Metro Vancouver Home Prices, Sales Expected To See Uptick In 2024

The fundamental factors of Metro Vancouver's real estate market — population growth and household formation — remain strong, and 2024 is "poised to be a growth year for the residential market," according to a forecast published by the Real Estate Board of Greater Vancouver (REBGV) last week.

Entering the new year, inflation is no longer an immediate threat like it was entering 2023, when there were concerns about a recession. Inflation is declining slowly, but declining nonetheless, and REBGV notes that bond and derivative markets are also now pricing in over 1.00% of anticipated interest rate cuts from the Bank of Canada, with much of those cuts expected in the first half of the year.

"These factors have the spring and summer markets coiled and ready for a strong first half to the year," says the REBGV.

REBGV is expecting a 0.50% decrease in the Bank of Canada policy rate, at a minimum, and is thus projecting an increase in sales activity.

After 2023 ended with a total of 26,249 units sold, REBGV is projecting 2024 to see 28,250 units sold — an increase of 7.6%.

By property type, condominiums are projected to see a 9.7% increase, from 13,678 units sold to 15,000. Single-detached homes are then projected to see a 5.7% increase, from 7,556 units sold to 8,000. Townhouses are projected to see a 4.3% increase, from 4,793 units sold to 5,000.


Residential sales forecast by property type.(REBGV)

Near-record-low inventory levels will continue to shape the market, and there is little to no welcome news when it comes to housing affordability. Demand remains consistent, and if market activity sees an increase like what is expected, prices are very likely to continue on their upward trajectory, REBGV says.

"Even moderate increases in demand could lead to renewed price escalation, as the pool of willing buyers continues to exceed the stock of available homes for sale," REBGV said. "This is the same dynamic we observed in 2023, and since inventory levels are only slightly higher than 2023 levels at the time of publication, we do not expect this dynamic to differ significantly in 2024."

Entering 2023, REBGV forecasted the composite residential benchmark price to reach $1,200,000. The year ended with the benchmark price at a slightly higher $1,287,000.

"While the significant increase in borrowing costs over the course of 2023 led many forecasters to speculate that prices would decline during the course of the year, our modelling work suggested the opposite," REBGV said. "The simple reason for this contrarian view at the time was that the availability of resale homes was too low to lead to any significant price declines. While resale inventory levels have crept upwards since the mid-point of 2023, a longer-term perspective reveals that inventory is still hovering near historic lows."


As a result of this, REBGV is expecting prices to increase modestly this year, to $1,320,000 — a 2.6% increase.

Single-detached homes are expected to see the largest price increase, 3.9%, bringing the benchmark price to $2,200,000. Townhouses are expected to see an increase of 2.1% that will bring their benchmark price to $1,300,000. Condominiums are forecasted to see an increase of 1.4%, bringing the benchmark price to $825,000.

Residential price forecasts by property type.(REBGV)

"With core measures of inflation finally receding to levels nearing the Bank of Canada’s target range of 1% to 3%, the risk of runaway inflation that preoccupied most of early 2023 (thankfully) now feels like a distant memory," says REBGV. "Offsetting this rosy picture, however, is the fact that the forces causing inflation to recede are related to slowing economic growth."

Unemployment remains near record lows, but slowing economic growth is of some concern. If unemployment increases and/or the economy heads into recession, residential sales could slow significantly as a result of reduced demand, and prices could also be lower than expected.


On the other hand, sales activity and prices could both be higher than forecasted if we avoid a recession and borrowing costs fall more than expected.

The Bank of Canada's next policy rate announcement is set for Wednesday, January 24.


