Expect this year’s homes market to be ‘more average’
Metro region should see more activity as interest rates begin to fall, experts say
The Metro Vancouver real estate market is waiting for the other shoe to drop. And that shoe is interest rates.
“We’ve gotten through that phase of ‘Tighten your belts, rates are going up, up, up, up, up,’ and that is something,” said Ryan Berlin, vice-president intelligence and head economist at Rennie Marketing, and co-author of The Rennie Outlook.
Now in its fourth annual iteration, the Outlook is a compendium of predictions of key macroeconomic, demographic and housing-related measures for Metro Vancouver for the coming year.
“That gives developers and individual homeowners a little bit more confidence because there’s a sense of more certainty about the interest rates in the macroeconomic environment. But we still haven’t seen the Bank of Canada move rates down.”
The report predicts “increasing sales counts as interest rates decline,” with a total of 49,000 MLS resales predicted for the year — 23 per cent more than in 2023 — and more presales as well, up from 11,500 last year to 13,000. One reason for the predicted increase in sales is pent-up demand.
“Over the last couple of years, we’ve accumulated about half a year’s worth of resale activity,” Berlin said.
These include first-time homebuyers and new parents who would have made a move into the housing market if not for the interest rates.
“Implicitly, the demand is there. It is a question of how quickly will it reappear when conditions improve. That is the million-dollar question.”
The report expects “benchmark MLS condo prices to recover to their 2022 peak by November and increase by four per cent overall in 2024. For detached homes, we see a larger increase in 2024 (of nine per cent) but still finishing the year below their 2022 peak level.”
So far this year, “sales have been a bit slow, but my baseline expectation is that they are going to start to pick up in the spring,” said Brendon Ogmundson, chief economist for the British Columbia Real Estate Association.
“The key is whether or not new listings are going to be able to keep pace,” Ogmundson said. “There is a real risk that if sales pick up a lot and listings can’t keep pace, we might start to see prices accelerate. Hopefully, new listings activity picks up and balances things out.”
Also affecting housing prices and stock are new residents. The Rennie Outlook forecasts 80,000 more people in Metro Vancouver this year, “nudging its population up to the three million mark.”
“We’re not building enough homes,” Berlin said.
Nor do we have enough rental units, although there is some good news on that front, says the economist.
“Last year, Metro Vancouver started a record number — over 10,000 — of purpose-built rental homes,” he said.
Over the last couple of years, we’ve accumulated about half a year’s worth of resale activity.
“There’s just so much demand funnelled into that segment of the housing market, and it’s been pushing values and rents up, and our vacancy rate regionally is below one per cent, according to CMHC. For renters it is a very, very tough, tough situation. That’s where the provincial government has stepped in with a number of policies that look to provide more affordable options to market as quickly as they can. But it’s an uphill battle for sure.”
For the housing market, 2024 looks to be a return to normal, or what passes for it in the Lower Mainland.
“The way I’ve been describing it is that it’s going to be more average than last year,” Berlin said. “This is not a year of through-theroof home sales or prices rising at a historically high clip or lots of new presale launches coming to market. But it’s a year where we go from very low activity, a lot of uncertainty, and a lot of people waiting on the sidelines to a little bit more engagement across the board in the market.”