum has largely been fueled by active initiatives that offer substantial incentives. For instance, in Burnaby, buyer incentives range from $20,000 to $40,000, accompanied by realtor bonuses scaling between $5,000 to $10,000.

MLA Advisory forecasts the launch of five presale projects in February, introducing a total of 770 units to the market. Among these, Juno by StreetSide in Surrey City Centre stands out by relying on its 10% deposit structure to attract investors. Offering such minimal deposits at the commencement of the sales program is a daring strategy that could yield significant appeal. This approach, coupled with the project’s extended build-out period, underscores the tactics developers are employing to capture interest, especially during a period of subdued overall market activity.

Presale Units Forecasted. Source: MLA Canada

To read more local news and projects please check our BLOG PAGE

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Tags: presale. presales, presale merket February 2024, presales 2024

METRO VANCOUVER HOUSING MARKET HIGHLIGHTS | JANUARY 2024

Home sales across Metro Vancouver’s housing market off to strong start in 2024

Source: REBGV

While the Metro Vancouver¹ market ended 2023 in balanced market territory, conditions in January began shifting back in favour of sellers as the pace of newly listed properties did not keep up with the volume of home sales.

Source: REBGV

The Real Estate Board of Greater Vancouver (REBGV) reports that residential sales² in the region totalled 1,427 in January 2024, a 38.5 per cent increase from the 1,030 sales recorded in January 2023. This was 20.2 per cent below the 10-year seasonal average (1,788).

“It’s hard to believe that January sales figures came in so strong after such a quiet December, which saw many buyers and sellers delaying major decisions. If sellers don’t step off the sidelines soon, the competition among buyers could tilt the market back into sellers’ territory as the available inventory struggles to keep pace with demand.”

Andrew Lis, REBGV director of economics and data analytics

There were 3,788 detached, attached and apartment properties newly listed for sale on the Multiple Listing Service® (MLS®) in Metro Vancouver in January 2024. This represents a 14.5 per cent increase compared to the 3,308 properties listed in January 2023. This was 9.1 per cent below the 10-year seasonal average (4,166).

The total number of properties currently listed for sale on the MLS® system in Metro Vancouver is 8,633, a 9.8 per cent increase compared to January 2023 (7,862). This is 0.3 per cent below the 10-year seasonal average (8,657).

Across all detached, attached and apartment property types, the sales-to-active listings ratio for January 2024 is 17.2 per cent. By property type, the ratio is 11.9 per cent for detached homes, 22.9 per cent for attached, and 19.9 per cent for apartments.

Analysis of the historical data suggests downward pressure on home prices occurs when the ratio dips below 12 per cent for a sustained period, while home prices often experience upward pressure when it surpasses 20 per cent over several months.

Source: REBGV

“Our 2024 forecast is calling for a two to three per cent increase in prices by the end of the year, which is largely the result of demand, once again, butting up against too little inventory,”

Lis said.

“If the January figures are indicative of what the spring market has in store, our forecast may already be off to an overly conservative start. Markets can shift quickly, however, and we’ll watch the February numbers to see if these early signs of strength continue, or whether they’re a blip in the data.”

The MLS® Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $1,161,300. This represents a 4.2 per cent increase over January 2023 and a 0.6 per cent decrease compared to December 2023.

Sales of detached homes in January 2024 reached 379, a 28 per cent increase from the 296 detached sales recorded in January 2023. The benchmark price for a detached home is $1,942,400. This represents a 7.3 per cent increase from January 2023 and a 1.1 per cent decrease compared to December 2023.

Sales of apartment homes reached 746 in January 2024, a 30.6 per cent increase compared to the 571 sales in January 2023. The benchmark price of an apartment home is $751,900. This represents a 4.4 per cent increase from January 2023 and a 0.1 per cent increase compared to December 2023.

Attached home sales in January 2024 totalled 285, a 82.7 per cent increase compared to the 156 sales in January 2023. The benchmark price of a townhouse³ is $1,066,700. This represents a 4.3 per cent increase from January 2023 and a 0.6 per cent decrease compared to December 2023.

1 Areas covered by the Real Estate Board of Greater Vancouver include: Bowen Island, Burnaby, Coquitlam, Maple Ridge, New Westminster, North Vancouver, Pitt Meadows, Port Coquitlam, Port Moody, Richmond, South Delta, Squamish, Sunshine Coast, Vancouver, West Vancouver, and Whistler.

2 REBGV is now including multifamily and land sales and listings in this monthly report. Previously, we only included detached, attached, and apartment sales, and these additional categories, which typically account for roughly one to two per cent of total MLS® activity per month, are being included for completeness in our reporting.

3 In calculating the MLS® HPI, Altus Group uses a narrower definition of “attached” properties than is used by REBGV in our “attached” statistics, preferring to use “townhouse” as their benchmark property.

CLICK HERE – Full REBGV January 2024 Housing Market Update

Vancouver BC – February 2, 2024

Have a look at the REBGV January 2024 Market Update Insights!

DOWNLOAD the REBGV January 2024 Housing Market Update CLICK HERE
See the Monthly Market Stats CLICK HERE
For more market information from the Real Estate Board of Greater Vancouver CLICK HERE
To view Geoff Jarman’s Listings CLICK HERE