Canadian Inflation (December 2023) - January 16, 2024
Canadian prices, as measured by the Consumer Price Index (CPI), rose 3.4 per cent on a year-over-year basis in December, up from a 3.1% increase in November. The increase was largely driven by base-year effects from gasoline, which were low in December of 2022. Excluding energy costs, CPI rose 3.7 per cent year-over-year in December, down from 3.8 per cent in November. Shelter costs continue to be a major driver of inflation, with mortgage interest costs up 28.6 per cent and rent up 7.7 per cent from last year in December. Grocery price inflation remained unchanged from November at 4.7 per cent year-over-year in December. Month over month, seasonally adjusted CPI rose 0.3 per cent. In BC, consumer prices rose 3.4 per cent year-over-year. The Bank of Canada's preferred measures of core inflation, which strip out volatile components, remained between 3.5 and 4 per cent per cent year-over-year in December. 

Despite a disappointing uptick in the year-over-year percentage change in CPI, the general picture remains similar. CPI is stubbornly high, still within the 3-4 percent territory that it has occupied since roughly the spring. Although gasoline prices drive volatility in the measure, including most of the December increase, shelter and food costs remain well above their pre-pandemic norms and are causing the CPI to remain broadly elevated. The annualized 3-month percentage change in the Bank of Canada's preferred measures of inflation, including CPI-median and CPI-trim, both ticked up last month and remain between 3 and 4. Amid tepid GDP growth and softening labour markets, financial markets continue to expect the Bank of Canada to cut rates substantially by the summer of 2024, but this will, of course, depend on the rate of economic growth and price appreciation in the first half of the year. 

Source: BCrea

Real Estate Presale Trends: January 2024 Report


As we delve into the dynamics of the real estate market at the beginning of 2024, it's evident that the presale segment displays a unique blend of challenges and opportunities. This report aims to shed light on the trends and patterns that have emerged in January 2024, offering insights into what can be expected in the real estate sector going forward.

December's Slowdown and January's Recovery

The year started on the heels of a somewhat sluggish December. However, January has shown promising signs of recovery. Key launches like Mosaic's Town & Centre and Anthem's South Yards (Tower B) have performed remarkably well. These successes can be attributed to their strategic launch timings, which cleverly navigated through minimal market competition.

The 2024 Outlook: Interplay of Factors

Looking ahead, the real estate market 2024 is expected to be influenced by a complex interplay of factors. Interest rates, affordability issues, and overall market dynamics will play crucial roles. One positive note is the anticipation of a strong presale market buoyed by continuous immigration and the escalating construction costs.

January's Presale Launches

This month is particularly notable for launching three major presale projects, introducing 785 units. Among these, Marcon's Soenhaus and Concord Pacific's Piano are particularly noteworthy. These developments add to the market’s diversity and signify the developers' confidence in the current economic climate.

The Lunar New Year Marketing Push

An exciting aspect of this month's market activity is the alignment with the Lunar New Year celebrations. Developers like Grosvenor, Streetside, and Qualex-Landmark are capitalizing on this festive season to attract potential buyers. Their projects - Brentwood Block, Juno, and Ironwood, respectively - are expected to draw significant attention, leveraging the celebratory mood and the auspicious significance of the Lunar New Year in many cultures.


As we progress through 2024, the real estate market, particularly in the presale sector, shows signs of an exciting blend of resilience and adaptability. Despite the challenges posed by external economic factors, there is a sense of cautious optimism. With strategic launches and marketing efforts aligning with cultural festivities, developers are navigating the complex market landscape with innovative approaches. This sets a precedent for an intriguing year ahead in the real estate domain.


The 2023 Housing Market was Defined by High Rates and Slow Sales

Vancouver, BC –  January 15, 2024. The British Columbia Real Estate Association (BCREA) reports that 73,109 residential unit sales were recorded by the Multiple Listing Service® (MLS®) in 2023, a 9.2 per cent decline from 80,506 units sold in 2022. The annual average MLS® residential price in BC was $971,144, a 2.6 per cent decrease from $996,943 recorded the previous year. Total sales dollar volume was $71 billion, an 11.5 per cent decline from 2022.


