Our real estate board just released its latest economic analysis. It takes a deeper look at housing supply trends in Metro Vancouver* and the ratio of buyers to sellers that have been active in the market throughout the COVID-19 pandemic.
*Areas covered by the Real Estate Board of Greater Vancouver include: 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.
Metro Vancouver’s real estate market has seen heightened, and in some cases record-breaking, sales activity throughout much of this period. On the supply side, home listings have struggled to keep pace, causing inventory levels to reach lows not seen in years.
In our new report, REBGV Economist Keith Stewart assesses housing supply levels in Metro Vancouver and the factors affecting it during the pandemic.
- In 2021, the market moved into a diverging pattern of rising demand and decreasing supply, placing renewed upward pressure on prices.
- The ratio of buyers to sellers in the region peaked at 1.5 in March 2021 and remains elevated.
- Current lows in housing inventory are, in part, a consequence of rising demand.
- Despite high sales, many detached and attached sub-markets continue to see multiple buyers searching for homes compared to sellers.
- COVID-19 has highlighted the challenge of crafting policies that help supply keep pace when demand rises. All levels of government can help by supporting policies that encourage supply creation.
After a brief lull in market activity in the early months of the pandemic as both sellers and buyers left the market, sales been running above long-term averages due to a steep rise in demand. Prices have increased because supply (number of sellers) hasn’t kept pace. The market will eventually come closer to balance as elevated numbers of buyers find a home and the number of new buyers decline due to higher mortgage rates stet and simply the pool of potential buyers is finite and will eventually be exhausted. Inventory levels will move back towards more typical levels over time as mortgage rates creep up and the pace of sales slows. Also, as the pandemic retreats, some sellers who have been holding off selling will enter the market – however timing is difficult to determine.
For policy makers, COVID-19 has highlighted the high degree of demand for homes and the challenge of crafting policies to keep supply at a matching pace . All levels of government can help through policies that support supply, both through expanding the stock of housing and polices that make it as easy as possible to sell existing homes. Recent demand levels point to the limits of demand-side measures to suppress demand to target price growth.
The persistent strength for attached homes (duplex and townhouse homes) points to a home type policy makers can target in the largely built out region covered by REBGV. Where land economics are favorable to it’s development, policy makers should consider ways to expedite the creation of homes that balance development feasibility and demand from home buyers.
Find the full report below!
Real Estate Board of Greater Vancouver