Strong Growth in Metro Vancouver Housing Market in Q1 2023 - Fifth Avenue REM mediaiqdigital tracking pixel
Market Intelligence, Real Estate News | July 6, 2023

The real estate market in Metro Vancouver experienced a significant upswing as the frosty winter weather made way for the blossoming of spring. The recent release of The Fifth Dimension Spring Edition report highlighted the remarkable transformation taking place in the market, fostering a sense of optimism for both buyers and sellers in the region.

A comprehensive report compiled by Fifth Avenue Real Estate Marketing Limited and Baker West Real Estate, featuring extensive data collected and presented by Zonda Urban, unveils a notable transformation in Metro Vancouver’s real estate market. This shift is attributed to a confluence of influential factors that are shaping the current landscape.

“In the face of challenges, the real estate market has demonstrated its unwavering spirit, exemplifying its ability to adapt, flourish, and overcome,” remarks Jamie Squires, President of Fifth Avenue Real Estate Marketing Ltd., emphasizing the positive developments in the report.

The report highlights four areas that have emerged as beacons of progress within this evolving landscape, showcasing significant improvements in the overall real estate market.

Leading the way is Vancouver’s Northshore, which experienced a remarkable 91% surge in sales absorptions compared to the previous quarter. This impressive growth can be attributed to the introduction of new high-rise developments, expanding the available supply to meet the escalating demand.

South Surrey/White Rock also witnessed a resurgence, driven by a surge in sales activity. The report indicates a threefold increase in sales compared to the previous quarter, primarily fuelled by heightened townhome activity and a limited influx of new developments. As a result, the scarcity of available condominiums in both high and low-rise segments further emphasizes the desirability and strong demand within this vibrant neighbourhood.

New Home Market

During Q1-2023, the new home market in Metro Vancouver exhibited signs of recovery, as buyer activity gained positive momentum. However, many developers chose to delay project launches, awaiting improved economic conditions and buyer sentiment. As a result, only 12 new projects were launched, introducing a total of 1,415 units to the market.

Compared to previous first quarters, the total inventory released was notably lower. The quarter witnessed a total of 2,141 new home sales, marking the lowest Q1 total since 2013. Nonetheless, there was a positive note with Q1 sales showing a 6% increase compared to the previous quarter. Additionally, there were 7,462 released and unsold units remaining, which indicated a 9% decrease from the previous quarter but a significant 45% increase from the same quarter last year.

High-rise sales dominated the new home market, accounting for 60% of total sales during the quarter, with 1,286 recorded sales. Noteworthy sales activities were observed in sub-markets such as Burnaby/New Westminster, Central Surrey/North Delta, and the Tri-Cities.

Resale Market

The Q1 resale market also demonstrated encouraging growth rates compared to the previous quarter, with the High Rise, Low Rise, and Townhome sectors experiencing growth rates of 58%, 22%, and 43% respectively.

Although there were declines when compared to the same quarter of the previous year, it is important to consider the broader market context and evolving consumer preferences. Active listings increased by 34% compared to the previous quarter, indicating a greater supply of options for buyers. This trend extended to the High Rise, Low Rise, and Townhome segments, with notable increases of 38%, 41%, and 20% respectively.

Looking Ahead

The decision by the Bank of Canada to maintain the overnight rate at 450 basis points has infused the local market with a sense of optimism. However, the high borrowing costs continue to impact purchasing activity.

Nevertheless, positive migration patterns have resulted in increased rental demand and record-high rental rates, indicating a thriving rental market. Looking forward, there is growing optimism for buying activity in Metro Vancouver during the latter half of the year.

Furthermore, the successful launches witnessed in the first quarter have laid the foundation for renewed confidence, with the anticipation of additional launches in the second quarter to further strengthen developer confidence.

Jamie Squires notes, “If the Bank of Canada maintains or lowers the overnight rates, it will bolster consumer confidence in the market. However, any further rate increases could potentially hinder the absorption rate gains achieved in this quarter, as they would elevate borrowing costs and limit the purchasing power of potential buyers.” Squires emphasizes the need to monitor both inflation and the Bank of Canada’s response to it in the coming months.

With rate updates scheduled for June 7th and July 12th, she advises stakeholders to be prepared for potential celebrations or challenges, as these announcements will set the tone for the Q3 market in the summer.

Read The Fifth Dimension Spring Edition 2023 report in full here.

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