“The highest mortgage rates in over 15 years led to the slowest sales in a decade for BC,” said BCREA Chief Economist Brendon Ogmundson. “With mortgage rates falling to start the year and the potential for Bank of Canada rate cuts on the horizon, the outlook for 2024 appears much brighter.”

A total of 3,596 residential unit sales were recorded in Multiple Listing Service® (MLS®) systems in December 2023, an increase of 2.6 per cent from December 2022. The average MLS® residential price in BC was $965,447 a 6.5 per cent increase from $906,356 recorded in December 2022. Total sales dollar volume was $3.5 billion, a 9.3 per cent increase from the same time last year.




B.C. property assessments show home values have stabilized after years of big gains

The assessed value of properties in B.C. has stabilized on average, with some outliers such as Lytton, Haida Gwaii and Tumbler Ridge recording big jumps in worth.

According to statements released Tuesday by the B.C. Assessment Authority, property values as of July 1, 2023, changed on average between minus 10 per cent and plus five per cent.

In the Lower Mainland, the range was between minus five per cent and plus five per cent.

“Across the Lower Mainland and throughout B.C., the overall housing market has generally stabilized in value,” said B.C. Assessment’s lead assessor, Bryan Murao.

“Most homeowners can expect only modest changes in the range of minus five per cent to plus five per cent. These assessment changes are notably less than previous years.”

For example, the average detached home in Vancouver rose in value nine per cent in 2022 and 16 per cent in 2023.

“Commercial and industrial properties are generally increasing in value at a higher rate than residential, especially in areas such as the Fraser Valley where properties are up in value as a result of limited industrial land,” Murao said.

Andy Yan, the director of Simon Fraser University’s City Program, said the flattening of prices was due primarily to the Bank of Canada’s policy over the past two years of raising interest rates as a way to cool inflation.

Yan also noted that the recent assessments were made on July 1, 2023, before the provincial government introduced legislation forcing municipalities to allow densification, a move that will likely impact prices moving forward.

“The new legislation may not necessarily immediately lead to increased values, but set a floor of pricing expectations that current owners are reluctant to leave,” he said, noting 41 per cent of home owners in Metro Vancouver do not have a mortgage.

Realtor Steve Saretsky agreed that the jump in interest rates had led to stalled property values. He said that since July 1, 2023, the housing market had further softened but could pick up this spring if the Bank of Canada brings its benchmark interest rate down.

For the Lower Mainland region, the overall total assessments values increased from about $1.94 trillion to nearly $2 trillion.

Almost $27.2 billion of the region’s increased assessments is from new construction, subdivisions and the rezoning of properties. B.C. Assessment’s Lower Mainland region includes all of Greater Vancouver and the Fraser Valley, as well as the Sea to Sky area and the Sunshine Coast.

At the top end, for a single-detached home, assessed values went up four per cent in Vancouver, Burnaby and Coquitlam. The average detached home’s value in Vancouver is now $2,209,000.

The average assessed value of a detached home in Surrey didn’t budge, sitting at $1,609,000. The worst performer in the region was the District of Hope, which had a 13 per cent decline in assessed value with an average detached home now worth $611,000.

The value of a detached home in Hope rose 14 per cent last year, and 45 per cent the year before during the COVID-19 real estate boom when buyers were seeking properties outside the city.

In a big change over last year, the average assessed value of a detached home in Whistler went down two per cent and is now $2,842,000. Last year a detached Whistler home rose in value 11 per cent, and 29 per cent the year before.

When it comes to the strata property class (condos and townhouses), the best performer in the Lower Mainland was Richmond, where the average condo went up in value four per cent to $779,000.

Vancouver Island had the same range of movement in assessed value as the Lower Mainland — between minus five and plus five per cent.

However, this was skewed by a very strong performance in the north of the island that outweighed an overall decline in value across Greater Victoria and the Central Island.

Figures shows a drop in value in all Greater Victoria’s 14 assessment regions, with detached homes in Colwood and Esquimalt falling three per cent.

In the Central Island, on average a detached home in Lake Cowichan fell nine per cent, while the drop was four per cent in Ladysmith.

In the North Island, a detached home in Port Alice rose 34 per cent, Port McNeill 15 per cent, Alert Bay 20 per cent and Tahsis 10 per cent.

Vancouver Island deputy assessor Matthew Butterfield said the large increase in values in smaller North Island communities was due to strong demand and lack of supply.

Southern Interior deputy assessor Boris Warkentin said that his region had value changes somewhere between minus 10 per cent and plus five per cent. Kelowna, Penticton, Summerland, Princeton and Salmon Arm all had a drop in the assessed value of a detached home, while those values rose in Armstrong, Vernon and Coldstream.

Warkentin said the value of properties in the fire-ravaged community of Lytton rose 26 per cent due to increased market activity.

Northern B.C. had a similar rate of change as the Southern Interior, with the exception of Haida Gwaii (increase 22 per cent) and Tumbler Ridge (increase 19 per cent).



Bank Of Canada To Drop Interest Rate To 2.25% By 2025: TD

The Bank of Canada (BoC) will drop its policy interest rate to a much more attractive 2.25% by 2025, according to a recent forecast from TD.

The long-term forecast, written by TD CFA James Orlando and Director Thomas Feltmate, predicts that inflationary pressures will ease over the medium term, allowing the central bank to cut its policy rate back to the neutral rate of 2.25%.

This would cut the interest rate, which currently sits at 5%, by more than half — a move that would be extremely welcomed by borrowers saddled with, in many cases, prohibitively high mortgage payments.

In recent months, borrowers have increasingly struggled with affordability. Would-be homebuyers have moved to the sidelines, either unable to qualify for a mortgage or voluntarily holding off until interest rates comes down. As a result, home sale numbers have dropped in major markets all across the country.

Those already holding a mortgage, however, are greatly feeling the pain. A recent survey from Zolo found that nearly half of Canadian mortgage holders are worried about their mortgages renewing at much higher rates. Another TD report released earlier this month found that by the end of 2023, nearly 50% of all mortgage holders will see their monthly payments increase in comparison to February 2022 — the month before the Bank of Canada (BoC) embarked on its rate hike campaign. By the end of 2024, that share rises to 65%. The average mortgage holder is expected to see their monthly payments increase by nearly 30% by the end of 2024.


The Canada Mortgage and Housing Corporation (CMHC) is similarly bracing for borrowers facing difficult payment increases, with new research finding that homeowners renewing their mortgages over the next two years could see a 30% to 40% increase in their average monthly payments. On a $500,000 mortgage with a five-year fixed-rate term and a 25-year amortization period, for example, a rate increase from 1.94% to 5.45% would result in a $950 jump in their monthly payments.

A bright spot for those having to renew is that some mortgage terms have already fallen below the 5% interest rate mark. Around mid-December, some institutions like Equitable Bank, THINK Financial, and MCAP began offering five-year insured fixed-rate mortgages at slightly more appealing rates. This shift towards lower rates is due to the bond yield market — which fixed rates are based on — cooling over the past month.


But as higher rates continue to weigh on borrowers, TD found that mortgage holders have pulled back their spending by approximately 1% compared to those without a mortgage, resulting in a $6B reduction in spending across the economy. In the absence of higher mortgage rates, TD said growth in real consumer spending would have come in at approximately 1.9% year over year in Q3. Instead, it came in at 1.5%.

In their forecast, TD predicts that inflation will end the year at an annual rate of 3.8% before falling to 2.7% in 2024, 2.1% in 2025, and 2.0% in 2026 — the BoC's target for inflation. After hitting a 40-year high of 6.8% in 2022, inflation has come down quite a bit this year, signalling good news ahead for Canadian spenders.


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